Market Conditions: What’s Up With the Ritz? 664 N. Michigan in River North
It has been one of the most anticipated buildings to begin closings since the real estate bust.
The Ritz-Carlton Residences at 664 N. Michigan in River North finally began closings in February 2013 after several delays.
Only if you looked at public records, it seemed as if nothing was closing despite the fact that, apparently at one point, nearly 40% of the building was pre-sold.
Crain’s Reports:
Thirty-one buyers who agreed to purchase a condo in the 89-unit project at 664 N. Michigan Ave. dropped their sales contracts in the first quarter, according to Chicago consulting firm Appraisal Research Counselors. The development, which began marketing in 2006, had just 11 sales under contract at the end of the quarter.
Apparently, country records show just 5 condos have closed since February. Prism, the developer, says 8 sales have closed and “many” of the pending buyers who backed out of contracts are now “displaying interest” in the tower again.
“The Ritz-Carlton Residences, Chicago is also experiencing a significant increase in both broker interest and direct buyer traffic due to the recovering economy and widely reported upswing in the luxury housing market,” the spokesman said in the statement.
It’s unclear how the buyers got out of their contracts. Purchase contracts for new condos often allow buyers to back out and get their earnest money back if the developer fails to complete their units by a certain deadline. A buyer who had a contract on a $1.7 million Ritz condo sued last fall to get his earnest money back, citing repeated delays in the project. Cook County court records show the case has been dismissed.
Though housing is recovering, the comeback has been driven from the bottom of the market rather than the top, said Jim Kinney, vice president of luxury sales at Baird & Warner Inc. Ultra-luxury buyers such as Kenneth Griffin have made recent big splashes, but homes worth $1 million or more failed to keep pace with the broader market last year.
That could be problematic for the Ritz, which at $1,200 per square foot is the most expensive active condo development in Chicago, according to Appraisal Research. The other two active luxury towers, Lincoln Park 2550 and the Trump International Hotel & Tower, asked $800 and $819 per square foot, respectively, for unsold condos in the first quarter.
“(The Ritz is) noticeably quite a bit more expensive, so you have to have someone who is really buying the brand,” Mr. Kinney said.
The assumption is that the luxury market is red hot.
But between The Ritz-Carlton Residences and Lincoln Park 2550, there is plenty of new construction luxury inventory.
Will we see price reductions on The Ritz and LP 2550 soon?
After delays, buyers back out of Ritz condo project [Crain’s Chicago Business, David Lee Matthews, June 25, 2013]
118 E Erie for those who want to look up the units
Why are they marketing the building as 664 N. Michigan and yet listing the properties under the old 118 E. Erie address? Which is it?
Maybe because the door is on Erie so legally that has to be the address? They use the Michigan Ave. address for marketing as it is more attractive. I know something like that happened with 1400 Museum Park.
Does Irving Berlin’s “Puttin’ On The Ritz” play on loop in the lobby?
maybe because a million bucks buys a lot of stays at a Ritz Carlton Hotel?
This and 2550 are so overpriced. Would have to be insane to pay this. For $1k / ft you can get into the Waldorf or 30 W Oak if you really want a luxury condo. Or you could “slum it” at Trump for $700-800 / ft. And of course you can get way more for the money in a SFH wherever you want. This doesn’t mean the high end is suffering – it means the Ritz and 2550 are overpriced.
Do we know how nice not über luxury ones such as Legacy and MP West are doing these days?
I see a few MPW sales on Redfin per month when I check it, but given the size of the building and how empty it was, it can take a while to sell out with the current pace.
Flooding in the nw suburbs anyone?
I never understood who this building was being marketed to and I’m not surprised no one wants any part of it.
“Prism, the developer, says 8 sales have closed and “many” of the pending buyers who backed out of contracts are now “displaying interest” in the tower again.”
Buy high, sell low! Brilliant.
Their virtual tour makes me laugh: http://www.theresidenceschicago.com/virtualTour.php
I wonder how much the assessments are….
If you ever walk by and see 1-2 doorman standing outside the building and wonder whether they do that so they can open the door for you, get you a taxi or to make the building look prestigious, know that it is for none of those reasons. There is simply not enough room for them inside the building. The doorman/waiting area is like 6′ x 6′.
On the not-quite-as-uber-end, everything at Superior 110 gets a contract within a week or two.
What happened to the ritz? Very simple:
Michigan avenue to tourists means luxury, culture, and convenience.
Michigan avenue to locals means flash mobs, bums, and ambulances.
People aren’t afraid of the price. 2550 is doing fine. People refuse to pay the price to live on Michigan ave.
“Michigan avenue to locals means flash mobs, bums, and ambulances.”
Does it? I live in River North and Mich Ave to me means tourists. I don’t fear any of the rest of that crap. I always just assumed it was the suburbanites who feared the big bad city and the media hype. Are any city folk out there afraid to shop the Mag Mile for fear of flash mobs and bums? Or do you, like me, just avoid it at all costs because of the annoying tourists? <- Serious questions.
“Michigan avenue to locals means flash mobs, bums, and ambulances.”
To me it means MUUUURRRRDDDEEEEERRRRR!!!!!!!!!!!
Strange layouts. Pricing is all over the map and doesn’t make sense. For 3 bdrm units, you get a tiny stackable laundry ‘closet’, for one bdrms @ 1900 sq ft, you get a laundry room with side by side appliances.
These places are not top tier luxury residences compared to RC Residences in other cities. Take Torontos for example…outstanding building and the floorplans alone are drool worthy. Renderings are fantastic and the website seems as though it were designed for people in that income bracket. The site for Chicago seems to be almost an after thought. The marketing team used for this building obviously is not used to marketing to people in this income bracket. Strange…but RC is well respected in other cities, what happened when it came to Chicago? Did they rely only on the location, thinking a Michigan Avenue address would guarantee a sold out building in months? It appears so….
I think pricing will need to be adjusted and it had better be done fast before it sits empty for years to come. We have a building here in the city that suffered from the same fate…prestigious address, top flight architecture, well known builder, everything seemed to be lined up in a manner that would almost guarantee immediate sell out. Instead the developer was found to be fraudulent and was offering free units to those who performed work for the building, something that is a huge no no in RE. When it came time for release of the units to the public, there were so many lawsuits against the builder and developer that those who initially put down deposits or actually signed contracts demanded to be released from the commitment.
Now here it is, some 4 years after construction was finished and a re-launch of the building is just now being scheduled. Some of the wealthiest people in the city were all ready to purchase units for cash when it was first advertised…now those same people don’t even want to hear about it’s re-release.
I tell you, it is so important to have all your ducks in a row when marketing a building of this caliber…one wrong move and it is all over for you and the building ends up as low income housing!!
Not that that would ever happen to this building, just saying it will probably (already has lost) lose a lot of the name brand prestige attached due to faulty marketing.
“Are any city folk out there afraid to shop the Mag Mile for fear of flash mobs and bums? Or do you, like me, just avoid it at all costs because of the annoying tourists? <- Serious questions."
Let me rephrase. People are not scared of shopping on Michigan avenue at 2 in the afternoon on a Tuesday. But what about walking home at 2am after a movie on a Saturday night. Michigan avenue feels more dangerous at night than it has in the last few years. The reason it feels more dangerous is because of the increase in muggings, flash mobs, and murders (remember the person shot in Louis Vuitton).
Walking anywhere at 2am certainly carries some risk, but if I had to choose one of the safest places to do so that would be Michigan Ave.
“But what about walking home at 2am after a movie on a Saturday night. Michigan avenue feels more dangerous at night than it has in the last few years.”
Dumb.
I would much rather live on Lake Shore Drive than this section of Michigan Avenue. For less than $1000 a square foot, you can live in the Drake Tower and still get all the amenities of a hotel, but with views of the lake: http://www.trulia.com/property/3046022454-179-E-Lake-Shore-Dr-21E-Chicago-IL-60611#photo-8
Mich ave is filled with tourists. However there are sometimes large groups of teens that might scare some white folk. But that mostly seems to happen the first warm weekends of summer. I think the incidents that have occurred are overblown but it would suck to have it happen to you. Except if you just imagined it like that old lady a month or so bac.
K
I have to agree with Jenny, but the issue w/ 179 E. LSD is that it’s a coop versus a condo — making entry requirements a little more challenging.
With respect to 664 N. Mich, I suspect the developer was banking on the cachet of the Ritz name. For whatever reason, that didn’t seem to hook enough buyers. A similar situation exists in Vancouver, BC; the structure started going up (marketed as RC residences), but things came to a halt — apparently due to slower than expected sales, etc. Evidently the property has been rebranded using the Trump name, supposedly with an ask of about $2k/sf. We’ll see how that plays out once the mew sales center opens.
Sabrina, I think the Ritz is listed as 118 E. Erie due to the property’s postal designation. If I’m not mistaken, a similar situation arose at Lincoln Park 2550, which was originally marketed as Lincoln Park 2520.