Crib Chatter

Thanks to the Tipster who sent in this ad that went out to agents for One Museum Park and 1400 Museum Park.  What it means is that the agent who brings her client to either of these two buildings and who writes a contract, gets paid NOW rather than later, at the close.

And for agents that are struggling to pay their own mortgages due to the slowdown in sales, this is a very attractive incentive indeed.

The ad says further:

For a limited time, One Museum Park (East Tower) and 1400 Museum Park
are offering 100% commission up front at signing!* This incredible broker
incentive is complemented by the most desirable lakefront community
in the city. Here, residents are just a short stroll from the Museum Campus,
Millennium Park, Michigan Avenue and more.

Plus, with Spring 2008 deliveries, there’s never been a better time for your client.

Don’t miss out on this special opportunity. Visit Museum Park today.

The * says the offer is “valid once all contingencies are met on contracts written from Nov. 1, 2007 to December 31, 2007.”

The Tipster told me that this is the first time she’s seen this kind of agent incentive from any of the developers.

One Museum Park [website]
1400 Museum Park [website]

If you go on one of the Architectural Foundation boat tours, they will inevitably mention Lucien Lagrange’s River North “masterpiece”, Erie on the Park, at 510 W. Erie.  Built in 2002, the building has become a signature building on the far west side of River North with its criss-cross design that is similar in feel to the John Hancock building.

The building is highly praised and the units have great views and nice, modern finishes.

The question remains: why aren’t units appreciating in the building?

One theory is that the units were overpriced in 2002 and, frankly, have stayed flat as more product has come on the market in the neighborhood.  Some owners are struggling to make any profit in the building.

This three bedroom unit seems like a “deal” compared to other three bedroom units in River North.  It has Southwestern views that cannot be obstructed.

Unit #1202: 3 bedroom, 3 baths

• Sold in September 2002 for $517,900
• Currently listed for $689,900 which includes 2 tandem parking
• Rubloff has the listing

At least this owner may make something over the five years.

Others don’t appear quite as lucky:

Unit #702: 2 bedroom, 2 bath, 1150 square feet

• Sold in November 2002 for $375,900
• Currently listed for $376,900
• Parking is $35,000 extra
• You can also rent it for $2500 a month
• Prudential Preferred has the listing

Unit #1702: 2 bedroom, 2 bath, 1100 square feet

• Sold in September 2002 for $406,900
• Currently listed for $375,000
• Parking is $30,000 extra

Unit #707: 1 bedroom, 1.5 baths

• Sold in August 2002 for $246,900
• Sold in August 2004 for $232,000
• Currently listed for $289,900
• Parking is available
• Rubloff has the listing

The building has won design awards.  But is something else going on with the building?  The two bedroom units listed here are pretty cheap for the square footage, the finishes and the location.

It’s not a surprise that the third quarter numbers out on Chicago’s downtown condo market show sales have slowed dramatically.  Crain’s reports that condo and townhomes sales fell 34% to 869 units compared to a year ago.  According to a report by the Appraisal Research Counselors:

“Prospective buyers are currently uncomfortable about the market, feel little sense of urgency to make a decision, and are often fearful that market conditions may weaken,” the report says.

Only 781 new units were launched in the quarter, down 66% from a year ago. Unsold inventory downtown was down 1% to 7,601 units, the first drop since 2005. 

The real problem will be in the future. The Appraisal Research Counselors estimates that out of the unsold units, developers have 3,539 units that are currently being built but that are unsold (and will be finished between now and 2010.) That would include all of the unsold units in Trump Tower, Waterview Tower, Library Towers, the Vetro and other buildings that are currently under construction.

Do these numbers include The Spire as well? (it is already under construction but the sales center is not yet open.) 

But developers continue to launch new projects such as the Peshtigo. From Crain’s:

“I think the next 12 months are going to be tremendously challenging,” says Harry Huzenis, executive vice-president of Chicago-based Jameson Realty Group, which develops its own condo projects and works as a broker on others. “If you’re a buyer it’s a wonderful time to be out shopping because I think there’s a lot of great values out there.”

Mr. Huzenis says he’s been advising his developer clients to cut prices and move aggressively to make sales before the market worsens. He figures concerns over the subprime debt market and volatility in the stock market sidelined many buyers.

“A lot of anxiety crept into the consumer’s mind. When the consumer gets confused, the consumer stops acting,” Mr. Huzenis says. “We saw steady sales throughout the year, but we’ve seen a real strong drop-off beginning with August.”

According to the article, developers sold 3,312 downtown condos in the first nine months of the year, down 35% from a year ago. Appraisal Research is also projecting the lowest number of total sales downtown since 2003, only 4,000 units. In 2003, 3,433 units sold. Sales seem to have virtually fallen off a cliff since August.

Crain’s cites The Legacy in the Loop as one of the few buildings that is still selling its units.

They said The Legacy is 85% sold and that it is holding up because their buyers are rich empty nesters.

“We’re hitting a fairly narrow segment of the market,” says James Hanson, a principal with Chicago-based Mesa, noting that they’ve been selling a unit almost every week despite the subprime mortgage crisis. “By and large these are empty-nesters. They’ve got significant income and significant savings.”

One a week, huh? That would be shocking when virtually nothing else is selling in this market. The building is under construction but is still several years away. They started marketing this building several years ago. Many buyers bought at the peak of the market – in 2005. How many were investors? And believe me, there are investors in the building. Is The Legacy really a building that shows how “healthy” the market truly is?  And aren’t all of the buildings marketing to these same rich boomers?

We’ll find out when the building is completed (and see how many contracts actually close.)

The inventory is going to continue to be a problem. There are only so many buyers of $300,000 750 square feet one bedrooms or $450,000 1100 square foot two bedrooms. Prices will come down as more inventory goes unsold.

[More Downtown Condos Sold Than Added in 3Q: Crain’s]

Maybe the name is a giveaway: “The Provenance.”  There is something not right about that name in Edgewater.  And if you walk up historic North Kenmore, you will stumble up on it and wonder, “why did they build this here?”

Located at 5230 N. Kenmore, the building looks out of place next to the more historic buildings.  Apparently, buyers are saying the same thing because out of 20 units in the building, 16 of them are currently on the market.

And they’ve been on the market for over 14 months.

Maybe it’s the prices.

3 Bedroom units: 2 baths

• Prices from $429,100 to $554,350
• 11 units available
• Square footage ranges from 1528 to 2040
• Parking $26,000 extra

2 Bedroom units: 2 baths

• Prices from $319,800 to $355,360
• Square footage ranges from 1275 to 1322
• Parking $26,000 extra

One Bedroom Units: 1 bath

• Prices from $244,000 to $262,550
• 901 square feet
• Parking $26,000 extra

Am  I missing something or are these prices what you’d pay to live in, say, Lakeview, Lincoln Park or in some buildings in River North?

Nice building + Over priced= No sales

Rubloff has the listings.

The Sunday Chicago Tribune had a cover story over the weekend about the gentrification of the North Pullman neighborhood.  For those of you who don’t know, Pullman is a Landmarked State and National Historic District (one of the few in the country that has city, state and national landmark status) located on the far South Side of Chicago.  It was founded by George Pullman, the railroad magnet, for his factory workers.

If you haven’t ever been down there to check it out- I encourage you all to do so.  (And no, it’s not dangerous.)  Pullman is a wonderful little neighborhood that does- yes- border some not so great areas (like Roseland.)

Pullman is composed of two parts: North Pullman and South Pullman.  As the Tribune article indicates, South Pullman has been much more gentrified than the North, which received landmark status much later and too late to save some of the buildings.  But one bank is trying to revive North Pullman.  From the Tribune:

Park Bank Initiatives, a non-profit subsidiary of Park National Bank, has embarked on an ambitious project to fix up some of the two- to four-bedroom row houses in the northern part of the neighborhood. The work, which has been recognized with a historic preservation award, is part of a larger movement to spur development and help restore that part of the neighborhood to its glory.

“It’s very significant,” said Michael Shymanski, president of the Historic Pullman Foundation and a longtime Pullman resident. “The bank understands that you need these pioneering efforts to set some good examples of what the standard should be for people who want to come in and improve part of the district. And the stuff that they do is quite good.”

The problem with North Pullman is that it is very down on its luck. Park Bank Initiatives is hoping that by restoring some of the rowhomes, that others will follow (after seeing that the neighborhood is on the upswing.) But will they?

I’ve been in both North and South Pullman. The North side is beset by foreclosures and there are homes with boarded up windows.  It didn’t feel safe to me.

This house is currently under foreclosure and on the market in North Pullman.  Not much of the original facade remains.

10639 S. Champlain: 3 bedrooms, 1 bath rowhouse

• Currently listed for $51,950
• Built in 1881
• Sold “as-is”
• Probably around 1300 square feet: bedroom sizes are 14×12, 12×7, 12×7
• No garage- but many times one can be added in the back

While there has been more gentrification and restoration in South Pullman, there are still quite a few properties in the south that are also in need of “help.”

11451 S. St. Lawrence: 3 bedroom, 1.5 bath rowhouse

• Currently listed for $119,900
• 1 car garage
• Built in 1888
• Taxes of $1203.65
• Square footage and bedroom sizes the same as the rowhouse above

You can see that this rowhouse also needs some TLC.

With some cosmetic changes, this rowhouse could be a nice condo alternative.

You can find out more about what’s available in Pullman from the Pullman Neighborhood Organization webpage. Also, some realtors specialize in the neighborhood. Michael Wolski from Coldwell Banker lives in the neighborhood and has many of the listings.

There are several different models of rowhomes. Some were built for the workers, some for skilled craftsman and some for the executives, so obviously, size and features will vary depending on the type of home you’re looking at.

Prices for most of the rowhomes in South Pullman range from $100,000 to $240,000 (depending on how extensively the home is restored and its size.) A few of the bigger executive homes would probably sell for more. Prices have also gone up in South Pullman considerably in just the past few years. Some of the restored rowhomes are beautiful.

If you’re interested in seeing inside some of them, Pullman has a Fall House Tour every October. Tickets are reasonably priced. It’s a good way to see inside a variety of the home types.

My only gripe with the area is that there is little to do there. There are no cafes, no coffee shops and no restaurants to walk to (except a nearby McDonalds, but that doesn’t count.) Some of the residents I’ve talked to have said they would “love it” if a restaurant chose to open up somewhere near or in the neighborhood.  The nearest restaurants are in Beverly.

The State is currently restoring the Marketplace building that burned down a few decades ago. What will go in that space? Will they truly return it back to a market? A market/grocer with a coffeeshop would be ideal and much needed in the neighborhood.

Anyone from Pullman that knows of any efforts to get more retail or restaurants to the area, please let me know. With a few coffee shops or, say, a Thai restaurant, the area could be an undiscovered gem on the south side. And you’ll all be saying: “Remember when those historic rowhouses were only $150,000?”

It’s the second most expensive single family home on the market in Chicago and it just had a price reduction.  Located in the Gold Coast on small, quiet Banks Street, the mansion was built in 1870.  From the listing:

The Most Architecturally Significant & Beautiful Home In Chicago! A 15,000 Sq Ft Masterpiece In The Heart Of The Gold Coast. This Residence Commands Four Stories W/26 Rms, 8 Bedrms, 11 Baths (9 Full & 2 Hlfs), & An Unheard Of 900 Sq Ft Rooftop Terrace. A Genuinely Brilliant 19th Century Treasure Redesigned By Famed Chicago Architect Marvin Herman.Substantial Tax Crdts Avl. To Buyer In The Frm Of Preservation Easement

25 E. Banks: 8 bedroom, 9 full and 2 half baths, 15,000 square feet, 2 car garage

• Last sold in September 2000 for $4.68 million
• Was listed in the spring for $13.5 million
• Recently reduced to $12 million
• Current taxes of $69,788 a year

Mary Bennett at Koenig & Strey has the listing.

Sorry to keep talking about the foreclosures, but they’re inescapable right now.  I’m hoping that I’m at least providing information for those people looking to buy in certain buildings (and want to avoid buildings with multiple foreclosures) or to those looking to see where some deals might be.

Yes, the “deal of the century” is still available (that’s the unit I’ve talked about before that is about 50% off its sales price of only two years ago.)  Clearly, the price will be going lower.

River City, at 800 S. Wells, in the Printers Row/South Loop neighborhood, continues to see condos going on the foreclosure auction block.  If it keeps up this pace, it could challenge The Sterling as the #1 foreclosed building in the city.

Right now, I would put it at a close second for that title.

Part of the problem with the building is that some of the units were bought in the original condition from the developer, American Invsco, so they look nasty.  Other units were renovated- but it’s hard to sell that product when the unit next door is so ugly.

This is an “original condition” unit.  Unit #542:

It’s 3 bedrooms, 2.5 baths and listed at $318,000.  Chicago Realty Partners Ltd. has the listing.

This is a renovated unit.  Unit #533:

This unit is also 3 bedrooms, 2.5 baths.  It’s listed at $374,900 and it just had a price reduction.  Sudler Sotheby’s has the listing.

Which unit would you rather buy?

Unfortunately, foreclosures are simply destroying any kind of value in the building.

Last week another large unit went to auction (similar to the “Deal of the Century” unit and the units show above):

Unit #510: 3 bedroom, 2.5 baths

• Last sold in July 2005 for $534,700
• Auction price of $427,756

This week, two one bedrooms came up for auction:

Unit #1318: 1 bedroom, 1 bath

• Sold in October 2002 for $198,500
• Sold in August 2006 for $250,000
• Auction price of $199,901

Unit #1245: 1 bedroom, 1 bath

• I can’t find a prior sale price
• Auction price of $239,885

Unit #1345, which I’m presuming is the same as #1245 just one floor higher, is still on the market from the developer American Invsco.  They’ve listed it for $194,900.  It’s 660 square feet.

There are 44 units for sale and/or 24 units for rent currently on the market out of 448 units.

River City is a famous Chicago building but it has proven to be an awful investment for condo owners.

Since we seem to talk quite a bit about the luxury market here, I thought it might be interesting to see what one of the biggest luxury builders is saying about the market.  Toll Brothers builds single family homes and townhomes, for the most part, and not large condominium buildings.  But what they have to say about the market is still interesting because a large percentage of downtown Chicago buyers are homeowners in the suburbs who want to move to the city (or simply buy a second home in the city.)

The numbers aren’t good.  (Surprise!)  Yesterday, Toll said sales were down 35% from a year ago.  CNNMoney reports:

Toll Brothers said higher-priced homes suffered the worst cancellation rates, as the average price of the 417 canceled contracts during the quarter was $788,000.

“We continue to believe that excess supply created by cancellations, speculative buyers, and overly ambitious builders; customer concerns about selling their existing homes; and a general lack of confidence are the primary impediments to our market’s recovery,” said a statement from company Chairman and CEO Robert Toll.

The slowdown is definitely affecting the upper bracket market. Heck, all you have to do is see all of the million dollar homes for sale in Lakeview to know that sales have really slowed. 

For instance, there are about 130 single family homes for sale over $1 million in Lakeview right now.  How long will it take to sell this million dollar inventory?  At the current pace, a long time. 

There are some gorgeous houses for sale right now however (as the pictures attest.)  All of the pictured houses are currently on the market in the Gold Coast, Lincoln Park and Lakeview.

What do you get for nearly a million dollars in an older Loop loft building?  You can get a brick, duplexed unit with a huge private terrace.

Haberdasher Square at 728 W. Jackson in the loop/west loop neighborhood is a 225 unit complex with two connected buildings.  The oldest, and the taller of the two, is from 1915, with the second one dating to the 1920s.  Each building was structurally different so some units are concrete and some are timber.

The building was converted to condos in 1995.

Unit #1201: 3 bedrooms, 2 baths, duplex, no square footage is given but I would estimate between 2500 and 2800 square feet

• Sold in October 2000 for $650,000
• Currently listed for $875,000
• Assessments of $910 a month
• The room sizes are huge.  The family room/third bedroom above is 20 x 14 and the dining room is 19 x 15.
• 750 Square Foot Private Terrace (the listing claims its the only one in the building)
• 2 tandem parking spaces included in the price
• Mariana Knittle at Coldwell Banker has the listing

Problems continue to mount with The Spire.  Is anyone really surprised?  The developer, Shelbourne Development, has never built anything over 40 stories.  And now they’re expected to navigate constrution of this monster building?

As reported previously, the official opening of the sales center was delayed several months because they didn’t have the right permits.  And now, Crain’s is reporting that construction on the building may be delayed as the developer is fighting with condo owners in the River View complex next door.  River View consists of townhomes and two high rises.  From Crain’s:

The opposition comes after Mr. Kelleher’s Shelbourne Development Group Inc. admitted that some high-priced townhouses along the base of the River View development would sink about two inches, although the company downplayed the drop, saying it would cause only cosmetic damage. The townhouses rest on a foundation that is separate from the condo high-rises at River View, a two-tower complex along the north bank of the Chicago River, west of the site of the Spire.

The condo association has filed an objection to the developer’s plan with the Department of Construction and Permits- which will delay construction further. Apparently, the easement that the developer entered into with the association to dig under their property was supposed to be only for utility wires- at least according to the association.

Shelbourne may also have to change the configuration of the parking garage. All of this means more delays.

But, again, is anyone surprised? Call me cynical. The Donald and the Trump Organization make it look easy. It’s not.

Check out the Crain’s article for a picture of construction on the building.