Crib Chatter

Crain’s is reporting on new downtown condo sales for 2023. This group mostly includes luxury units as few buildings are putting up new units under $1 million. There are a few exceptions like the Reed at Southbank in Printers Row, which is selling 2/2 units under $800k.

But there are 4 big new luxury condo buildings that have been selling units the last few years, including during the pandemic. All 4 have seen falling sales this year.

From Crain’s:

• Tribune: sales dropped “more than” 50%
• St Regis: sales down 40% with 220 sold out of 353 units
• Cirrus in Lakeshore East: sales down 33%
• One Chicago in River North: down 37% to just 10 sales

Seems like the plunge is more than just higher mortgage rates.

“The downtown condo market is awful right now,” said Jim Letchinger, principal of JDL Development, the firm responsible for One Chicago. By “downtown,” Letchinger for the most part means the Gold Coast/Near North area where he has previously built and sold a series of condo buildings, including Elm Tower and No. 9 Walton.

The larger area surrounding the Loop “is doing better,” Letchinger said.

The difference, he said, is that a traditional clientele for his and the other two marquee buildings, affluent empty nesters, “are not moving downtown” anymore.

Freed from working in the office five days a week, fearful about reports of rampant crime and turned off by the thickets of vacant restaurant and retail spaces, “they’re deciding not to come,” Letchinger said.

The West Loop continues to find buyers. Real estate agents seem to think the epicenter of Chicago’s wealth is leaving the Gold Coast/Streeterville/River North and migrating west.

“There’s no doubt the West Loop and Fulton Market has benefited,” said Tim Sheahan, one of two Compass agents leading the sales effort at Embry, the May Street building that has closed several $3 million-and-up-sales.

“We’ve seen buyers who would traditionally buy in the Gold Coast or Streeterville, the east part of the city, who have meandered west,” Sheahan said. “With all that’s going on around Michigan Avenue, they decide to come look over here.”

But if Michigan Avenue recovers, will the buyers return too?

Wealthy people “are not sure what’s going to happen in Chicago in the future,” Rafaeli said. “So they’re just sitting and waiting.” Some empty nesters keep the big family home in the suburbs, he said, and either rent downtown or stay in hotels.

Renting and staying in hotels are two ways “to keep from making a long-term commitment when there’s this big question mark hanging over Chicago,” Rafaeli said. The question, he said, is “Is Chicago going to get safer? Is it going to feel safer to go out for a walk on Michigan Avenue after dinner?”

Chicago has seen shifting wealthy downtown neighborhoods over the years. South Prairie used to be the place to live. Then it was the Gold Coast. For a time, River North was the “in” wealthy neighborhood.

And now, it appears to be the West Loop. So far, the condo developers haven’t built a new condo building in Fulton Market this cycle. Seems likely that will change soon enough given the number of apartment buildings going up.

Is the Gold Coast condo dream over?

New downtown condo sales are up this year, except at a few marquee buildings [Crain’s Chicago Business, by Dennis Rodkin, December 21, 2023]