In a bold bet on a real-estate revival and victory over the pandemic, developer Sterling Bay said Thursday it has closed on $174.5 million in financing to start construction at 300 N. Michigan Ave.
In partnership with Magellan Development Group, Sterling Bay plans a 47-story building with 289 residences. It also will include a 280-room hotel to be purchased by the citizenM brand upon completion of the building, expected in about two years.
Construction is due to start in August. Sterling Bay CEO Andy Gloor said his team overcame many hurdles to secure financing when worries about the economy have put other construction plans on hold.
In the case of hotels, new construction is almost unthinkable now because COVID-19 shutdowns have caused demand for rooms to plummet. Many experts think it may take years for tourism to rebound, assuming a vaccine or effective treatment make travel and large-scale gatherings attractive again.
Executives said the project’s prominent location near Millennium Park on Chicago’s best-known streetwall makes the deal a sound investment despite the current crisis. The lower levels will offer 25,000 square feet of what Sterling Bay called “flagship retail space.”
“Securing a construction loan of any dollar amount in today’s business climate is a feat, but to secure financing of this magnitude — especially for a property that includes significant involvement of a hotel operator — is almost unheard of,” said Stephen Quazzo, CEO of Pearlmark Real Estate.
Pearlmark is providing financing with Bank OZK, formerly Bank of the Ozarks, and Monroe Capital. There also was a crowd-sourced campaign through CrowdStreet.
Sterling Bay already has demolished a four-story brick building on the property. The lead designer for the high-rise is bKL Architecture.
The developers have agreed to pay $3.9 million into the city’s Neighborhood Opportunity Fund, which supports commercial improvements on the South and West sides.
