JLL Arranges $113 Million Debt-and-Equity Package for Downtown Chicago Office-to-Residential Conversion

JLL Arranges $113 Million Debt-and-Equity Package for Downtown Chicago Office-to-Residential Conversion

A vacant 25-story office tower at 500 North Michigan Avenue in downtown Chicago will get a second life as rental housing, after developers Commonwealth Development Partners and Triangle Capital Group closed a $113 million financing for its conversion into 384 mixed-income apartments.

JLL Capital Markets structured the transaction, with Chris Knight, Ryan Planek and Annie Thomas leading the effort. The capital stack pairs $71.5 million in non-recourse construction debt from Santander Bank with $41.5 million of joint venture equity from Washington Capital Management. Crain’s Chicago Business first reported the deal.

The financing arrives amid a broader wave of office-to-residential conversions in Chicago’s Loop, where elevated vacancy has pushed owners to explore alternative uses for aging office stock. The 500 North Michigan project pursues two public incentive tracks: Federal Historic Tax Credits, enabled by the preservation of the building’s 1960s-era architecture, and tax benefits under the Illinois Affordable Housing Special Assessment Program.

The developers’ basis reflects the depressed market for vacant office assets: they bought the building for just $5 million last August. In a related transaction this April, Washington Capital Management acquired 21,565 square feet of ground-floor retail connected to the property from Commonwealth Development Partners for $41 million — nearly nine times the price paid for the entire tower months earlier.

Situated on the “Magnificent Mile” in Streeterville — a neighborhood anchored by Northwestern Memorial Hospital, Lurie Children’s Hospital and the University of Chicago Booth School of Business — the completed project will add more than 250,000 square feet of rentable apartment space. The unit mix comprises 320 market-rate apartments and 64 affordable units. Planned amenities include a rooftop pool, fitness center, coworking space, a theater, ground-floor retail and 60 on-site parking spaces.

Robin Dean of Washington Capital Management described the development partnership as an experienced sponsorship team and called the tower’s location irreplaceable, adding that the firm believes the asset is positioned to serve sustained housing demand in downtown Chicago.

JLL’s involvement underscores the continued role of brokerage capital markets desks in assembling complex conversion financings. The company, a commercial real estate services and investment management firm, recently traded at $340.61, up 1.26% from its prior close of $336.38, with a market capitalization of roughly $15.8 billion.

Construction began in May 2026, with completion targeted for March 2028.

What to watch

• Confirmation of Federal Historic Tax Credit approval for the project.
• Leasing progress and pre-leasing momentum as units deliver in early 2028.
• Additional office-to-residential conversion financings in the Chicago Loop, which may signal broader lender appetite for the asset class.

Source: original release