Crib Chatter

You can tell a lot about the state of the Chicago highrise market by the buildings that are currently closing on units downtown.  Most of those closing now were sold three to four years ago- at the peak of the “boom” and when investors were most active in the market.  Several analysts of the Chicago market have commented that they believed the percentage of investors in downtown buildings was between 20% to 30% of all buyers during that time period.

We should be seeing that now in the buildings that are closing.

One way to monitor the investor interest is through the number of rentals that are springing up on Craigslist and the MLS.  With the sales market as slow as it is, many investors will have no choice but to try and rent out their units to try and cover some of the carrying costs (though at the prices I am seeing out there- many will not even come close to covering their costs every month.)

Take, for instance, Unit #1202 at 340 on the Park, a two bedroom, two bath, 1500 square foot, north facing unit.  They are asking $3500 a month in rent (parking included) when they paid $639,000 for the unit.

I don’t know about you, but I don’t see how you’re covering your taxes, assessments and a mortgage payment on $639,000 with $3500 a month.  And that’s IF they get that rental price.  It’s a bit more competitive (aka not a bad price) compared with some of the others I’ve seen in these newer buildings- but there are only so many renters out there who can afford that kind of nut a month.

And all the investors are competing against each other to sell or rent out their units.  Every month that goes by without a renter in the unit, is more money lost.

What’s the competition like right now?  If you are a renter looking for a new construction “luxury” unit in Streeterville or near Millennium/Grant Park, you have quite a few to choose from.

Avenue East, 160 E. Illinois: 7 for rent (on MLS and Craigslist) out of 130 units.  Closings still continuing.  The building is not yet sold out.  There is a two bedroom with the parking for $3350 a month or you can get a 772 square foot one bedroom for $1795 (parking extra) which seems like a “deal” compared with the one bedroom rental at 600 N.  Fairbanks (see below).

Cityfront Plaza, 240 E. Illinois: 4 for rent (on MLS and Craigslist) out of 281 units.  Closings still continuing.  The building is not yet sold out.  You can get 1360 square feet here without the parking for $3000 a month.  Unit #1203 is a pricey 1 bedroom, 1 bath, 874 square foot unit at $2175 with parking extra.  Here is a one bedroom with den available for $2800 a month with the parking. That is very expensive for the square footage. I’d be surprised if they can get that price. It’s not even a two bedroom.

The Columbian, 1160 S. Michigan: about 20 (on MLS and Craigslist) out of 221 units.  Closings still continuing???  The building is only 75% sold from the developer and there are other flipped units also for sale.  This building has the best “deals” for renters.  Investors keep lowering prices on the units in order to rent them. 

You can get a straight on view of the lake with 1600 square feet for only $2500 a month.  I’ve also seen others with views of the lake that are also very nice for even cheaper- like this 1491 square foot two bedroom for $2300. 

I’ve seen the one bedrooms for as low as $1700 a month including the parking (for about 720 square feet and decent lake views.)  That is cheaper than you’d find in the new luxury apartment buildings in Streeterville and River North and you get hardwood floors and nicer kitchens here.

Here are the views and the livingroom from one of the rentals.  Not bad at all for rental.  This unit is listed for $2300 a month:

600 N. Fairbanks, Helmut Jahn’s new building: 2 for rent (on the MLS and Craigslist) out of 227 units.  The building has not yet begun closings.  There could be quite a few rental units in this building as there were 5 one bedroom units per floor and investors historically like the one bedroom units.  One investor is asking a pricey $2400 a month without the parking for a 850 square foot one bedroom.  Will they get this price?  That’s mighty expensive for that square footage.

340 on the Park, 340 E. Randolph: approximately 25 (on the MLS and Craigslist) out of 344 units.  The building is only about 30% closed so far.  These are the most expensive of the rentals I’ve seen, especially for the one bedrooms.  Yes, the one bedrooms are all over 1000 square feet.  But they’re still one bedroom units (not preferred by couples).  Many are listed at expensive prices of over $2500 to $3800 – plus $250 for parking.  The two bedrooms are in the $4000s and up.

Take this 1300 square foot one bedroom.  Yes, that is huge.  But it’s still a one bedroom.  They are pricing it at $3250 a month with the north views.

A renter can pay $4000 for a one bedroom with lake and park views at 340 on the Park or they can pay about $2500 for pretty good lake and park views and two bedrooms and two full baths at the Columbian.  Granted, the finishes aren’t as nice in the Columbian.  But they’re both brand new and both have access to great parks and nearby restaurants.

The Columbian started closings several months ago so that building is telling about the rental market and how quickly investors will be able to rent.  Granted, there is not much “buzz” about the Columbian now (as there is for 600 N.  Fairbanks and 340 on the Park).  But every building loses it’s “buzz” pretty quickly.  Shortly, we will have closings beginning in 600 N. Lake Shore Drive and I’m expecting to see quite a few rentals in there as well.

There are lots of reductions in rental prices in the Columbian right now because,  again, investors must rent quickly in order to lower their losses on these units.  Every month that ticks by is another mortgage payment lost.

If the 20% to 30% investor figure holds up, then we should be seeing nearly 100 units for re-sale or rent in a building like 340 on the Park and about 50 or 60 units for sale or rent at 600 N. Fairbanks.

Currently, there are about 36 units for sale and rent at 340 on the Park (that means they are NOT both currently for sale AND rent- but either or.)  36 total units are being sold/rented out.  With only about 30% of the building closed- I would say we are on track to see the 100 units rented or re-sold with this building in the next six to eight months.