CHICAGO- Last Monday, GlobeSt.com reported that a joint venture of Chicago-based Marc Realty Residential LLC and Atlas Real Estate Partners and Angelo Gordon & Co. of New York City bought a 330-unit student-housing tower at 2 E. Eighth St. for $59 million. A story in Crain's also quoted Robert Bronstein, president of the Scion Group LLC, a Chicago-based student housing investor, who critiqued the joint venture's plan to market the tower to companies as a summer housing option for interns or other employees, saying “they underestimate the marketing and turnover costs of what is essentially an extended-stay hotel.”
That statement obviously irritates the joint venture partners a bit. “We've been doing summer leasing for the past five years,” says David L. Ruttenberg, a principal of MRR. “We have a deep knowledge of this market.” He adds that the immediate neighborhood only contains a couple of buildings that can compete in the summer with their new building. “There's more demand than supply. We know it's there; this is not a guess.”
“If anyone knows this market, it's Chicago Apartment Finders,” says Arvind Chary, a managing principal of Atlas. Two of MRR's principals also own CAF, the huge residential leasing brokerage. “We have no doubt we're going to be successful filling these apartments this summer.”
Ruttenberg also feels that they picked up the building at a good price. “The construction costs for a product of this size would be $300,000-a-unit.” But for 2 East 8th, on a per-unit basis the partners paid about $180,000, he says. In that neighborhood “it's a very rare thing.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
