Chicago Office Building to Become New Apartments
The conversion of the 14-story space will resolve a $29 million foreclosure lawsuit.
Updated on Oct. 29, 2026 in Commercial
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Envoi Partners has entered a contract to purchase the office space at Chicago's 332 South Michigan Avenue, aiming to convert the property into apartments. This move resolves a $29 million foreclosure lawsuit against the building's current owner, Aetna.
Why it matters
The deal reflects a significant shift in commercial real estate values and repurposing strategies for distressed assets in downtown Chicago. For the local community, it marks the latest effort to transform aging office inventory into residential space to address urban vacancy.
The property appraisal dropped from $56 million in 2016 to $13.4 million in January 2026, a decline tied to the resolution of a $29 million foreclosure lawsuit. The site will undergo a conversion process similar to the developer's project at 19 South LaSalle Street.
The players
Envoi Partners
A developer that specializes in purchasing distressed office buildings for conversion into apartment units.
Aetna
The current owner of the office space that faced a $29 million foreclosure lawsuit.
The details
Envoi Partners is executing a strategy of acquiring distressed office assets through foreclosure proceedings to facilitate residential conversion. The building at 332 South Michigan Avenue was split in the 1990s, with 78 separately owned condos on the top floors while the lower 14-story section remained office space. This transition addresses the building's financial insolvency by shifting the floor use toward the high demand for downtown housing.
Timeline
1990s: Building was split into separate office and condo sections.
2000: Residential condos were delivered to the building.
2004: Aetna purchased the property for $29 million.
2016: The property was appraised at $56 million.
January 2026: The property was appraised at $13.4 million.
Money Landscape
This deal underscores the broader trend of converting underperforming office space into residential units in the face of record-low property valuations. It follows a wave of adaptive reuse projects across the city as developers work to navigate the post-2016 decline in commercial real estate values.
Residents in the downtown area may see an increase in housing supply as the building is converted from offices to apartments. Those interested in potential leasing opportunities should keep track of development permits filed for the 332 South Michigan Avenue site.
The takeaway
This conversion project signals that investors are betting on residential demand to revitalize long-distressed office assets. Local observers should monitor the city's building permit portal for updates on construction timelines and unit availability.
Further reading
Learn more about local property trends in Chicago Commercial.
Source note: This article includes information reported by The Real Deal New York.
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