The Chicago Tribune reported over Memorial Day weekend that new condo projects are selling at a fast clip, including Trump Tower which started closings 4 years ago, just as the housing bust was picking up steam.
About 92 percent of the condominiums in the 4-year-old building are sold, and not at fire-sale prices. In fact, the building outsold all other downtown projects during the first quarter, with 24 closings at an average sales price of $623 per square foot.
Trump isn’t the only new downtown condo development that’s faring extremely well as the housing market begins to truly make its way back.
Before Belgravia Group even completed demolition or started construction this month on CA3, a third phase of its successful midscale condo project in the West Loop neighborhood, 39 of the 40 units went under contract.
Deliveries won’t start for a year.
New construction in other neighborhoods also is getting snapped up. Meanwhile, some condo developers who began renting out blocks of units they couldn’t sell during the market’s darker days are now canceling those leases as they come up for renewal and again marketing the units for purchase.
“I don’t see this as a blip,” Gail Lissner, a vice president at Appraisal Research Counselors, said of the market’s promise. “I see it as a new pattern.”
Now that the getting is good, how long before thoughts start turning away from the smaller, mid-sized buildings to the high rise?
“Once things started to turn for the good, (sales) have started to happen really fast,” said Alan Lev, Belgravia’s president and CEO.
“I’m a little surprised at the speed of the turnaround in the market. Certainly, there are fewer buyers in the marketplace than there were four years ago, but the buyers that are out there are extremely qualified.”
“There’s a tremendous amount of buyer confidence,” said Chezi Rafaeli, the Coldwell Banker Residential Brokerage agent who has the listing for the still-unsold $32 million penthouse condo at Trump.
Seeking to seize on that confidence, Belgravia continues to scout for additional good sites for midsize projects, and Lev finds himself frequently running into competitors.
The market still isn’t ready for the return of high-rises with hundreds of condo units, experts say, because of the presales that would be needed to secure financing and the several years it would take to deliver a building.
Developers and bankers remain wary.
“The longer the time frame on any project, the more likely you are to hit a bump in the road,” Lev said.
But, historically, many of the new “condo” buildings were first built as apartment buildings. How hard would it be to convert, say, The Streeter, or the new apartment building on Wells that just sold for record prices into $800,000 2-bedroom condos? The finishes are already “luxury”. They have stainless steel and granite. Maybe you have to swap out the refrigerator for an upgraded model and put up a backsplash.
Will the first step in this the “new” condo era be simply to convert one of the already built rental buildings?
Will it happen in 2013?
A ‘new pattern’ in downtown condo market [Chicago Tribune, Mary Ellen Podmolik, May 24, 2013]