River City, University Center signal changing South Loop landscape
October 6, 2017

Mark Realty Capital wants to turn River City condominiums into apartments
and has tendered a $100 million buyout offer to current owners.

By Rick Romano

Proposed changes to two South Loop buildings signal an evolving economic landscape and the area’s continuing residential and commercial growth.

River City, the mixed-use structure at 800 S. Wells St., has 449 condominiums and street-level businesses. Condo owners are weighing a $100 million buyout to covert the building to apartments.

Officials from three local institutions recently sold University Center, the housing at 525 S. State St. for their schools’ students, garnering more than $200 million while the site remains primarily student focused.

From condos to apartments 

At River City, the $100 million purchase offer comes from Marc Realty Capital, which previously has offered $81.47 million and $92.2 million to buy the site. Neither of those earlier offers gained the approval minimum of 75% of owners required by Illinois statute.

Condo association attorney Kelly Elmore of KSN, a condo specialty practice in Chicago, said officials will know the vote total after the Tuesday, Oct. 24, deadline.

“With a lot of owners out of town, this takes a lot of time,” Elmore said.

Marc Realty Capital and the condo association both declined to comment, but a real estate expert and area community group representatives offered their views regarding the transaction. They said the condo-to-apartment tran-
sition has become a common trend and began when the real estate market collapsed in 2008.

“The collapse was only part of the move away from condos,” said Doug Imber of Essex Realty Group. “Lenders did not want to make loans where more than 50% of the units were being rented out. Many original condo owners moved for various reasons, such as job changes and getting married, and they were not able to sell. It became a bigger and bigger risk for the lenders.”

Imber said a State statute gives condo owners some protection, allowing them to weigh offers on their merit rather than feeling they have to settle for a lot less.

Another attraction for those opting for apartments over condos is the financial commitment, he added.

“A lot of people are attracted to downtown, including young professionals just starting out and those who are older who don’t want the same level of responsibility as they had in their homes,” he said.

Dennis McClendon, a longtime member of South Loop Neighbors, said the residential model does not matter in a place like River City. He is more concerned about a developing river walk.

“It doesn’t matter who owns them,” McClendon said. “It matters whether there will be a continuation of the river walk or whether it will be a sea wall and an interruption in that area.”

The Riverline development, which broke ground a year ago next to River City, is developing riverfront housing as well as river- and street-level businesses. Developers and local leaders are targeting a number of existing buildings for expanded commercial development. McClendon said River City has about 70,000 square feet of business space, with room for more.

Despite having been sold, University Center will continue to house students from three schools.

Josh Ellis, development chair of the Greater South Loop Association, agrees. He said his neighborhood perspective welcomes anything that helps create a diverse culture.

“River City is an iconic building, and its transition is natural in the grand scheme of things,” Ellis said. “The Riverline will involve the construction of multiple buildings, and it will be a mix of condos, apartments, and townhomes. I generally feel it is good for the neighborhood to have a diverse range of residential units that attract those who are single, couples, and families. There are a lot of options.”

Ellis said South Loop development “has been going at breakneck speed” since the 1990s.

“Many of those who live in South Loop work downtown, which is immediately accessible,” he said. “Many are renters, and I don’t feel that is an issue. Now, we would love to see more families put down permanent roots, but many renters also are involved in the area as a safe and diverse neighborhood for themselves and their family members.”

A place for students

Though officials recently sold University Center, the structure built in 2004 as a “super dorm” for students at De Paul University, Roosevelt University, and Columbia College will continue to function in part as student housing. Together, as part of the sale agreement, the schools will lease 1,200 of the building’s total 1,700 beds.

The schools are sharing the building’s sale proceeds of $201 million. Anjali Julka, senior communications manager for Columbia, said the schools’ Education Advancement Fund received $74 million while using $127 million to pay down the housing facility’s debts and bonds.

The ownership change will not affect living arrangements for students, said Carol Hughes, executive director of news and integrated content at De Paul.

“They will continue to enjoy the same high quality of housing,” Hughes said.

Blue Vista Capital Management acquired University Center as part of a joint venture with AXA Investment Managers.

Paul Sorenson, head of Blue Vista’s student housing business, said, “University Center Chicago is a unique facility” and pointed to various amenities such as dining, conference, and fitness facilities as well as 28,000 square feet of street-level retail.

Two sides to growth

Aldermanic reaction to the latest developments remains minimal. Ald. Danny Solis of the 25th Ward, which includes River City and the Riverline project, did not respond to several Gazette Chicago interview requests.

Prentice Butler, chief of staff for Ald. Sophia King of the 4th Ward, which includes University Center, did not want to comment specifically on any developments. He did say that Ald. King always takes into account reaction from existing residents and businesses when new development is proposed. The issues usually focus on parking and street traffic, he said.

“With any kind of development, there needs to be a balance,” he said.