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pre-pandemic office-to-residential conversion at 330 South Wells in the Loop has raised concerns about the viability of such redevelopments. Despite generating enough revenue to cover debt costs when it was completed, the building's performance has since declined due to stagnant rents and increased debt service costs resulting from Federal Reserve rate hikes. The 17-story building, which features 132 apartments and vacant retail space, is now struggling to meet its financial obligations.

    LG Group, the developer behind the project, has been making interest payments on its loan but failed to pay off the principal when it matured last month. The loan was moved to special servicing, and a debt workout plan remains uncertain. The building's occupancy rate stands at 88%, with apartment units ranging from $1,700 to $2,300 per month.

    The City of Chicago is investing millions in similar office-to-residential conversions along LaSalle Street through the LaSalle Street Reimagined initiative. Developers receive subsidies in exchange for preserving a portion of their units as affordable housing. Recent projects have been selected, including a $64 million proposal to repurpose 79 West Monroe Street, which will include 35% affordable units.

    As more office-to-residential conversions are underway, developers will test whether public funding can mitigate financial risks and avoid the fate of 330 South Wells.