Market Conditions: Options Not Good for Waterview Tower
Crain’s has an update on the status of Waterview Tower, the luxury hotel/condo building on Wacker in the Loop, which stopped construction several months ago.
The Export-Import Bank of China which was apparently going to ride to the rescue of the project with a $400-million construction loan- has now pulled out of the deal.
Crain’s reports that this refusal to approve the loan increases the chances that Bank of America, which took over the loan from LaSalle when it acquired that bank, will foreclose on the project.
What are the options for the building?
The bank’s decision leaves Mr. Dvorak in a tough spot. He has been courting equity partners for the $500-million project for some time, and more recently has been trying to sell off its hotel, condo and parking components separately, according to people familiar with the development.
Under one scenario, the developer would finish the hotel and sell the rights to build the condos later, when the condo market recovers. But running a luxury hotel while construction is under way on the building’s upper floors would be extremely disruptive and a potential deal-killer. Another option: Convert the current structure, a 26-story concrete shell, into apartments.
“They’re looking for anything, any option for a transaction,” says one person aware of Mr. Dvorak’s plans.
One positive development is that Shangri-La Hotels is apparently still onboard for the project.
Buyers have signed contracts for 156, or 67%, of the residential condos in the building, according to Chicago-based consulting firm Appraisal Research Counselors. With an average price of more than $800 a square foot, the condos are among the most expensive in new buildings in the city.
The tower’s 200 hotel units are also being sold off individually as condos; buyers have signed contracts for 80 of the condo-hotel units, or 40%, according to Appraisal Research.
Shangri-La Hotels & Resorts, the Hong Kong-based luxury hotel chain that would run the hotel, remains committed to the development, according to an executive.
The developer “has fulfilled its obligations to us,” says Shangri-La Regional Vice-president Stephen Darling. “We’re excited about the project and we hope that everything will materialize as it should.”
Let’s hope something gets built at this location. It’s awful for the city to have a half-completed shell of a building at that prominent location.
Construction loan on hold for Waterview Tower [Crain’s Chicago Business, Nov 5, 2008]
Just so you know…..China is going to have an economic hard landing and not just a slowing of growth. Hence, firms from China will be less able to invest in the U.S. and as income taxes are raised in the U.S. under an Obama administration and democratic controlled congress, fewer people will be able to afford $500K+ homes/condos anyway. It does not bode well for the housing market which is heavily dependent on the people moving up the property ladder over time…a few rungs were just lopped off the top for a lot of people. Expect more substantial price declines ahead and fewer high end projects.
China’s having thier own problems. Factories are shutting down and exports are declining – and not just to North America, but to the middle east, Europe and South America. A significant drop off in world industrial production is almost always a leading indicator of a recession.
Don’t worry, OBAMA GONNA SAVE US ALL!
John, I disagree on the ability of people to not be able to afford homes under the new administration. If you’ll see the attached link, we will be fine with our mortgages.
http://www.youtube.com/watch?v=P36x8rTb3jI
When people vote on emotion instead of platforms and policies we are headed down a third world and dangerous political path. Instead of putting our faith in the federal government for change in our lives we need to reinvigorate the American Dream of relying on our liberty and hard work for self determination. With the economic problems on the horizon it makes me think of the Obama logo with that “O” over the horizon…it must be a black hole that will suck up all our hard work through taxes! Seriously though, the probable coming economic policies will dissuade capital investment in the U.S. which will be bad for jobs and incomes…..and housing which is dependent on both.
It’s a depressing day, I know, and I feel your pain John, I really do, but there are plenty of places to bash Obama, plenty of places on the web other than here, so bash the RE market but the Obama stuff is a tad bit misplaced.
Agreed!!!!
Well, the proposed tax increases on the $100K+ income earning families will be like a massive oil price spike on them causing fewer potential buyers for nice condos and homes. It will push marginal buyers out of the market for a long long time. That can only mean further price declines. Peggy is going to be sorely disappointed.
*yawn*
I agree that this half built tower is indeed a travesty for the Chicago skyline if it remains as such for a significant amount of time. This is Chicago not Pyongyang, there should be a law passed legally requiring developers to finish or demolish a structure like this within x years. If the developer goes bust go after their bankers.
what was on this site before construction started? I’m trying to recall but can’t
^^^
It was a surface parking lot.
thanks^
“Buyers have signed contracts for 156, or 67%, of the residential condos in the building…With an average price of more than $800 a square foot.”
When the bankrupcy court is auctioning off the assets of this project they may reap a small fortune for the identities of those buyers. Dumb rich people are getting harder and harder to find and there are any number of ‘investment advisors’ who would kill to get that list…
John
John-
As many people have mentioned take your political rants elsewhere. America survived just fine with high income taxes up until Bush cut the top rate. Wasn’t it 91% at some point just before Reagan and even in the 50% region for some of his tenure? At least back then we tried to pay back our debts. Now we just print money out of nothing for fear of raising taxes.
-the skeleton of Waterview is horrible. demolish it!
Ban John please.
^^Second.
I wouldn’t say ban Jon. We have to unite not divide. Just because he expresses a different viewpoint you don’t need to attack him and ban him. Listen to him, urge him to stop the rants. Banning is for fascists; we are not fascist here.
I don’t object to the viewpoint…I object to the trolling.
I never said I would stop reading, I feel the need to post this…
Please do not ban John… Nothing he said is harmful, racist, or derogatory. He is simply immature and sad. If he is banned it makes all the people supportive of the same crap that he espouses with no substance behind it. John just is what he is, an insecure 30k millionaire.
John on November 3rd, 2008 at 9:53 pm
“But I am a midwest self-made frugal type that doesn’t need a trophy property to prove anything to the Jones.”
John on November 4th, 2008 at 11:01 am
“I choose a massive place on the beach in Florida instead”
He might be sad but the contradiction only a few hours later is funny. And btw who in Miami that looks like Matt Damon is inside so much. I’m married and living in a country that speaks a funny language, I have an excuse 🙂
Hey – I’ll lay off the Obama comments if that makes you happy. However, the tax increases will take a number of people out of the home buyer market….in economics, everything happens at the margin so I focus on things that impact the margin, not the masses per se. We’ve seen the hit on the subprime purchases among others, a hit on the upper middle and above through higher taxes is gonna be a death blow to residential real estate in my opinion and accelerate the price declines. That is my opinion, feel free to disagree……or ban me if reality hurts that bad.
I don’t think he’s trolling, his viewpoints are tangentially related real estate. Sure he’s a little pompous but this is the internets. We need to unite not divide. We need to embarce and love not hate and destroy. Come back John, just don’t get overly political unless topic itself is political.
ChiGuy,
Hate to get into the political rant here, but you can’t compare the Clinton economy to our current environment and think that tax hikes aren’t going to hurt our current economy.
And Reagan lowered the tax rate on the highest level from what it was prior, and it worked like a success. Reagan also inherited a weak economy.
Get your head out of the sand!
That said, I think Obama’s all talk and we have nothing to fear about tax rates that would strangle our economy….at least I hope!
IB – Keep your promises please…just kidding. If you were really reading, you’d know that I am RENTING the trophy property at a silly low rental amount. Unreal deals down here, no joke. And yes, I do need to brush up on my spanish down here…and apparently portuguese too. Everything I have posted is true…there are some posts by a John that is not me, but hey what do I care. And yes, I do have millions in the banks (banks, plural for FDIC coverage!). Peace out buddy.
What bothers me is not raising the taxes on the top earners. Given the financial disaster this country is in, that is unavoidable if we ever hope to pay back what we owe to the world. What bothers me is the desire to lower! taxes on the majority of people at the same time. It screws incentives. I am against more handouts and bailouts. Period.
John said, “We’ve seen the hit on the subprime purchases among others, a hit on the upper middle and above through higher taxes is gonna be a death blow to residential real estate in my opinion and accelerate the price declines. That is my opinion, feel free to disagree……or ban me if reality hurts that bad.”
Residential real estate is already dead. It died in October of this year. Raising taxes next year is like beating a dead horse.
Yes I remember you telling me about saving 400-900 a month on rent. Not sure I ever heard Ken Griffen (who I know you have more than) saying the same but I do respect that.
At best… Like I said to Bob once a while back. Nouveau Riche – Can smell them a mile away, and it ain’t a good smell.
E Comencar seu Portuguese com isso, vai comer porra meu cachorrinho!!
Also, I see the market conditions in South Florida, CA, Las Vegas, and Phoenix as a leading indicator of where the Chicago real estate market is headed. It won’t be as severe, but it is following along esp. as more buildings are completed and more condo units come on the market. As a midwesterner (I strongly considered 340 OTP) I wasn’t as aware of the severity of the real estate crisis. In the midwest, more people don’t think it is really so bad….just ask SH. In South Florida you’d think the sky was falling. So, I have the advantage of seeing that Chicago is in for a more substantial fall even though people are in denial there and in South Florida I have the advantage that things aren’t as bad around the country as people down here think (it really is bad down here….really bad) since a lot of people who are full time residents think the same situation is all over country, it isn’t.
IB – no, I have $3K+ per month not even counting the price declines! I figure by renting and saving on the cost of ownerhship with a conservative price decline of 20% over the first year of renting…I will save over $240K….yes, $240K, it really really is that bad down here! Chicago won’t be that bad, but I suspect the worst is yet to come…and I am an optimist, every time I think I am bearish I get proven wrong that I was too bullish. You should come on down and teach me how to lite spliff. LOL
As far as Nouveau Riche (which I guess you meant as a put down….I earned it for goodness sakes, versus the dead weight of being a trust fund baby) so what? I worked by arse off. I spend less than 20% of my income….seriously, I live way below my means and will never have a money worry ever again. You should congrats people who earned honest money versus the old rich who inherited it. Oh well, can’t please everyone I guess. In the meantime I will positioned to step in as a cash buyer when the long drawn out bottom is reached and I will have my pick of some great properties….but no rush, I’ll wait for the old rich to make some more stupid mistakes with their money…. 🙂
John.. You missed the point entirely. Your hypocrisy is that you felt the need to tell people you have a “massive” place juxtaposed to the “no need for trophy property”
I have not one penny that I did not earn myself but that is the point also. The reason i stopped posting was I got upset with myself for saying things I deem might be obnoxious or demeaning to others. I once got into a convo with HD about a small property I sold and he asked me for details which I continued refuse to provide. You have to understand that what for some might be a “small property” others might work endlessly to never achieve and it is absolutely DISGUSTING to flash things in their face. Unfortunately I have a temper and just got so annoyed with your stupid tax crap that I made allusions to my personal means and the moment I hit submit realized that I just violated my own principles. So I felt the need to avoid posting further..
By the way I will say it again. Bush taxed you more than anyone ever could. He just never sent the bill. And if you spelled your name without the H in it you might understand half of why last night was so important. The other half is we were heading into Fascism as a nation. See when 70% of a country wants out of a war you lied your way into and you are a Democracy you do not send 30,000 more troops. At work if 95% disagreed with me I had the right to overrule, if I live in a democracy and I am in the 30% minority but yet get my way something is very wrong. Last night was a statement! He will be no savior or messiah but that is not the point. For the first time in my life I voted Democrat, I have never been prouder of my choice. So if you need it spelled out what people are saying here.. Feel free to talk about prices and markets but every down tick is not because of Obama. The 30yr Jumbo is 10% before he came into office.
As for spleefs, not for me, I use a double water filtered bong. MUCH healthier!!!
IB – The 30 year jumbo is not 10% on bankrate.com. Obama ran on the economy and he will be held to the performance of the economy. But enough political stuff since that will make people upset and it is time to move on from the election to what policies may affect real estate. Increasing taxes now will cause substantial harm to buyers at the margin, plain and simple, and it will lead to a further over correction below the historic norm. We need as soft a landing as possible not a hard landing that way over corrects. Just my opinion.
There will be no soft landing.
I look at Wells Fargo, they actually still lend (sometimes). 9.875 today.
btw.. next Brazilian model you see in South Beach walk up to her and say what I said to you… 🙂
Never flash your wealth because others are only looking for a way to steal it from you.
HD.. I swear to god I was just typing..
“And since HD is an attorney you should ask him what happens to people that like to promote themselves as having money.. the answer has something to do with painting a bullseye on your freaking head.”
Jumbos can still be had for 6.5% these days in Chicago. The fallout hasn’t hit all banks, especially those that never got into: 1) high LTV mortgages during the boom, 2) alt-A mortgages during the boom, 3) sub-prime mortgages during the boom or 4) played with MBS/CDOs during the boom.
HD.. unless of course you are a fictional character also 🙂
“See when 70% of a country wants out of a war you lied your way into and you are a Democracy you do not send 30,000 more troops. ”
If policy decisions were made by popular vote….god help us all.
Yes, the war was a huge mistake but leaving it unstable would have likely had disastrous long-term consquences, and we probably would have had to go back in eventually.
I bet if you polled the masses they’d also want tax rates of 70% for the wealthiest class, and low-no taxes for themselves. I’m sure that would work out swell.
Think of me as the Cheshire Cat always with the grin.
What would happen if the people figured out that they could vote themselves free goodies from treasury … and what if they elected the candidate who promised to give away the most …
HD.. there is a very famous quote to that about why democracy can not work. Not sure where to find it. And Alice and wonderland always scared the crap out of me for some reason.
Investor. Ok what if we just forget about the war and leave it to torture and suspension of habeus corpus. But I promised anon I wouldn’t say those things anymore.
My new name
Subprime voters… my goodness please read the fine print before signing a mortgage or voting please. Kinda funny, pretty sad, but it is Howard Stern.
http://www.youtube.com/watch?v=iCipmnYCKB0
Bob said – Jumbos can still be had for 6.5% these days in Chicago.
Are you talking about a Jumbo 30 Year fixed? If so who is offering this right now?
Ok.. the Cheshire Cat inspired me… My final change. Appropriate with my Rio fictional character and Ze was always fun.
Riverwalker,
So be it. I’m certainly no Bush fan! I never voted for him. I just thought IB’s point was rather ridiculous, and used a quite bad example as well.
Kind of like it’s ridiculous to put civil rights like gay marriage to popular vote. Wonder how long we would’ve had slavery in this country if popular vote decided it.
Imagine if they put the revolutionary war to a popular vote. “Well, 33% hate the Brits and want to fight, 33% like the brits and want to remain a colony….and the other 33% doesn’t care either way.”
HD.. They did… War almost was not fought. If 70% were ok with the Monarchy why would you have fought it. I like the Brits.
Investor.. bad example I agree. Does not apply to harming people or violating constitution. U.S. Is not true Democracy or Republic nor can it be. Massive scope of this convo so I will bow my head and concede and gladly not go there.
First Savings Bank of Hegewisch & Hometrust Mortgage Corp are listed on Bankrate dot com. You would of course need 20% down. Bankrate is your friend.
Hey only around 52% voted for the guy, we live a very divided county still and although white voters were pretty race neutral, black voters were absolutely not (see exit poll numbers). That will need to be addressed if the nation is going to move forward on black race matters (not a problem with asian, hispanic, etc.). With that said, people voted out of emotion, frustration, and economic worries. If the guy doesn’t deliver, they will turn on him rather quickly. My prediction is the American standard of living will decline over the next four years and houses will get cheaper at least on real dollar terms. The change to the worse and hopelessness will be brutal. I didn’t vote for the guy since there was too much uncertainty for the job position. Although I loath Hilary, I’d much rather prefer her since there is less uncertainty.
With the desire not to get into politics much more…but we did just have an election….I would advise buyers to hold off as inventories continue to mount, prices continue to fall, jobs continue to be lost, wages continue to be stagnant, taxes will be increased, credit continues to be tight, and lending standards continue to return to the historic requirements. The short-term and immediate prognosis is you’ll probably overpay and lose equity if you buy now.
Nobody cares about anybody’s political opinions or predictions on here John.
Bob – My predictions are about where housing will go as it follows the macro economics. The bottom line, nothing changed and things may get worse. Good luck buying now.
Bankrate is BS and is not my friend. Give them a call and see what kind of fees are involved. It’s a bait and switch.
I keep saying that a depression or at least a serious recession is baked into the cake. There won’t be anyone left for Obama to tax once the invisible hand of the market slaps our economy around for a couple of years.
There are some unscrupulous lenders on bankrate: Hometrust Mortgage Corp may be one of them. But check out First Savings Bank of Hegewisch’s webpage where they show 6.5% with 0 points:
http://www.fsbhegewisch.com/rates.asp
It says effective November 5th, so rather hard for them to bait and switch on that. Loans are not a perfectly efficient market, you can get better rates by doing more research.
And John don’t worry. The earliest I will be buying is in two years when I have 20% down, but if the market hasn’t stabilized by then I can just keep adding to my downpayment and riding out the storm on the sidelines.
Bob, don’t kid yourself. Your comments are just as ridiculous as John’s. While I don’t agree with John necessarily it’s a nice change from the cult of personality everywhere else in this god damn ciyt. and if you think anyone here is gonna take a 6.5% jumbo from the first savings bank of HEGEWISCH you’re deluding yourself.
I have been reading this blog for some time and really think it is a fantastic source of information that gets better each day. Sometimes there are some driveby posts but that is to be expected on occasion. Bob does usually have some good comments but I must say John, not sure if always the same John, has excellent and insightful comments on the broader market that have been very helpful to me. John’s posts have helped me to decide to rent versus buying now and I know that I will be better off because of that. I also think homedelete is excellent too. Thanks so much. Let’s hope we don’t actually go into a depression.
hd–you want anti-any-national-politician, there are plenty other, better fora out there.
Pentagon Federal Credit Union has 30-year fixed jumbos up to 2MM for 6% with no points. My car loan is through them and I can assure you they don’t ‘bait and switch’.
Just because Wells Fargo doesn’t want to do jumbos anymore but can’t stop altogether because the gov won’t let them doesn’t mean every bank wants 9+% for a jumbo mortgage. There is still affordable financing out there for jumbos for those willing to look.
Until this thing reverts back to 3.5 times earnings – better off not looking.
I am in the market for a 30-year Jumbo. I will check with both and let you know if it is legit.
Called Pentagon and you have to be a member before they will discuss. The lady I talked with was hemmed and hawed a lot. This is BS, no way you are getting that rate up to $2mm.
1st Bank of Hegeswich 6.5% Jumbo only loans to certain areas. Bucktown and Logan Square weren’t included. She said they only loan on the south side for the most part.
You are not getting those rates on 30 year Jumbos anywhere right now Bob. Don’t kid yourself.
a friend of mine recently locked on a 30 yr. fixed jumbo just under 8% w/ 20% down.
bb:
Condo or sfh? I would expect condos to suffer (relatively) in underwriting right now.