Vancouver, B.C.-based Onni Group is finalizing a deal to buy the Ace Hotel in the trendy former meatpacking district for more than $63 million, according to sources familiar with the agreement.
But in a letter sent today to local hotel investors and professionals by the Ace Hotel Group, the boutique hotel chain said it will no longer manage the property beginning Jan.
If the sale is completed at close to $400,000 per room, it would mark a big drop-off from what Sterling Bay tried to sell it for before the COVID-19 pandemic, but a relatively high figure amid a public health crisis that has bludgeoned room demand downtown.
The deal would chart new territory in Chicago for Onni, which has been among the busiest developers in the city during the pandemic, but hasn’t played in the local hotel market.
But it’s also a wager on the momentum of Fulton Market, which has thrived in the face of the crisis with a slew of companies continuing to lease offices in the neighborhood.
Part of Sterling Bay’s deal with Google to turn a former cold storage facility into its main Chicago office was that the developer would build a hotel across the street to serve Google’s visitor needs.
But the property never traded, and the pandemic clobbered its value in a way that has lingered for the past 20 months.
Still, the pending sale price at the Ace would be among the highest per-room totals paid for a downtown Chicago hotel since the beginning of the pandemic.
It’s hoping for a more profitable outcome at the 200-room Hyatt House it opened in the West Loop in 2019, which it put up for sale in October.
Sterling Bay might have wanted to unload the Ace sooner, but the hotel last year was at the center of a legal battle between the developer and its lenders on the property.