Sign of the times: LG Development scraps luxury condo project for hotel

The Chicago condo market has been in decline, which is most evident in the continued popularity of the condo deconversion. Meanwhile, hotels are having a moment in the city.

LG Development Group’s latest move seeks to capitalize on both trends. The local firm is giving up on its stalled 12-story luxury condominium project at 61 W. Erie Street, according to Curbed. Instead LG Development has pitched a five-story, 29-suite hotel in River North to be operated by Airbnb rival Sonder, according to the report. The space has sat vacant since 2016. The proposed River North hotel will include a ground-floor lobby, retail space and a rear loading dock. It will not require re-zoning, Curbed reported.

LG is also looking to double down on its partnership with Sonder, the San Francisco-based firm that leases apartments in nine U.S. cities — and three abroad — and turns them into furnished short-term rentals that compete with hotels.

Sonder is leasing all of the Plymouth Building in the South Loop from LG Development, which originally planned to redevelop the Chicago landmark as student housing.

Sonder offers 30 suites in the Plymouth building, almost 100 at Essex on the Park and others, totaling more than 200 suites in Chicago, according to the company’s site. The company’s expansion will continue with their renovation of the Waterman Building’s top five floors.

Chicago’s Downtown hotel market has been booming, with rising inventory, prices, and so far, stable absorption. The 156-key Moxy Hotel in River North is a competing boutique hotel in the area, and the Blackstone Group purchased a 337-key River North Marriott this summer. [Curbed] — Sarah Paynter