340 on the Park: How many flippers are actually selling?
As I discussed in a prior post on 340 on the Park, which is in the midst of closings on the units, many are being listed for re-sale or for rent.
A tipster was kind enough to send me some data (at least the data that is currently being reported on the MLS) about closings in the building.
As of last week there have been 70 closings out of a total of 344 units. (Remember, this is the data reported by Related, the developer, so sometimes it is delayed and there are more closings that have taken place than are reported.) In addition, each week there are closings planned so the number will continue to rise.
Out of the closings reported so far- there are only two or three re-sales. That means that most of the flippers haven’t been successful at flipping anything yet.
This is despite the owners on the 340 on the Park owners forum insisting that numerous buyers have made $200,000 to $300,000 on their flips so far.
What does the data show?
Unit #1804: 2 bedroom, 2.5 baths
- Originally sold for $830,000
- Currently listed for $1.2 million
- This sale is “pending” so we don’t have the actual closing price yet
Unit #2201: 3 bedroom, 3.5 baths
- Originally closed for $1.489 million
- Now listed for $1.531 million
- Currently is “pending” so we don’t have the actual closing price yet
I also think that the earlier you could get your listing on the market, the better off you were in possibly making quite a bit of money flipping. The buzz about the building is always the greatest right when the initial closings take place and people start moving in. It will be no different with 340 on the Park. Every month that goes by now, more units will come on the market and the buzz will lessen.
Right now, there are about 40 units for sale or for rent with over 25 of those for sale. If you were a buyer interested in, say, one of the one bedroom units, you already have a dozen to choose from.
And more will be coming on the market as closings continue. In this housing market, with the upper bracket already getting slammed and inventory from other new construction buildings also coming on the market, there is simply too much competition for the $600,000 to $700,000 one bedroom condo. There aren’t enough buyers at that price point for all of the product.
And while 340 on the Park is a nice building with beautiful views to the South (if you are on that side of the building)- every unit has the same exact finishes (there was no upgrade package) and some of those finishes aren’t what you’d find in a typical Chicago “luxury” building. For instance the appliances are GE appliances (not subzero or wolf- which is what you would get in, say, 600 N. Fairbanks).
How long will the flippers hold onto their high prices until they start lowering to just get out of the unit? We’ll have to see. Many will probably just rent out the unit- meaning that 340 on the Park will have quite a few renters living amongst the owners. The Heritage at 130 N. Garland also initially had quite a few renters (and still does).
We shall see over the winter. 2007-2008 is not 2005 when the easy re-sale money was virtually guaranteed.
What investors will get burned and in what buildings?
If anyone has any information about actual re-sales in this building (or others), I’d love to hear about it. Let me know! And thanks for the tipster who sent me the above information.
I have an issue with the 1 bedroom units. Why would I pay 600-700K and have 1 sink in the bathroom and a combined tub/shower? For that price, I want at least 2 sinks and a separate tub/shower.
The 340 on the Park master bath is spacious and luxurious with a double sink, bubble jet tub, large separate shower. The 1 bedroom units are larger than some older 2 bedroom units and have a 1/2 bath too.
The one bedroom units are spacious as they will be in the “Peshtigo”, Related’s (formerly LR) next project.
I used to live in an LR development on Pearson and they do know their market.
I have been into numerous units at 340 OTP and my question is: How can units differentiate themselves? Were there ANY upgrades or selections given to the buyers? My understanding is that everything in the building is exactly the same. And while the finishes are very nice, I think it is unfortunate that every unit looks exactly the same.
Sabrina is correct in saying that there are other buildings with the same views. In addition, there are plenty of other buildings with stunning views ( ie Riverbend, the Heritage, LPT ) to choose from.
I think that 340 OTP is a quality product, especially when compared with other new construction, but I am curious to see what the market time will be for the “flipped” units. We instituted a rental cap at 10% in my former LR building and I would advise the 340 OTP owners to do the same.
Hi Carol,
The large 1 bedroom units (1100-1350 sq ft) do have powder rooms;however, the master bath room has 1 sink and a combined tub and shower. No way would I advise a client to buy this product. Why not buy a similarly sized unit at 55 E Erie, 250 E Pearson, 270 E Pearson, etc…
The 1 bedrooms have 2 sinks.
There are a lot of comparisons to be made with other buildings, such as the Heritage, however, one look at the amenity level at 340 sets it apart from everything else. Some people chose 340 for the LEED Green certification as well.
Their are some unique location characteristics in 340. It is fantastic to walk out into a park in back or the world-class park in front without having to cross Michigan.
Regarding pricing – Market Value as most of us know is determined by the current closings of very similar units. Those who bought early have potential gains (many in the area of 200-300 thousand dollars), based on the fact that Related closed units at those price levels more recently in the sales effort. That is the simple fact of it. You don’t have to sell to have your property valued.
Customization in most new condominium developments = choose your cabinets and counters. Sure the units all look very similar – it is a new construction high-rise! The limits to customization by Related, through efficiencies gained in the construction process, allowed units to include very high quality finishes fort the price. Real value was added by this simple limitation. The upper two-thirds of the building did allow customizations.
We live in 340 and we absolutely love the building. We have lived in the New Eastside for many years and are familiar with every building in the area. We chose 340 for a variety of reasons and we have not been disappointed.
We live in a one bedroom (with double sinks).
Whooops!
I checked the floorplans. The one bedroom units (A Units) facing South have only a single sink in the master bath. The North-facing 1 bedrooms (C Units) have 2.
Patrick: You’re trying to tell me that you have “value” even before you sell a property? In a declining market?
Wow- this is news to me.
Because you can price a property at whatever you want- doesn’t mean it’s “worth” that. We’ll see if the one bedrooms sell for over $700,000- which, according to your theory, is what they’re “worth” because they’re listed for that amount.
As I’ve said- until I see more closings on re-sale units in the building- it’s all just speculation what anything is “worth” or its “value”. The market will speak. Right now, the market is pretty dead. Some things are still selling. But there is a lot of new product coming on the market right at the same time- in very nice buildings. Sellers in 340 on the Park have to compete with sellers in 600 N. Fairbanks, 550 St. Clair and, shortly, 600 N. Lake Shore Drive.
The 1 bedroom 1 1/2 bath south facing B unit has has the same luxurious master bath and powder room as the 3 bed room plus den unit. The unblock-able view is better the higher the floor is, so it should differentiate value to a view conscious buyer. As buyers are able to see the views from different floors, they will definitely see surprisingly different views.
Some of the posts on this site are trying to perpetuate the view that units in new construction luxury buildings like 340otp are overpriced. If 400ode has units on the market for 500 dollars a square foot one would think that 600 to 650 dollars a square foot is a reasonable premium for units in 340otp or the heritage. This is especially the case for niche units that have 2000 square feet and at least 2 bedrooms. They are now available in central loop and right on millenium park. One isn’t required to go to the more congested near north area.
With several buildings in downtown at 800 to over 1000 dollars per square foot, new buildings in the lakeshore east area don’t seem so overpriced. Certainly, there are more choices than ever from value to luxury to ultra luxury. This is a positive situation.
Certainly, there are listings that are pushing the limit or trying to find the limit. The heritage has a 3 bedroom unit (#2804) listed for 1.5 million dollars. At 2100 square feet with primarily city views, this is going for 700 dollars per square foot. In 2002, this unit was available from the developer for about 840,000 dollars. At 340otp, there are two 3-bedroom units with much better views and 300 more square feet going for 1.7 million (#1605) and 1.6 million (#2901). It appears 1605 was just purchased yesterday. The price won’t be known til closing but it is probably right at the 700 dollars per square foot mark.
Tom: Again, they can price them at whatever they wish. The fact is that sales are slowing considerably in this price range and that means that prices will come down (given the amount of inventory.)
I have no doubt that a unit here or there will sell. We’ve seen the price per square foot really rise in the last three years in the downtown area. But at some point, you hit a wall.
I believe we’re hitting it now (especially when you see the sales figures for the buildings currently under construction like Waterview Tower, Trump and The Legacy.) Developers are loath to ever lower prices. But we are heading into a tricky real estate market. Some of these developers aren’t going to make it (and yes- even on the “luxury” buildings.)
Does Related honestly think that right now is a good time to be building the Peshtigo? What planet are they on?
But, as I said, sales are slow in the luxury market. By next summer, prices will come down as sellers have to lower to dump their units.
Or, they’ll simply try and rent them out (if they’re investors) and get some money to try and help their carrying costs. At the prices they are asking to rent out these units, there is no way they’re covering their carrying costs. Investors who rent out these units are losing money monthly.