By Lee Kiser
Principal of Kiser Group
Last week, I saw something that left me speechless (for those of you who know me, something that rarely happens). I walked through the final stages of construction for Somerset Place Apartments at 5009 N. Sheridan Road, a newly converted 160-unit multifamily project in Uptown renovated by Indianapolis-based Zidan Management. Touring the building with Zidan’s manager Ayman Assaf, I realized I was seeing something that would be a total game changer for Uptown and, potentially, the entire north side rental market.
For a little background, I cut my teeth in Uptown as a young commercial real estate broker. It was the first area I worked in when I embarked on my career in Chicago, so I’m speaking from personal experience when I say how excited I am about this project and what it will do for the neighborhood as a whole. Uptown has historically been one of the more challenged multi-family real estate markets on the north side. Ironically, one of the main reasons for the Margate Park/New Chinatown area of Uptown not being such a good neighborhood was Somerset Place itself. For decades, Somerset Place was an assisted-living facility for the mentally impaired. While the intentions of the facility were good, the building ultimately became the focal point for crime in this northeast section of Uptown, as poor management, supervision and building maintenance led to the gradual demise of the property. Too often patients and former residents brought the problems within the building into the surrounding streets, creating legitimate safety and security concerns.
Apartments in Uptown have been gradually changing for the better over the past decade, led mainly Horizon Realty Group. Since 2006, Horizon has completed wonderful rehabs of several formerly problematic properties in Uptown: The Covington, 4600 N. Clarendon; Sheridan Plaza, 4601 N. Sheridan; and Uptown Regency, 5050 N. Sheridan. More recently, Uptown’s new aldermen, James Cappleman (46th Ward) and and Harry Osterman (48th Ward and home to Somerset Place) have pushed for new residential housing standards. But the new Somerset Place Apartments sets a new standard for quality that raises the bar not only for Uptown but for all north side multifamily, and Somerset will be the catalyst that kicks Uptown’s rental market transformation into hyper drive.
The level of finishes and amenities this property will offer in a 160-unit, 1920s building is simply astounding. I felt like I was walking through the halls of the Waldorf Astoria on Walton Street in River North. I’ve never seen anything like it on the North Side, and, frankly, I think you would be hard press to find some of this building’s features in the newest apartment high rises downtown.
It has all of the bells and whistles that have become standard in large apartment projects—a fitness center, sky deck, bike storage, party room, lounge areas—but it was the smaller details that really set the renovation apart from the competition. A few examples:
1. It has the best WiFi set up I have ever seen. Residents will be able to control many aspects of their units via their smartphones, including monitoring the laundry room for available machines or when their dry cycle has finished (by the way, WiFi is free for tenants).
2. Common area accents include custom artwork, real wood accent panels, high end LED lighting, and custom elevator vestibules.
3. Unit finishes are top-of-the-line, including full appliance packages, individual HVAC and water heaters, wood finish floors, high end cabinets, rain showers, and the list goes on.
4. Every window has custom window blinds so that the building looks uniform from the street.
5. From the skydeck, you can see the lake, Sheridan Road, Argyle and even Wrigley Field.
Believe it or not, though, the thing that probably blew me away most is a projection system in the lobby – a 3D screen, computer-generated graphic that splashes images of everything from the Chicago skyline, to sunsets, waterfalls, or interesting geometric shapes. Completely captivated, I literally stood there for 10 minutes and couldn’t stop watching this thing until I was interrupted to continue the tour. As if I needed more evidence of Zidan Management’s attention to detail, what was most mesmerizing about the lobby projection system to me was watching Raed Zidan himself, the founder of Zidan Management, working out the details of the system’s beta test with the programmers.
Now the big question: Will this building generate the rents it needs to justify the rehab costs? The answer? I have no doubt that when this property opens, it will have plenty of renters lined up, willing to pay even higher rents than the initial schedule. In fact, Zidan is already pre-leasing. Somerset will work because tenants will have best-in-class amenities and finishes and a lower price point than they can find anywhere else on the north side. In addition, Somerset is within 2 blocks of Lake Michigan, a 1/2-block to the Argyle “L” station, and 1-1/2 blocks to the new Mariano’s at Foster and Sheridan.
The impact of Somerset is that it will have a trickle-down effect that will benefit the entire Uptown neighborhood. When Somerset attracts a higher-paying renter, top-tier commercial will soon follow. Higher-paying renters attract businesses and retailers that want to cater to them. For instance, across the street from Somerset at Uptown Regency (5050 N. Sheridan), Horizon has wisely been holding onto commercial space waiting for the right restaurant business to match the quality of its apartments upstairs. With Somerset Place Apartments across the street, Horizon will likely have much more negotiating power when the commercial tenants come calling. Somerset itself also has a 4,000+ square foot restaurant space ready for the right business.
It’s ironic that Someset was once the wedge that broke up this portion of Uptown, but will now be the glue to bring it together. Even more ironic is that I initially tried to get Zidan to sell this property right after they gained control from the previous operator of the failed assisted living operation. I went to Zidan’s office in Indianapolis two years ago before they had started even the initial planning for the property and told them I could sell it for a number that would have doubled their initial investment. Another firm could buy it, rehab it, and create apartments. Raed Zidan thought about it for a while, but eventually decided to make a go of it himself. As this was going to be his firm’s first project in Chicago, I tried to persuade him a bit more. I asked him if he had strategies for working with the aldermen, zoning issues and area labor, all things that can be tricky in Chicago. He said he would figure it out.
Well, he sure did.
And for the first time in my career, I’m actually happy I didn’t get the business two years ago. If Zidan had given me the assignment and taken the short-term quick profit, we would have eventually had simply another good apartment rehab in Uptown. Instead, the neighborhood now has a completely new benchmark, a world-class apartment building that is poised to raise the bar for all surrounding neighborhood real estate. In that scenario, Zidan, Uptown and Chicago are all winners.
Come see Somerset Place Apartments for yourself on October 2, 2014, at the grand opening. Plan plenty of time because if you’re like me, you’ll be stuck in the lobby for a while. Hope to see you there.
Somerset Place Apartments
Horizon Realty Group
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