July 18, 2016

University of Chicago sells Hyde Park dorms

By Alby Gallun

The University of Chicago continues to unload student housing, selling three buildings near its Hyde Park campus as it seeks buyers for more.

3L Real Estate, a Chicago real estate investment firm, said it has acquired the three residence halls totaling 391 units from the university, 3L's first acquisitions since it was founded last year. The buildings have been operated as undergraduate dorms, but the school no longer needs them because it's opening a new 800-bed dorm designed by Jeanne Gang on the northern end of its campus.

The university has been selling off its housing partly because the Hyde Park real estate market is so strong, allowing it sell out for high prices and reinvest the proceeds in teaching and research. Last October, the U of C sold 21 buildings with about 690 apartments for graduate students and faculty to Pioneer Acquisitions, a New York-based real estate firm. In May, the university also hired brokerage HFF to sell a real estate portfolio including 11 buildings with 394 units for graduate students, faculty and staff.

3L bought a 187-unit building at 5540 S. Hyde Park Blvd; a 123-unit building at 5445 S. Ingleside Ave., and an 81-unit property at 5748 S. Blackstone Ave. 3L declined to disclose a purchase price. An executive at HFF, which brokered the sale, did not return a call.

3L said it will run them as dormitory-style rentals for the 2016-2017 academic year before redeveloping the buildings.

“Our priority is to provide quality living spaces that are financially viable for young and active people who seek out popular neighborhoods like Hyde Park, but find the price point way beyond their means,” 3L founder and CEO Joseph Slezak said in a statement. “We are catering to students, recent graduates and a young and growing workforce who want walkable neighborhoods, transportation, nightlife and lake shore access at a price that allows them to actually get out and enjoy those community assets.”

Slezak founded 3L after a roughly 16-year career at BJB Partners, a Park Ridge-based apartment landlord.

The university, meanwhile, is still in the process of selling a third real estate portfolio. It includes 394 units with 520 bedrooms, one retail building and six land sites, currently either vacant or used as parking lots, according to an HFF flier. The university bought the properties, some of them decades ago, to ensure it had enough good housing near its campus.

“As demonstrated by the University's sale of residential properties last summer, the real estate market in the areas surrounding campus is now strong enough to attract a number of potential investors and support a range of residential options,” James Hennessy, the university's associate vice president for commercial real estate, said in a statement in April.

5748 S. Blackstone Ave. is one of the buildings 3L Real Estate bought from the U of C.