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A development group plans about 500 apartments on the near West Side, convinced it can fill them with workers and students from the Illinois Medical District and University of Illinois at Chicago.
The joint venture of Guggenheim Real Estate, Atlantic Realty Partners and Focus Development wants to build two towers with roughly 250 units each next to the Medical District Apartments, a 410-unit property just east of the IMD, said Atlantic President and CEO Richard Aaronson.
Sitting between the medical district and UIC, the property at 901 S. Ashland Ave. offers an appealing location for people who work and study at the school and IMD institutions. And it's steps from the restaurants and nightlife of Taylor Street.
Aaronson is especially high on the medical district, which employs about 30,000 people now. That number's expected to rise as Rush University Medical Center and other medical institutions there expand.
“We've got a situation where we have huge job growth and pent-up demand for new rental product,” he said.
Boston-based Guggenheim, which has owned the Medical District Apartments since 2004, recently formed the joint venture with Atlantic, which is based in Atlanta, and Northfield-based Focus in a deal that values the existing property at $111 million. KIG, a Chicago-based brokerage, arranged the deal.
The West Side property, which covers 5.6 acres, includes a pair of 12-story apartment buildings flanked by two parking garages. Built in 1972, the apartment buildings are 94 percent occupied.
The development group first plans a major renovation of the existing apartments that will include new flooring and kitchen and bath rehabs. It then wants to build the two rental buildings where the parking garages currently stand, one at the corner of Ashland and Polk Street and the other one at Ashland and Taylor.
Aaronson estimates the towers, which it would build one at a time, would cost about $75 million each.
“This site offers tremendous upside potential through a combination of value-add renovation and ground-up development,” Susan Tjarksen, principal and managing broker at KIG, said in a statement.
Planning is still in the early stages, and the developers will need a zoning change from the city. As part of that process, they presented their proposal a couple months ago at community meeting hosted by Ald. Jason Ervin (28th), who represents the area, Aaronson said. He expects the alderman to hold another community meeting on the project sometime soon.
The area has caught the attention of other developers. Just west of John H. Stroger Jr. Hospital, Chicago developer Jack Higgins plans a 1.2-million-square-foot mixed-use project that would include 200 apartments. And a group led by Chicago developer John Murphy is working on a redevelopment of the old Cook County Hospital into a hotel and about 150 apartments.
“You've got so much embedded demand in that market that it's almost staggering,” said Murphy, president of Chicago-based Murphy Asset Management and vice chairman of MB Real Estate Services.
Murphy and Aaronson say demand has outpaced supply, a situation exacerbated by the recent demolition of about 300 units of student housing to make way for a new $500 million Rush outpatient center.
“It really implies a supply imbalance situation,” Aaronson said.
Atlantic Realty and Focus have teamed up with each other on other Chicago projects, including the Reserve at Glenview, a 239-unit apartment development in Glenview; Parker Fulton Market, a 227-unit apartment tower in the West Loop; and a proposed 245-room extended-stay hotel next door.
The address of the property has been corrected.