Crib Chatter

As I talked about earlier, closings have begun at Avenue East, at 160 E. Illinois the new high rise right off of the Mag Mile in Streeterville.  (It is much more completed than the picture above suggests.)

There isn’t much architecturally interesting about the building, but it has a great location right near the Mag Mile without actually being ON the Mag Mile with its crowds.

The building has 130 units, with 20 of them currently listed for re-sale.  Most of the re-sales are through the developer.  But flips are now appearing as well.

Unit #1102: 2 bedroom, 2 bath, 1508 square feet, terrace overlooks Michigan Avenue and South skyline, parking available

• Those familiar with the building tell me that this type of unit would have previously sold in the mid-$600,000 range.
• Currently listed for $810,000 plus $40,000 for parking

The flipper is looking for $537 per sq/ft.  Will they get it?  That is a very hefty flip for an average building that isn’t even sold out yet.

Stay tuned.

Marie Cabrera at Baird & Warner has the listing.

File this post under “they just don’t build them like this anymore.”  I don’t care how “nice” new is.  It never looks like this.

Look at that woodwork and the crown and ceiling moldings!  They’re exquisite.

The pictures above are from an 1888 Victorian at 462 E. Oakwood Blvd. in an area of the South Side known as the Oakland Landmark District.  It is an area just north of Kenwood, only a block or two from the Lake.  Some confuse it with Bronzeville.  From the Chicago Landmark District website:

During the 1870s and ’80s, when the area became known as Oakland, it was one of the city’s premier residential neighborhoods, the embodiment of an elegant Victorian-style suburb. The architectural styles of its surviving rowhouses and single-family residences include Classical Revival, Queen Anne, and Richardsonian Romanesque. The core of this district centers on a group of picturesque, Queen Anne-style cottages designed by Cicero Hine in 1886-87. The district also includes 50 nearby historic structures, some located as far north as 35th Street.

The house recently had a price reduction.   It was listed over $1 million previously.

462 E. Oakwood Blvd: 5 bedrooms, 3.5 baths, 5000 square feet

• Currently listed for $990,500

Sybil Martin of Coldwell Banker has the listing.

The day after the Chicago Spire made its big splash, Chicago developer Michael Reschke was interviewed in the Wall Street Journal about the mega-high rise he has on the drawing board, the Chicago Waldorf.  According to the article, it will be a 100 story Waldorf-Astoria hotel and condominiums with 325 rooms in the hotel and 300 luxury condos.

100 stories! 

The Chicago Waldorf will be built in partnership with Fordham Co., who has developed other luxury condo buildings such as the Fordham at 25 E Superior and the nearby Pinnacle.

The picture above is from the Wall Street Journal (provided by De Stefano and Partners).  The building looks very similar to the Chicago Spire- which will literally be less than half a mile up the street.  There is no address provided for the building but I believe it will be built on one of the lots across from the River East AMC movie theater which is on Illinois and Columbus.

They are expecting to price the condominium unts at $800 per sq/ft.

This project is added to the growing list of luxury projects announced or underway in Chicago right now.  In the last two days alone, with the grand opening of the Spire, 1500 more condo units all in the luxury price range have been announced.  How many rich people are there?

The article even concedes that the market for luxury condos is slowing.  Reschke is also developing 10 E. Delaware, a 121 unit luxury building in the Gold Coast.  This project is much smaller and is what I would consider a boutique building.  It’s in a great location and the units are very well appointed with Poggenpohl kitchens and subzero appliances.

I originally thought that people buying in this building would be older buyers in the neighborhood who are tired of their older buildings but love the neighborhood and want “new” and so would trade in their condo for a new one.  The price points aren’t crazy in 10 E. Delaware.  They have 3 bedroom, 3 bath units still available for as low as $1.299 million.

But the article says that only 65% of 10 E. Delaware is sold even though they’ve been marketing it for well over a year.  The building is due to be completed in 2009.

If they can’t sell that building at those decent price points in a great location, why do they think they’ll be able to sell an even more expensive tower in an already crowded area in Streeterville?

Reschke seems unfazed by any slowdown.  The Wall Street Journal asked him if he didn’t think he was getting in over his head (in addition to the Waldorf and 10 E. Delaware developments, he has several other hotels in the planning stages around the city).  They interviewed him at his office and conference room which was filled with plans of all the developments he’s working on. He replied:

“It’s not that many,” he said. “How can I be overextended? I still have room on the walls for more drawings.”

Yes indeed. How could he be overextended?

The Wall Street Journal had some interesting Chicago condo statistics in its Wednesday edition.  According to Marcus & Millichap Real Estate Investment Services, Inc. the Chicago area is going to add 26,000 condominiums this year and next to the already existing supply of 220,000 units.

According to the Chicago Association of Realtors:

• August saw a 10.5% decline in the number of condos sold compared to August 2006.
• The number of condos sold in August was 1707 units.
• The average market time was 109 days versus 90 days in 2005.
• Median sales prices were up 6.6% in August to $325,000.

It’s possible that condo prices continued to go up because more units on the higher end of the market were sold.  That is what is happening in several other cities right now.

It’s all about the inventory however.  The builders continue to build.  New buildings continue to be announced. 

Who are they selling to?  I wonder.  There are already thousands of unsold units in just the downtown.

Crain’s has posted information from the press “sneak peek” at the Chicago Spire today.

The rumors about prices weren’t too far off.  They will range from $750,000 to $40,000,000 (not the $10 million that was talked about.)

Several things:

1. The $750,000 cheapest unit will be for only 534 square feet.  I’m assuming that is a studio apartment.  Who is going to pay that kind of money for a studio?  That comes out to $1404 per sq/ft!  These small units will be among the most  expensive per square foot in the entire city.
2. $40 million for the penthouse- would you really want to live on the 150th floor?  Really?  Why not just buy on, say, the 100th floor for probably $30 million or more less and you’d have the same view (and maybe even better because it would have less cloud cover and weather related issues.)  Oh- but then you wouldn’t be on the “top of the world.”

The units will have 10 foot high ceilings, floor to ceiling windows (think of Helmut Jahn’s 600 N. Fairbanks) and wide-planked herringbone floors.

There will be 1,193 units.

According to Crain’s, when the sales center opens in mid-January 2008 you will be able to:

The sales center offers buyers the chance to walk through models of a living and dining room, a kitchen, two bathrooms and a nearly 1,000-square-foot unit with a “cocoon bed” enclosed within frosted glass walls.

Let the great debate begin. What is the real market for this building? Let’s say he sells half of them to European investors (who, basically, because of the weak dollar, are getting them at 50% off.) So a European investor buys a studio for $800,000 (which is really $400,000) and intends to rent it out.

The John Hancock has studios. There isn’t one for rent currently but there is a one bedroom for $1800 so what would a studio go for?  Much, much less.  And those studios are closer to 700 square feet.

I know what you’re thinking. That building was completed in the 1970s- so you can’t compare. Let’s compare it to 340 on the Park the recently completed 45th tallest building in the world with some pretty striking views of Grant Park and the Lake to the South. According to Craigslist, you can pay anywhere from $2600 to $10,000 to live in there.  And the smallest one bedrooms are around 1,000 square feet and go up from there.

How will any “investor” in the Spire make money off owning one of these units?

And remember- there will be hundreds of units in the building. I shudder to think what the assessments will cost for owners as well.

Does this building even make sense in Chicago at this time? There is a housing bust going on. None of the other “luxury” buildings is even close to selling out its product. If anything, there isn’t enough of affordable product.

I don’t want it to seem like I’m against the building.  I’m just as proud to have the Spire in the city as anyone else. I was just up in the Sears Tower at the Skydeck and felt a surge of pride watching the History Channel movie promo they show you about how they built it before they let you up to the Skydeck. It is an engineering marvel. The Spire will be as well.

But aren’t the prices just a little unrealistic?

I already have had several posts on early flips at Helmut Jahn’s modern high rise at 600 N. Fairbanks in Streeterville.  The closings have not yet begun but another flip has appeared.

Unit #1901: 3 bedroom, 2.5 baths, 1746 square feet, Southeast facing unit

• Hasn’t yet closed but those familiar with the building tell me pre-construction price would have been around $800,000 without the parking
• Currently listed for $1,140,000 plus $70,000 for parking

That’s a mighty daring flip, if I do say so.  That’s $652 sq/ft.

The sale is subject to the close of the original contract.  Closings are expected to begin in the building in October.

For downtown condos, there are a couple of price ranges that are having difficulties in this market.

One of those ranges is $400,000 to $600,000.  At this price, without the wacky loans, you either need a very good paying job or two incomes that also pay very good.  Take  away the wacky loans and actually require a downpayment and the pool of buyers in this price range shrinks.

But inventory is just huge.  There are too many $500,000 units.

Sellers in this price range in just average buildings (not prestige buildings and with nothing much unique about their unit) are having a hard time.  Many are resorting to price reductions.  And some are finding they will not make a profit if they bought in the last two to three years.

700 W. Van Buren is one of those buildings.  You don’t think much about it- even when passing it on the Eisenhower Expressway (sorry!).  I’m not saying there is anything wrong with it- but it’s one of those buildings in the loop/near west loop that is just there.

Some sellers are taking it on the chin there.  I just saw this post on Craigslist saying that they just lowered $49,000 and they are willing to finance.  It also says that they put in $100,000 in upgrades.  If so- they are really losing money.

Unit PH#3: 2 bedroom, 2.5 bath, 1433 square feet, large 7 x 21 balcony with landscaping facing east

• Currently listed at $499,000 (parking additional)
• Sold in August 2005 for $480,000
• Sold in October 2003 for $442,000

There has been some appreciation over the last four years, but once you pay closing costs and your realtor- you’re pretty much losing money.

It’s rough out there in this price range.

 The Chicago re-sale market is showing the strains from the housing slowdown.  Some owners have been trying to sell for all of the spring/summer selling season.  And others have been trying to sell since the summer selling season of last year- 2006!

Such is the case with several vintage condominiums in this 1894 graystone building on beautiful Belden in Lincoln Park at 549 W. Belden.  This building is located in East Lincoln Park, not far from the Lincoln Park Zoo with easy access to the nightlife and restaurants of Old Town and on Armitage.  It is a prime street, with million dollar mansions lining the block.

Unit 1RE: 2 bedroom, 2 bath, a den, no square footage given, high first floor, doesn’t appear to have in unit laundry (can you put it in?), no parking

The pictures above are of Unit 1RE.  The tall ceilings are fabulous.

• Currently listed for $359,000
• Previously sold for $343,000 in January 2005
• Previously sold for $220,000 in April 2000
• Has been on the market since early spring with several price reductions

Unit #4RE: 2 bedroom, 2 bath, 1100 square feet, top floor with a private roof top deck, w/d in the unit, listing says it has been rehabbed with new baths

• Currently listed for $368,900
• Previously sold for $338,000 in July 2004
• Previously sold for $232,000 in December 2000
• Has had several price reductions
• Has been on the market since Summer 2006

What’s wrong with this picture?  When does a 2/2 with in-unit laundry priced under $400,000 not sell in Lincoln Park?  The assessments are low.  Unit #1RE has assessments at only $208 a month.  While Unit #1RE doesn’t appear to have in-unit laundry, it may be possible to put it in (because #4RE has it.)

Both suffer from not having a parking space, which, frankly, with today’s picky buyers, does impact re-sale in these dense neighborhoods.  It is a deal-breaker for many.

It appears that neither of these owners is going to make any money off of these condos, despite having lived there for several years (and being in one of Chicago’s best neighborhoods.)  The real price appreciation took place from 2000 to 2004 and it has slowed down markedly ever since.

A sign of things to come?

Estate Properties has the listing for Unit #4RE.

Cindy Wilson at Koenig & Strey has the listing for Unit #1RE.  You can see more on the listing at this post on Craigslist.

The world’s tallest residential building, the Chicago Spire, is under construction near Navy Pier in Chicago.  Chicago is already home to the current tallest residential building in the world, the John Hancock Building, built in the 1970s (all of the more recent “tallest” buildings have been purely commercial).  The Hancock is a mixture of residential and commercial however.  The Spire would be solely residential.  The Spire dwarfs even the Hancock in size however.  It is double the size of the 45th tallest residential building in the world, the recently completed 340 on the Park at 340 E. Randolph.

Yesterday was supposed to be the grand opening of the Spire’s sales center but that has now been pushed off until January 2008.  Instead,  the developer held a “sneak peek” look at the project for realtors and the media.

The Irish developer, Shelbourne, has made no secret of the fact that they are marketing the units aggressively to overseas investors.  They have a separate real estate agency handling sales specifically for the overseas market.  At more than $1000 per square foot, these would be among the most expensive units on the market in Chicago.  And you’re going to have to sell a whole heck of a lot of them to get the building built.  There will apparently be 1200 units. 

Even with a healthy economy, Chicago doesn’t come close to the money found in London or New York.  Hence, the reason that the developer is pushing them to foreign investors.  And with the dollar trading so weak to the Euro and the British pound, you’re essentially buying a unit at nearly 50% off.

Problem is, apparently Chicago is not seen as a world class city by the Europeans.  The London Telegraph recently discussed the problems with “selling” the Spire overseas:

Yet investing in this premium-priced tower designer skyscraper, in the US where many property prices are falling, and in a city largely unknown to British investors, may well appeal only to the brave. Conventional wisdom urges investors to buy lower-cost properties in established markets with limited supply.

The Spire’s story so far may also make investors nervous. The original developer failed to win funding so dropped the scheme, rival developer Donald Trump claims the Spire may be a terrorist target, and the Calatrava design has seen late changes including the removal of a proposed hotel. The Chicago Times newspaper has suggested that a shorter tower could be built on the Spire’s existing foundations if the full scheme is scaled back.

Will the Olympics be a major impetus to putting Chicago on the map internationally? Maybe.  If Chicago gets the games.

The units will seem cheap compared to their European counterparts (heck, even to their New York counterparts.) But “cheap” is relative.

Official prices are being kept secret ahead of a four-month marketing campaign prior to the units going on sale in January 2008. But Sherbourne hints the apartments may cost around a quarter of their central London equivalents.

“Prices fetch £3,000 per square foot in central London and £2,500 in Manhattan, and the Spire will cost only a fraction of that,” says Savills director Ed Lewis. He promises each apartment will be big: “Americans like their elbow room. Even a studio will be 750-800 sq ft, some 15 to 20 per cent larger than in the UK.”

What will a building be like that is nearly all owned by investors? What will that contribute to the community if there are few Chicago residents actually living in the building?  Or they are all, simply, renters?  No one seems to be asking these questions.

Sales at the high end have definitely slowed. Trump still has quite a few units for sale. Waterview Tower is the same story.  The Ritz is also apparently only 40% sold.  What about Canyon Ranch?  No one talks about its sales.  And on and on and on (in the upper bracket.) The agents act as if the boom will go on forever:

“Chicago remains pretty strong and has certainly not suffered in the way some markets have – for example San Diego and Boston,” says Chris Gaggero, an English estate agent who works for @Properties, a realtor in the city.

“The Trump Tower, which added a lot of inventory to the high-end downtown market in Chicago, doesn’t seem to have created a drag,” Gaggero adds. He points out, however, that the number of top-end apartments already on sale in downtown Chicago is 15 per cent up on the figure two years ago. Prices in this sector have risen only one per cent since 2005.

Conveniently, the agent giving the “all is well” quote is from @properties, the realtors chosen as the marketing agency for the Spire in the United States. What are they going to say- that it will never sell? Of course not. Interesting statistic, though, that prices in the upper bracket haven’t really gone up at all in nearly three years.  The article lists the pros and cons of investing in the Chicago Spire. Do you agree?

Pros and cons of investing in the Chicago Spire

PROS

• Architectural landmark

• Developer keen to woo British buyers

• Exchange rate

• Ripe for corporate letting

• City set to boom long term

CONS

• High price

• Tall towers are not always popular with renters

• Well-publicised problems in US housing market

Prices at the Spire haven’t officially been announced yet but numbers that have been floating around put the range at $750,000 to $10,000,000.

While I’m on the subject of the most foreclosures, we’ll continue on with the list of the buildings that top the list.  This is an unscientific survey based on the number of times I see the building’s address when looking at the foreclosure listings put out by Record Information Services.  The building that has the dubious distinction of claiming the #2 spot, after The Sterling, is Millennium Centre at 33 W. Ontario in River North.  It is a 363 unit building originally developed by American Invsco (hm…yes, them again.)

This building is suffering from the same fate as The Sterling.  Apparently investors no longer are able to flip and many can’t handle the payments.  Many of them bought under the American Invsco “deal” of 2-2-2.  There is also the phenomena of, frankly, people just living above their means.

Several times a month, units come up for foreclosure auction in the building.  Just last week, I talked about the $1 million plus unit that came up on the auction block.  This week it is a more mundane 2 bedroom, 2 bath.

Unit #28G: 2 bedroom, 2 bath, 1300 square feet, NW views

• Previously sold for $437,700 in November 2003
• Previously sold for $560,000 in February 2006
• Auction price of $448,000

There are no pictures of Unit 28G as it’s not currently on the market.  But Unit #26G  is still available for sale through the developer.  The pictures above are of Unit #26G.  Is that carpet I see in the living room?  Gasp! 

Unit #26G is priced at  $459,900 plus $27,000 for parking.  American Invsco has the listing.  Unit #28G is being auctioned off for slightly lower than the Invsco unit currently on the market.  But does that make it a deal?  We’ll see.