Between medical personnel, support staff, students, and others in allied fields, there’s always been a big demand for housing in the Illinois Medical District area. At the same time, there’s been precious little large-scale development in the area.
But the development frenzy that is echoing from downtown Chicago into the neighborhoods is finally reaching this corner of the city with a project from Guggenheim Real Estate.
You may know the company’s Medical Center Apartments as the pair of 12-story buildings on the east side of South Ashland Avenue between Polk and Taylor Streets. Each tower is accompanied by an immense low-rise parking deck.
KIG has put together $111 million in financing to renovate all 410 apartments in the project. And according to Crain’s Chicago Business, an expansion is also in the works.
That would involved replacing the park of low-slung 1972 parking garages with two more apartment towers of about the same size.
More details in the press release that follows.
KIG Arranges $111 Million Joint Venture Partnership for 5.65-Acre Mixed-Use Development on Chicago’s Near West Side
Multiphase project in Illinois Medical District to include rehab of 410-unit Medical District Apartments, additional residential components
CHICAGO — KIG, Chicago’s leading commercial real estate brokerage firm specializing in institutional multifamily properties throughout the Midwest, today announced it has arranged an $111 million joint venture partnership to invest in and renovate Medical District Apartments, an existing 410-unit rental community in the heart of the Illinois Medical District on Chicago’s Near West Side, and ultimately develop a larger mixed-use project on the site. The new venture includes the property’s owner, Guggenheim Real Estate LLC (GRE), as well as Atlantic Realty Partners and Focus Development Inc.
Located along Ashland Avenue between Polk and Taylor streets, the approximately 5.65-acre property includes two 12-story residential towers, as well as a pair of two-story garage decks under consideration for redevelopment. In addition to repositioning the existing apartment buildings, which were built in 1972, the joint venture is proposing a multiphase development that would include a mix of residential unit types.
“This site offers tremendous upside potential through a combination of value-add renovation and ground-up development,” said Susan Tjarksen, principal and managing broker at KIG. “The joint venture between GRE, Atlantic Realty Partners and Focus Development will allow each to capitalize on continued demand for rental housing in downtown Chicago, particularly in areas like the Illinois Medical District, where high-quality jobs and public transportation are easily accessible. Ongoing investment on the Near West Side, including the proposed redevelopment of the Cook County Hospital, will only raise the profile of the neighborhood – and underlying real estate values – in the months and years ahead.”
GRE selected Atlantic Realty Partners and Focus Development’s joint equity, development and construction plan from a pool of eight potential partners sourced by KIG. Atlantic Realty Partners, based in Atlanta, and Northfield, Ill.-based Focus Development will co-develop the property, while Focus Construction will serve as the general contractor for the rehab and new construction. Tjarksen and KIG Managing Partner Todd Stofflet led the team that represented GRE in the formation of the joint venture.
Currently 94 percent occupied, Medical District Apartments includes a mix of studio, one- and two-bedroom apartments in a highly accessible location, steps from Rush University Medical Center, the University of Illinois at Chicago and several major bus and rail lines. In addition to jobs throughout the Illinois Medical District, which employs approximately 30,000 people, the property offers convenient access to nearby employment centers, including the central business district and West Loop, which has attracted high-profile employers like Google and McDonald’s. Also nearby are popular shopping, dining and entertainment destinations, including Taylor Street’s restaurant row and the United Center, approximately 1 mile northwest of the property.
“It’s very rare to find an infill opportunity like this that has ‘eds and meds’ job growth coupled with a declining rental housing stock stemming from the Rush expansions,” said Richard Aaronson, president and CEO of Atlantic Realty Partners. “This project checks all the boxes for us: value-add, TOD, retail adjacency and walkability. We are excited to bring new investment and new housing options to the Little Italy/University Village neighborhood.”
“The strong performance of the asset and the combination of adjacent institutions, transit resources, and the rich backdrop of the Little Italy neighborhood make the opportunity highly attractive,” said Tim Anderson, president and CEO of Focus Development. “We are thrilled to invest alongside our partners in this dynamic community.”
As part of its capital improvement program, the joint venture plans to enhance residences at Medical District Apartments with new flooring and upgraded kitchens and baths. Select common areas will also be updated as part of the renovation. Current amenities include an outdoor pool and sundeck; fitness center; business center; lobby with concierge and complimentary WiFi; bike room and garage parking.
“This partnership offered GRE an excellent opportunity to unlock additional value in what historically has been a strong-preforming asset, with occupancy consistently above 94 percent,” said Stofflet. “The renovations to the existing towers will allow ownership to increase rents and better compete with nearby rental properties while offering a relative value to new construction. The additional land gives the venture maximum flexibility to pursue a phased development tailored to needs of the surrounding neighborhood, which until recently, has been underserved in terms of new retail and residential investment.”
Due to the property’s proximity to public transportation – Medical District Apartments is less than a quarter-mile from the Polk Pink Line station and within walking distance of the Blue Line – future phases of the project may be eligible for incentives under the city’s transit-oriented development ordinance. The renovation of the existing residential towers is scheduled to begin in third-quarter 2016.