A year after investing $170 million in a brand-new apartment complex in the South Loop, Waterton has acquired another sizable residential development located less than a block away.
According to a statement from the business, the 346-unit Alta Grand Central apartment complex at 221 W. Harrison St. has been acquired by the Chicago-based investment group. A joint venture led by Chicago-based D2 Realty and Atlanta-based Wood Partners purchased the land from Waterton in 2020 after the two connected 14-story structures south of Willis Tower were developed.
Another Wood Partners building in the South Loop, located at 801 S. Financial Place, cost Waterton $170 million last year. The property was renamed the Elle.
The majority of completed transactions have demonstrated the damage that increased borrowing rates have caused to real estate values; late this year, prices for a few houses in the Loop and Streeterville were significantly lower than their pre-pandemic values.
The Alta Grand Central property was described in the statement as “a compelling opportunity to acquire a newer vintage property at an attractive basis” by Waterton Senior Vice President of Acquisitions Julie Heigel. She added that properties similar to the Elle are drawing in renters who are looking for an upscale rental experience while still being within close proximity to the South Loop neighborhood.
Waterton has strong reason to be optimistic about the future of downtown apartments, even with the challenges facing property values. Not only are rentals for premium, or Class A, apartments in the downtown area at all-time highs right now, but a sharp decline in apartment project building starts over the previous year indicates that the supply of new units may soon slow down. Over the next years, landlords should have more pricing power as a result of this.
In its statement, Waterton highlighted “third party research” that showed that while 33,000 more people are anticipated to move to Chicago over the next four years, fewer than 8,100 additional housing units are anticipated to be finished.
In May, marketing materials from brokerage Newmark stated that while the property had maintained a 93% occupancy rate, Alta Grand Central’s effective gross income had climbed by 22% over the preceding 12 months.
Since the start of the COVID-19 pandemic, Waterton, who owns thousands of flats in the Chicago area, has placed some significant wagers on recently constructed downtown high-rises. The Shoreham and Tides apartment buildings in Lakeshore East were purchased by the corporation in 2021 for a sum greater than $388 million. The 2,346-unit, four-building Presidential Towers complex in the West Loop is also owned by Waterton.
According to the corporation, Waterton had around $10.8 billion in real estate assets in its nationwide portfolio as of the middle of the year.
On behalf of D2 Realty and Wood Partners, Newmark agents Liz Gagliardi and Chuck Johanns promoted the Alta Grand Central property for sale.