Chicago Condo Project Re-Purposed Into Warehouse
- Sep 17, 2010
Dees Stribling, Contributing Editor
Chicago–A good many condominium projects came to a screeching halt with the onset of the recession and the housing market contraction, leaving a number of vacant sites in markets nationwide. But there have been some intended condo projects that have been successfully repositioned away from intended multifamily uses, such as 1260 W. Madison in Chicago.
Recently, the entire 45,000-square-foot building was leased by SkinnyCorp L.L.C., the parent company of a company called Threadless, an Internet-based purveyor of custom-designed T-shirts, which will use the facility as distribution and office space. Representing the new owner of the building in the lease was Chicago-based HSA Commercial Real Estate, while Jones Lang LaSalle represented SkinnyCorp/Threadless in the deal.
The transaction involved a change of ownership as well as a zoning reversal to accommodate a light industrial user. The 1260 W. Madison facility is a former FedEx property acquired from a Milwaukee bank by Chicago-based JRG Capital Partners L.L.C. in a loan sale auction last year.
The previous owners had planned to redevelop the property into condominiums, which had been a popular development strategy on the near West Side of Chicago during the 1990s and into the mid-2000s. But in more recent years, the market for such condos cratered.
“After JRG Capital Partners acquired the mortgage from the bank, it was able to obtain the deed for the property in exchange for forgiving the mortgage-holder’s debt,” Wayne Shulman, senior vice president of HSA Commercial Real Estate, tells MHN. “The original mortgage-holder was able to free itself of the property and make the bank happy to get the loan off its books. JRG saw the opportunity to acquire an attractive site and had the patience to re-tenant it.”
Rezoning was required before the property could be repurposed for commercial use, Shulman adds. “The new owners stepped in at the ideal time,” he says. “We were able to guide the deal through a loan sale and deed-in-lieu-of-foreclosure, and reversed the zoning from residential back to the property’s original zoning for commercial use. These steps were required to position the property for an appropriate use in the current market.”