Local developer and investor Sterling Bay has closed $174.5 million in financing for the construction of 300 N. Michigan Ave., a $250 million, 47-story mixed-use tower in downtown Chicago that the company is building in partnership with Magellan Development Group.
300 N. Michigan Ave. is located just south of the Chicago River and its Riverwalk and just a short walk from the Magnificent Mile. The project will include 289 residential units, 25,000 square feet of flagship retail space and a 280-key hotel that will be purchased by citizenM upon the building’s completion.
The development’s capital structure includes senior-secured financing from Bank OZK, a regional bank based in Little Rock, Ark.; $24.5 million in mezzanine financing from Pearlmark Real Estate and Monroe Capital; and a crowd-sourced equity component fundraised through CrowdStreet.
A recent report in Commercial Property Executive detailed both the growing volume and acceptance of commercial real estate crowdfunding and the likely impending shakeout in the niche.
Sterling Bay has already demolished the former four-story masonry structure that previously occupied the site, a company spokesperson told Commercial Property Executive. This will allow Chicago-based general contractor Linn-Mathes to start construction in August. Local design firm bKL Architecture is the project’s lead architect.
A sector in turmoil
Another fillip in the project’s financial picture is Sterling Bay’s $3.9 million payment into Chicago’s Neighborhood Opportunity Fund, which the city uses to support small businesses in underserved neighborhoods on the South and West sides.
It was just last summer—or an eon ago for the hospitality industry—that Sterling Bay opened the 200-key Hyatt House West Loop–Fulton Market in the eponymous neighborhood near Chicago’s CBD.
The U.S. multifamily sector was in good shape entering the first quarter, according to an April report from CBRE, with “relatively low vacancy, solid rent growth and dynamic investment and financing activity.” Since then, obviously, the overall economy has veered toward recession because of the COVID-19 pandemic.
Still, based on figures from the end of the first quarter, Chicago was solidly among the markets where demand was outstripping new supply. Net absorption over 12 months was 138.3 percent of completions over the same period, while rent growth year-over-year was 2.0 percent.