Trump Tower Chicago flippers are apparently undercutting Donald Trump’s pricing on unsold units in Trump Tower, according to Crain’s.
The article addresses the condo/hotel units, which we’ve chattered about before.
Trump Tower remains only about 70% sold and has been at that sales level for at least a year.
From Crain’s:
At least 34 hotel suites sold by the developer in the past six months are back on the market, some priced at a steep discount to comparable unsold hotel units in the yet-to-be-completed project. They are owned by investors who signed purchase contracts before construction began on the 92-story skyscraper, aiming to flip the units for a profit after closing.
“My clients want to get out, and the only way they can get out is by undercutting the developer,” says broker Andrew Glatz, who has listings for 18 hotel units in the building at 401 N. Wabash Ave.
Mr. Glatz has listed a one-bedroom hotel suite on the 25th floor for $1 million, well below the $1.5 million a buyer would pay Trump for a comparable unit.
He’s also trying to sell a two-bedroom suite on the 23rd floor for $2.6 million, vs. $3.2 million for a Trump unit.
Remember, it’s not like the flippers have been very successful in the building as very few have successfully flipped. We chattered about at least one flip in the building that sold last February after the Trump Tower’s sales office touted it in the news media.
According to Crain’s there have been a total of 2 units that have flipped in the 7 months the building has been closing on units.
Mr. Trump offered deals to pre-construction investors, but since then he’s hiked prices — so much, some observers are convinced, that he’ll have to drop them to get sales moving again.
Buyers who walk into the Trump sales office today can pay $1.3 million to $1.6 million for a one-bedroom hotel suite. Or they can buy one of eight resale units on the Multiple Listing Service ranging from $879,000 to $1.7 million. The average asking price: $1.2 million.
Ms. [Ivanka] Trump says she’s not concerned about the resale market, saying there will always be investors who have “fallen on hard times” and will discount units to sell them quickly.
The investment has worked out well for at least two buyers. One closed on a two-bedroom unit for $1.4 million on Feb. 7 and sold it on March 27 for $1.8 million, according to documents filed with the Cook County Recorder.
The other paid $438,000 for a studio on Feb. 15 and sold it for $890,000 four days later. The original purchase prices did not include the cost of fixtures and furniture, estimated at $135,000 for a two-bedroom and $45,000 for a studio.
If the first two flips are any indication, other investors will make out well too, even if they have to undercut Mr. Trump to attract buyers.
“It’s the only way we’re going to get them sold,” says Randy McGhee, a broker who is trying to sell a one-bedroom resale suite for $879,500, vs. $1.3 million for a new unit. “We’ve got a sluggish market to begin with.”
The condo buyers are slated to close shortly. What will be the fate of those flippers? We’ve already chattered about several of those flips which have appeared on the market before the closing.
Stay tuned.
Condo buyers flip off Trump [Crain’s Chicago Business July 28, 2008]
