Horizon Realty Group Brings Rooftop Pickleball: In a growing trend of converting under-utilized office spaces into residential properties, Horizon Realty Group is undertaking a project that will transform its seven-story office building in Streeterville into 72 loft-style apartments. The project represents the real estate firm’s first office-to-residential conversion, as more companies in Chicago seek to capitalize on vacant office spaces.
A New Chapter for the Pelouze Building
Horizon purchased the historic Pelouze Building, located at 230 E. Ohio St., for approximately $5.6 million in September. The office space had been largely vacant, with an occupancy rate of about 65% when Horizon acquired the building.
Horizon’s Chief Operating Officer, Jeff Michael, explained that the previous owner was keen to sell, with little interest in pursuing new office tenants due to the changing dynamics of the commercial real estate market.
“There’s not the same demand for office use as there once was.” – (Jeff Michael)
According to Colliers, a commercial real estate firm, the vacancy rate for older Class B office properties, like the Pelouze Building, stood at 30% in the third quarter of this year, slightly higher than last year’s 29.8%. In contrast, Class A properties, which are newer and have modern amenities, had a lower vacancy rate of 18%, indicating a continued demand for high-quality office spaces.
Keeping Commercial Space and Adding Luxurious Amenities
The Pelouze Building, originally the offices of Pelouze Scale & Manufacturing Co., will retain its ground-floor commercial tenants, including a Thai restaurant and an optometrist. Horizon believes the building benefits from its mixed-use nature, situated in a mostly commercial corridor.
The new apartments will feature a mix of studios, one- and two-bedroom units, maintaining the building’s historic loft aesthetic. The development will also include a rooftop sundeck and two pickleball courts, a unique addition that Horizon hopes will set the building apart in the competitive downtown Chicago real estate market.
“There’s not many buildings that have rooftop pickleball in the middle of downtown Chicago with great views.” – (Jeff Michael)
The project will also offer a suite of amenities, including a gym, resident lounge, and yoga room.
Looking to the Future: Investment and Timeline
Horizon estimates an investment of $15 million to $20 million for the project, which will be privately financed. Construction is slated to begin in January, with the project expected to be completed by 2026.
This project marks Horizon Realty Group’s first foray into converting office space into residential units. Historically, the firm has specialized in transforming old hotels into apartments, a process that has become their core business. The company currently manages more than 20 apartment complexes across Chicago, with a heavy concentration on the city’s North Side.
Despite not initially seeking a conversion project in Streeterville, Horizon was drawn to the Pelouze Building because of its location, layout, and existing infrastructure. Its proximity to the University of Chicago Medicine’s River East hospital, Northwestern University’s Feinberg School of Medicine, and its law school makes it an appealing location for potential residents.
“I think there’s a good population base that will need this type of product. There hasn’t been a lot of new construction there in Streeterville.” – (Jeff Michael)
News in Brief: Horizon Realty Group Brings Rooftop Pickleball
Horizon Realty Group is converting the historic Pelouze Building in Chicago’s Streeterville neighborhood into 72 loft-style apartments. The $15-$20 million project will feature rooftop pickleball courts and luxury amenities, including a gym and resident lounge.
The building, purchased for $5.6 million in September, will retain its ground-floor commercial tenants. Construction is expected to begin in January, with completion anticipated by 2026. This marks Horizon’s first office-to-residential conversion project, following their success in transforming old hotels into apartments.