I was struck by the title of a link to an article on Crain’s today which said: “Upscale condo owners: What downturn?”
But when I clicked on the article, I found it mainly focused on Trump Tower and how more than half of the owners who have resold in that building have actually seen appreciation.
Crain’s analysis of Cook County records shows that residential unit re-sales at Trump have been above the purchase price for 31 of the 49 residential units that have been re-sold, a 63 percent success rate. By comparison, a 60-building survey of downtown and North Side condo buildings by Chicago-based Appraisal Research Counselors shows an overall 19 percent decline in condo values since the end of 2007, around the time prices peaked.
But ultra-luxury success here has its limits. Celebrity developer Donald Trump is unlikely ever to realize a profit on his namesake Chicago skyscraper, raising doubts about the future of such ambitious projects. By the end of 2011 he had only sold 69 percent of the residential units at the River North structure along the Chicago River.
“I’ve had better,” Mr. Trump says of his investment in the 92-story hotel and condominium. “It was very expensive to build. I’m very proud of the building itself, but as an investment, I have done much, much better on other things.”
What the article doesn’t say is how many of the successful resales were buyers who bought at the “friends and family” rate that was originally offered to a select few when the building was first publicized.
And what about other luxury high rise buildings? How are they doing?
At another posh locale, the Waldorf Astoria Chicago in the Gold Coast, five of seven re-sales have been for a gain. Completed in late 2009, the condos formerly known as the Elysian Hotel & Private Residences sold out by September. Nearby, nearly half of re-sales in the Palmolive Building have been for a gain.
There’s no mention of some of the other luxury buildings like 55 E. Erie, 50 E. Chestnut (still not sold out), 10 E. Delaware and others.
Tricia Fox, an @properties broker in Chicago, says success depends on two factors in real estate: location and timing.
People who bought in 2003, when bargain-rate prices were offered to help kick-start the development, have done well. Larger units with the best views have sold out, while smaller condos with lesser views remain in large supply.
“They rent in a New York minute,” Ms. Fox says. “If (owners) have holding power, they can rent their condo and they’ll still do well. They feel that if they hold on to them they’ll garner a higher price in the future, which I believe is correct.”
With Trump still just 69% sold as of the end of 2011, what happens when a couple hundred more luxury units come on the market in the Ritz and in 2520 LP this year?
Trumped up: Trophy towers’ condos rise above housing slump [Crain’s Chicago Business, Ryan Ori and Micah Maidenburg, April 16, 2012]
