One of the city’s high-rent apartment properties, 401 E. Ontario St. in Streeterville, has been acquired by a new ownership group and is likely to go condo.
If that move takes place, it will further squeeze the rental market in the Streeterville-Gold Coast-Near North Side area, which has been swept by a gale of condo conversions in the last few years.
The new owner is Streeterville Development Associates LLC, which is controlled by affiliates of Draper and Kramer Inc., Equity Marketing Services (a now-independent former subsidiary of financier Sam Zell’s Equity Group Investments Inc.) and Rubin Construction Corp.
The 51-story, 394-unit building, which was completed in 1990, was purchased for more than $70 million from an investment fund managed by Dean Witter Realty Inc., according to Herbert Emmerman, a principal of Equity Marketing.
“Our intent is probably to submit it to condo conversion,” said Emmerman. The building will be managed by DK/Equity LLC, a Draper and Kramer-Equity joint venture formed for the purpose of taking rental projects condo.
Emmerman acknowledged the conversion would probably contribute to a shortage of rental units in the area, at least until apartment projects on the drawing board are built. But he added there is also a shortage of condos in the area within the price range of people who aren’t rich.
While he hasn’t set firm prices, he said the homes at 401 E. Ontario will go for much less per square foot than, for instance, the Streeterville condos about to be built along the Chicago River by developer Dan McLean, where most of the units are going for more than $250 a square foot at pre-construction prices. The average price is about $711,000.
The 401 building–where rents now average about $1,700–will be upscale but affordable to a “broad market,” including singles, young marrieds and empty nesters who don’t require a huge amount of space, Emmerman said.
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Intriguingly, one apartment building fewer in Streeterville could only be a market boon for Draper and Kramer, which is planning to build an apartment tower a few blocks away at St. Clair Street and Grand Avenue.
“Synergism for them, too,” chuckled Emmerman.
The long view: A former subsidiary of Atlanta-based United Parcel Service of America Inc. has become the owner of two of downtown’s glitziest office buildings.
Overseas Partners Capital Corp. recently acquired 200 W. Madison St., Hyatt Corp.’s headquarters, about a year and a half after buying 333 W. Wacker Drive, the distinctive, curvy green structure on the turn of the Chicago River in the West Loop.
The company is a subsidiary of Overseas Partners Ltd. of Bermuda, a reinsurance group that was set up by UPS as an overnight package insurance funder in the early 1980s and then split off from the giant parcel handler.
The real estate purchases were made for the long haul as a diversification play to go with other investments such as rail car and airplane leasing, said David Byard, the company’s property management executive in Chicago.
“It’s very much in keeping with an insurance company to take a very long view,” Byard said. “It’s the best way to get the maximum value out of a piece of real estate.”
The Deerfield native suggested that downtown Chicago is a great place to make long-term investments in real estate, because, among other things, its buildings are too impressive to disappear.
“Chicago’s got such great architecture. If you’re going to diversify in real estate . . . if you expect to hold forever, Chicago is a great place to do that.”
And all this time you thought Rome was the Eternal City.
Step on it: Seattle-based Starbucks Co. is opening its first Chicago-area drive-through cafe later this summer at 75th Street and Millbrook Lane in Naperville.
Steve Baer, vice president of Litvin/LaRue/Greenfield Commercial Real Estate, the representative for Starbucks in the Chicago suburbs, said the store will be about the same size as Starbucks’ other suburban stores.
The only difference is espresso addicts will never have to walk again.
Sounds like a great place for market research to answer urgent questions, like: Do Toyota drivers buy tall, dry, decaf cappucinos while BMW owners go for grande skim lattes with an extra shot?