JPMorgan Asset Management sells Streeterville apartment tower

JPMorgan’s investment arm is ready to test the waters by selling a residential tower in Streeterville, and risk taking a shower.

JPMorgan Asset Management, which owns the 19-story, 198-unit apartment building at 850 North Lake Shore Drive, is marketing the property for sale, even though rising interest rates have contributed to significant losses in the value of other multifamily towers in downtown Chicago that have gone under. Sell ​​it. This year, Crane reported.

The owner hired Newmark’s Chicago office to market and sell the building, which JP Morgan acquired for $140 million in 2016, setting a new per-unit price record for apartments in downtown Chicago at the time.

Newmark’s Liz Gagliardi, Chuck Johanns and Susan Lawson lead marketing efforts on behalf of JPMorgan.

There’s a good chance the building’s value has diminished due to increased interest rates and decreased demand for commercial real estate in Chicago, although demand for rental units downtown remains strong. Recent sales of other downtown residential buildings have also fallen below their pre-pandemic values, exemplified by the sale of a 398-unit apartment tower in Streeterville for $173 million, a 28 percent decline from its 2016 purchase price.

While the Lake Shore Drive property does not have an official asking price, people familiar with asset estimates may attract bids ranging from $85 million to $90 million, the publication reported. It remains uncertain whether JPMorgan would accept such a price, and the company did not respond to the outlet’s request for comment.

The building is one of a handful of downtown residential properties currently on the market, with landlords taking advantage of high demand for rentals in the city. New developments are expected to slow, with only 400 new apartments expected to be added in 2025, the lowest annual number since 2004.

While the high demand was driven by factors such as limited new supply and high interest rates, the cost of borrowing was a major hurdle, resulting in a significant gap between sellers and buyers in terms of property prices. National apartment sales through July 2023 fell 67 percent compared to the same period a year earlier, to just under $65 billion, the outlet reported, citing MSCI Real Assets.

Newmark emphasizes continued demand for the Lake Shore Drive building from major Streeterville employers such as Northwestern Memorial Hospital and Northwestern University. The building houses relatively large apartments, averaging 1,264 square feet, and the average monthly rent is $3,574. As of this month, the building is 95 percent leased.

The Lake Shore Drive building, a 96-year-old Beaux Arts building, was originally known as the Lake Shore Athletic Club. It was converted into a residence by Northwestern University in the 1970s. In 2008, it was acquired for $39 million by a joint venture including Northbrook-based Integrated Development Group, which converted it into upscale apartments, eventually selling it to JPMorgan in 2016.

JPMorgan financed its acquisition in 2016 with a $70 million loan from Nationwide Insurance, and the mortgage is scheduled to come due in May 2026, according to Cook County property records.