Market Conditions: No Second Tower at Walton on the Park in the Gold Coast: 2 W. Delaware
Crain’s is reporting that there will be no second tower built at Walton on the Park, the new high rise development at 2 W. Delaware, in the Gold Coast.
You’ll recall, in mid-August, we chattered about the flips popping up in this building. See our prior chatter here.
In a sign that the new-condo market is expected to stay in a prolonged funk, the developers have dropped a proposal for a second residential tower, which would have brought the total number of units up to 385.
Instead, the developers plan to build a small commercial building on the site, according to the loan amendment.
Buyers have closed on 22 units and another 81 are under contract, confirms Ralph Oliva, a sales associate in the Lincoln Park office of residential brokerage Coldwell Banker NRT, which is handling sales at the 31-story building, located next to the landmark Scottish Rite Cathedral and near Washington Square Park.
But slow sales have become the norm for recently completed condo towers in the city’s most fashionable neighborhoods.
Walton on the Park’s developers “haven’t underperformed the market,” says Gail Lissner, a vice-president at Appraisal Research Counselors, a Chicago-based real estate consulting firm. “This is the new reality.”
According to Crain’s, two prospective buyers have also sued the developer, alleging in the lawsuit that the developer is planning on renting out the remaining 100 unsold units.
Shipka, Stein win condo loan extension [Crain’s Chicago Business, Andrew Schroedter, September 1, 2010]
Not suprised. The prices here (1BRs starting at 500k) are just out of line with the neighborhood. You can get some really nice 2BRs in the Gold Coast for that.
So Stein has a bad track record? I looked at these units during 2007 – 2008. I thought nice location. I liked it. The prices were crazy.
In hindsight, I am glad I didn’t purchase. Aside from the collapse of the bubble, the finishing of the inside of the units were not as nice as I would have expected.
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Renting the remaining 100 units is going to kill the building. Then again if I didn’t own, I’d consider renting here….so by all means…rent the building
Given that the preconstruction lender on the project was taken over by the FDIC and the preconstruction loan was acquired by a hedge fund at a large discount, I am not sure if the building is even elgible for traditional bank financing. I wouldn’t be suprised if the hedge fund rents out the unsold units, as the funds interests are not aligned with the homeowners in the bulding. Many of smaller units under contract were purchased by investors with the intent to flip. They will never close on these units, as the market decline exceeds the paltry desposits required by the developer at the peak.
its so amusing how much stuffy condo owners HATE renters to death
My brightside comment to them is, well would you rather have massive forclosures or renters?
“My brightside comment to them is, well would you rather have massive forclosures or renters?”
Sucks probably equally as much in terms of your property value going downhill.
I think the housing bubble will stain the appeal of new construction for years to come. Just way too many risks, particularly with large developments. Evaluating the health of the HOA and other units owners is more important than ever. I would hope good buyers agents are ferreting his information out for their clients. I know the lenders scrutinizing these developments more than ever.
I agree with Chichow. I think the buiding would be a fantastic place to rent, but a very poor investment to purchase. With the imploding of Corus, I think the future value of the units in the building is uncertain — at best. Hedge funds are looking for returns for their investors — period. If the market dosen’t rebound in the next 12-24 months and ‘value’ investing in real estate dosen’t generate returns that exceed other investments with comparable risks, what prevents the hedge fund from discounting the remaining unsold units by 20% – 25% (or more) to simply unload this as an investment. The building is already sort of ‘tainted’ in the eyes of most sophisticated real estate buyers, so given the large shadow inventory of units available elsewhere, I don’t see how this building will be able to close the 80% of the unsold units at the current list prices. Pricing will be volatile in this building for the forseeable future.
“Just way too many risks, particularly with large developments.”
I think anon put it best as basically buyers of pre-con are essentially limited partners with the developer, sharing in all downside risk but no upside risk.
“buyers of pre-con are essentially limited partners with the developer, sharing in all downside risk but no upside risk.”
Well, no upside any more. Pre-con buyers in buildings completed before ’06 generally did pretty well. 340 OTP pre-con buyers did *very* well, in general.
“Well, no upside any more.”
Well even that pales into comparison for the stakes the developer is playing with. If a big building sells out at initial pricing they’re likely rich (condo owners aren’t). If it doesn’t the developer is effed..but so are the condo owners.
Is there any tabulation of all of the cancelled condo projects? Off the top of my head, I can think of the Spire and the proposed downtown Evanston High rise (flat iron looking building).
If it turns to rentals, would be interesting to see how much the rentals units are per month. It would really destroy the value of these units. That being said looks like an awesome place to rent. So no second tower? I thought the only reason the pool sat in the shade all day was so that it could be joined to the other tower? So now you just have a pool in the shade all day for no reason at all, opps. Should have made indoor or roof pool.
Any thoughts as to what will happen with Silver Tower? Seems to be broken windows everytime I drive by all over the building…
“Any thoughts as to what will happen with Silver Tower? Seems to be broken windows everytime I drive by all over the building…”
???
I walk by there daily and haven’t seen once what you are talking about, are you sure you have the right building?
Yes – I think they are having issues with the glass that was used. They are fixed within a few days, but there was one this morning on the south side of the building and one at the beginning of the week on the east side
I have lived in the neighborhood for 30+ years and I had wanted to purchase a home in this building. If I were to make a cash offer on a unit, what percentage off the developer’s asking price would be realistic? or, do you all feel that the economic health of this building is way too risky?