Developers planning to convert a high-vacancy office building near Chicago’s Magnificent Mile retail corridor to 252 apartments have secured more than $90 million in financing, a key step for a property that has encountered multiple financial setbacks in recent years.
Chicago developer Mavrek and Acres Commercial Realty Corp. said they have closed on financing for the conversion of the 24-story tower at 65 E. Wacker Place. The deal included a $62.4 million loan from Derby Lane Partners, $11 million from Hoyne Savings Bank and more than $17 million in federal and state historic tax credits monetized through PNC Bank, according to a statement.
Interior construction is poised to start on the redevelopment, called Wacker Place, the firms said.
It is the latest example of developers in Chicago targeting office properties for residential conversions amid historically low demand. In a nearby example, a Connecticut-based developer recently completed the purchase of the office portion of the 24-story tower at 500 N. Michigan Ave. with plans to convert it to 320 apartments.
Mavrek and Acres are adding a new chapter to the building at 65 E. Wacker that began as the Millinery Mart Building and later became home to the offices of Esquire Magazine.
Most recently it has been known for a Morton’s steakhouse, which will remain at the base of the tower.
An affiliated company, Uniondale, New York-based Acres Capital, previously seized the tower from two separate owners in a period of 2½ years in a dramatic example of financial distress faced by office landlords in the past several years.
Most recently, Rochester, New York-based Intersection Realty Group planned a residential conversion before defaulting on a $14 million loan from Acres. That developer forfeited the property to Acres via a deed in lieu of foreclosure, a voluntary move that allows the lender and borrower to avert the lengthy foreclosure process.
Mavrek and Acres plan to redevelop the nearly century-old tower into luxury apartments. The developers plan to add a coworking lounge, fitness center and rooftop deck with views down the Chicago River.
“This project is about more than just bricks and mortar — it’s about breathing new life into one of Chicago’s historic structures while honoring its architectural legacy,” Mark Fogel, CEO of Acres, said in the statement. “By transforming this former office building with the help of the state and federal historic tax credit programs, we’re creating a vibrant, sustainable space that meets the needs of today’s communities while preserving the character that makes Chicago unique.”
For the record
The financing was arranged by Chris Knight of JLL Capital Markets. The general contractor is McHugh Construction. The redevelopment is designed by Pappageorge Haymes Partners.