CHICAGO—As developers continue launching new apartment projects near downtown, mixed-use developments that satisfy residents' growing demand for entertainment and retail are cropping as well. The South Loop has become one of the hottest submarkets, and that's giving new life to some of its historic structures.
Commercial real estate investment banking firm Continental Partners recently secured a bridge loan on behalf of KCI Co., a private investor, for the acquisition of a 115,000 square-foot industrial building at 2222 S. Michigan Ave. along the South Loop's landmark Motor Row. The new owner plans to reposition the former auto showroom into a class A, mixed-use property, according to Eugene Rutenberg, director at Continental Partners.
“This was a highly opportunistic deal,” Rutenberg tells GlobeSt.com, and it “had to close quickly to meet the seller's demand. The challenge was that most lenders were unable to provide the amount required due to the short time frame, and the fact that the transaction needed to close during the winter holiday season, which created a further hurdle as there was no time to obtain an MAI-certified value.”
The $7 million loan with an interest-only amortization was priced at LIBOR + 750. According to Cook County records, the purchase price was $10 million and the lender was Chicago-based Pangea Mortgage Capital, LLC.
Rutenberg says it was important that a deal like this had a local lender. Unlike lenders from NY or CA, Pangea officials were comfortable closing quickly because they understood the true potential of properties in Motor Row. “They didn't need an appraisal.”
More than 1,900 hotel rooms are under construction in the area, Rutenberg adds, along with about 3,200 apartments. And, as reported in GlobeSt.com, since 2014 many Motor Row properties have changed hands.
“Motor Row sits in the McCormick Square entertainment district, an area which is undergoing tremendous revitalization and is on track to become a new Chicago hotspot,” Rutenberg says.
KCI plans to renovate both the interior and exterior of 2222 S. Michigan, and will use the first floor as a high-end restaurant and entertainment venue. The second, third and fourth floors will hold co-working office spaces, a gym, and perhaps a boutique-type hotel.
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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.
