By Barbra Murray, Contributing Editor?
It?s a new day for the project at 111 W. Wacker Drive in downtown Chicago. The multi-family development, which fell victim to the financial collapse in 2008 and has sat in a semi-completed state ever since, moves closer toward realization now that its new owner has secured $115 million in construction financing for the 504-unit luxury rental high-rise. Related Midwest obtained the loan from U.S. Bank.
Related acquired the property at 111 W. Wacker last year and entered into a joint venture with Clark Wacker L.L.C. to revive development at the site. Timing is everything and 2008 was not the right time for the condo-hotel that had been planned for the parcel. The original vision for the project, known as Waterview Tower under previous owner Waterview L.L.C., had called for a 90-story tower featuring upscale for-sale residences and a Shangri-La hotel. While the commercial real estate has bounced back, the condo-hotel craze seen five years ago has not. However, the apartment sector is on fire and the 60-story high-rise Related is building will sprout up in a market where demand is strong and growing stronger.
At mid-year, the vacancy rate in Chicago proper had dropped for the 13th consecutive quarter to 4.4 percent, according to a report by Marcus & Millichap Real Estate Investment Services, giving the city an edge over the national vacancy rate of 4.7 percent. By year?s end, the vacancy rate in the city is expected to decline to 4.3 percent.
Renters in the luxury market want it all and Related intends to deliver. In addition to premier residential units, the 950,000-square-foot tower at 111 W. Wacker, designed by Handel Architects L.L.P, will feature approximately 440 parking spaces and street-level restaurant and retail offerings.
Having coughed up a tidy sum, clearly U.S. Bank sees a strong future for 111 W. Wacker. U.S. Bank served as the lead lender on the loan transaction, while Bank of America took on the role as syndication agent. The development falls into a national category that lenders find most attractive these days.
?Pipelines of under way and planned apartment projects are expanding in many metro areas and several major lenders appear willing to underwrite construction on select projects,? William E. Hughes, senior vice president with Marcus & Millichap, said in the report. ?The primary considerations for lenders include the quality of sponsorship and strong market fundamentals, including low vacancy and rising rents.?
Related is on track to commence vertical construction of 111 W. Wacker early next year and open the doors of the apartment property in 2014
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