River North loft offices sell for $15 million
A River North loft office building sold for $15 million, a deal the developer says is part of a plan to narrow its focus to apartments.
Chicago-based Cedar Street sold the six-story building at 303 W. Erie St. to New York-based Alvarez & Marsal Property Investments. The $15 million deal was completed Jan. 30, said Cedar Street co-founder and Managing Partner Alex Samoylovich.
The approximately 70,000-square-foot building is almost fully leased to small office tenants and Concrete Cowboy, a bar and restaurant set to open on the ground floor sometime this year.
“We’re selling off noncore assets so we can focus on developing Flats,” Samoylovich said of Cedar Street’s apartment brand. “We believe it’s an opportunistic time to sell, and we want to focus on Flats’ multifamily and mixed-use developments.”
Some investors have cashed out for larger gains in River North, driven by increased demand for loft office space by technology and creative tenants.
In a deal late last year, Chicago-based Brijus Capital sold a building on the same block of Erie for more than $35 million, or more than four times what Brijus paid in 2013. That property required more extensive work as it was converted from a half-empty warehouse to modern offices.
The firm owns a large portfolio of apartments, mostly in North Side neighborhoods such as Uptown, Edgewater and Andersonville. Cedar Street also is kicking off its first development in Ravenswood.
The company says it has about 5,000 apartment units in operation and under development. It may sell another 10 to 15 office, retail and industrial properties in the next two years, Samoylovich said.
A Cedar Street venture acquired 303 W. Erie for $11 million in 2012 and bought the business that occupied the ground floor, the Hop Haus gastropub. Cedar Street replaced that concept with Mercadito Hospitality’s Tippling Hall.
That bar and restaurant closed in 2015, after just a year in business.
New York-based Alvarez & Marsal Property Investments was in talks to buy 303 W. Erie for about two years and worked with Cedar Street to bring in a new ground-floor tenant before completing the acquisition, said Michael Marsal, founding partner of the real estate investment firm.
“A lot happened since our initial interest in the building,” Marsal said. “Tippling Hall was still open when we first started talking. It was part of the deal to make sure that space was leased.”
Alvarez & Marsal’s purchase price includes the assumption of a loan on the property, Marsal said.
The deal includes a 7,500-square-foot parking lot, Samoylovich said. There are no immediate plans to redevelop the lot, Marsal said.
The River North deal was Alvarez & Marsal’s second in as many months in Chicago. In December it paid almost $29 million for a 23-story vintage office building at 205 W. Randolph St. in the Loop.
Alvarez & Marsal also is part of a venture that owns the office building at 205 W. Wacker Drive, where it is planning a new food hall.
Crain’s Chicago Business | Ryan Ori