Why this building's days may be numbered
After buying a low-rise retail building in the South Loop, Buzz Ruttenberg is happy to collect rent for the time being. But he's already dreaming what he could build in its place.
A venture led by the Chicago developer paid $7.9 million for the 8,400-square-foot building at 400 S. Financial Place, which he expects to tear down someday to make way for a tall tower.
"It could be office, it could be condos, it could be small rentals that cater to students," said Ruttenberg, founder of Belgravia Group, a Chicago-based developer that specializes in residential projects. "We'll see."
Ruttenberg bought the one-story building in a joint venture with North American Real Estate, a Schaumburg-based retail investor and developer, according to Stan Johnson, the New York-based brokerage that sold the property. They acquired the building from a venture led by Fort Lauderdale, Fla.-based investor Lawrence Oberman, according to Cook County property records.
Current zoning for the South Loop property does not limit the height of a tower a developer could build there, Ruttenberg said. The neighborhood is undergoing a transition. The property is on the southern edge of the downtown office market, sitting across the street from the Chicago Board of Trade Building and a few blocks east of the gargantuan old Main Post Office, which a New York developer is converting into offices.
The area is also becoming more residential. A tall condo tower stands just west of the retail building, whose tenants include a Subway and Dunkin' Donuts. A few blocks south, Chicago developer CMK has begun construction on the first of several buildings in Riverline, a 3,700-unit housing development along the Chicago River.
"It's a very attractive site with a variety of alternative uses that will only get more attractive with time," Ruttenberg said.
He's in no hurry, saying he doesn't expect to build anything there for at least five years. With tenants in place, he said he's happy to earn a 7 to 8 percent return on the property in the meantime.
"The opportunity to acquire a (property) that benefits from strong immediate cash flow and combined with substantial long-term redevelopment upside, is simply a rare opportunity in today's marketplace," Brandon Duff, regional director at Stan Johnson, said in a statement.