State & Chestnut Chicago, Illinois

Newcastle developed a 35-story, 367-unit apartment building in Chicago's Gold Coast neighborhood.

The Need

Loyola University Chicago was seeking to generate capital from the sale of excess land to help fund the development of its School of Business on a parcel adjacent to the site. Loyola chose Newcastle to develop the site from a field of highly qualified, experienced developers.

The Assignment

Newcastle had the opportunity to develop a new apartment building in Chicago’s best rental submarket. The project’s location and proximity to Michigan Avenue differentiated the asset from recently completed, under construction, or proposed projects. Newcastle’s goal was to deliver smaller apartment units with better amenities in an effort to attract Gen Y renters, while maintaining its appeal to older and empty-nester renters. By developing units that are 10% smaller than many competing properties, Newcastle delivered apartments at rents approximately $200 lower than the luxury properties typically being developed. The project planning, underwriting, and rezoning phases were led by Newcastle professionals. Financial, operational, leasing and marketing decisions were organized and directed by Newcastle and informed by an interactive process with external professionals. In the process, Newcastle balanced concern of neighbors, construction & weather challenges, and increasing apartment supply in the market.

The Result

In June 2015, the $120-million project opened on budget with 42% of the units preleased. Upon stabilization, the asset will be a positive, long-term addition to Newcastle’s portfolio, due to its strong financial returns and excellent location.