Looking Up New highrises are
changing by Barry Pearce Click here for New Highrises & Highrise Conversions Chart.
As
he narrowed the field, he decided that though prices were steeper in brand
new highrises, they offered the best deals. “I
looked at some conversions, existing condos and new construction,” Gauer
says. “What attracted me to the new buildings most was that I’m
guaranteed brand new state-of-the-art amenities and features. I looked at
many lofts too, and the prices that they’re currently going for, $200 to
$210 a square foot...At $300 a foot, River Bend was a better value because
you’re getting everything brand new.” River
Bend is a 38-story luxury highrise planned by Bejco Development for 323 N.
Canal, on the Chicago River. Prices in the tower begin in the $300s and
range upwards of $1 million. The building is one of more than a dozen
downtown highrises either planned or underway in a market with no shortage
of competition, or - for the right projects - buyers. Magellan
Development Group offers perhaps the best examples of how popular brand
new highrises have become in Chicago. The company says it sold out its
highrise at 630 N. State Parkway in less than a month, and then followed
up that success with sellouts of three days or less at two more planned
highrises. The Farallon, a 171-unit tower at 600 N. Dearborn, sold out in
one day last September, according to Joel Carlins, president of Magellan,
and a new 25-story highrise to be built at 480 W. Ontario sold all units
in three days with virtually no advertising. “The
pent-up demand for condominiums in this area is remarkable,” Carlins
says. While
it is difficult to ascertain how many of the units may have been bought by
speculators, who purchase blocks of units as investments to sell later at
a profit or to rent out, the highrises do seem to be moving briskly. The
Fordham, a new highrise planned for a premium location, 15 E. Huron, had
racked up more than 100 contracts two weeks before its grand opening, on
Feb. 26, according to Herb Emmerman, of Equity Marketing Services, which
is handling sales and marketing for the project. The 245 condos at the
Fordham range from the $250s to more than $4 million and include
ultra-luxury finishes and “hotel-type” amenities, Emmerman says. Along
with the Bristol, the Park Tower, River Bend and River View, the Fordham
is part of a growing group of high-end towers with prices that rarely dip
below $400,000 and can run into several millions of dollars. John Jaeger,
of Appraisal Research Counselors, Ltd. says several more of the same scale
are on the drawing boards. “We’re
looking at an extremely busy year construction-wise,” says Jaeger, vice
president of residential projects. “There’s been a tremendous amount
of projects beginning downtown, and a lot that were announced in ’99 are
building now. We’re also going to see more buildings like the Park
Tower, with units selling at $350 to $500 a square foot. Earlier
in the decade, the city saw a spate of condo conversions, but virtually no
new highrise construction. What’s changed? For
one thing, the economy. An unprecedented span of growth and a runaway
stock market have put a lot of cash in the pockets of a lot of home
buyers. Many of these same buyers have built up significant equity in
their current homes and have good leverage to trade up to luxury highrises
in a hot real estate market. Demographics
also favor the new buildings. As well-off baby boomers become empty
nesters, developers say, many are looking to simplify their lives and
return to the excitement of living in downtown Chicago. Some are trading
suburban single-families for low-maintenance condos, while a smaller
number are keeping larger homes and buying in-town residences for weekends
and late nights at the office. The
so-called “echo boom,” the copious children of the boomers, are
meanwhile entering the housing market. Though the higher-end product tends
to be out of their range, some of the new towers aren’t. One
East 15th Place, a 23-story tower by Legacy Development in the South Loop,
has brand new units starting in the $130s. Wells Street Tower, a 33-story
building by D2 Realty Services in Printers Row, also is priced below the
competition and has units beginning in the $130s. At Huron Pointe, 421 W.
Huron, Enterprise Development will have some pricier units, but also some
condos below $200,000. Another
factor in the rise of these buildings is a new interest in living
downtown. The city has worked hard to clean up and populate the Loop, with
physical improvements, new businesses and an incipient theater district.
The trend began with the conversion of countless old industrial buildings
into affordable loft condominiums, and the shift to more expensive
highrises is perhaps a natural evolution. The
stock of good, readily convertible loft buildings in the central area has
dwindled, and prices on the remaining ones have risen sharply. Likewise,
the number of rental highrises that make affordable conversion candidates
has decreased, partly because of earlier conversions and partly because of
a tight rental market in which owners can afford to hold onto their
buildings. “We’re
running out of a stock of buildings to convert,” Emmerman says. “There
are still some wonderful opportunities, but they are not for sale yet. And
the market now has reached sufficient numbers, where people are willing to
pay $225 a foot and up, so new construction is possible.” While
New Homes counted 14 new condo
towers underway, with several more imminent, there were only nine highrise
conversions still selling units. Two companies control the bulk of the
apartments converting - American Invsco and DK / Equity, a joint venture
between Draper & Kramer and Equity Marketing Services. American
Invsco, which converted Lake Point Tower and became one of the nation’s
foremost converters of condominiums, is currently selling the Gold Coast
Galleria, a 331-unit building at 111 W. Maple; the Elm at Clark, a
300-unit tower next door, at 1122 N. Clark; and 1344 N. Dearborn, a
19-story building in the Gold Coast. Conversions
have been selling well not only because there are fewer of them, but also
because they offer a lower price point in a market where rents have been
rising steeply. Both the Gold Coast Galleria and the Elm at Clark have
units in the $150s, while 1344 N. Dearborn has some in the low $100s. Quick
delivery also gives today’s highrise conversions an edge. While the
newest highrises on line can’t promise occupancy until some time in
2002, most conversions can deliver units in as much time as it takes to
paint and carpet an apartment. “Obviously,
delivery time is a negative; I’ll be moving in August of 2001, but
it’s worth the wait,” says Gauer, the River Bend buyer. New
highrises also are being discussed for the space at Illinois Center
currently used as a golf course; at the Montgomery Ward site, at Chicago
and Halsted; and at the near-Loop site controlled by CSX Corp. Will
Chicago’s latest love affair with vertical housing support so many new
towers?
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When
Paul Gauer decided to buy a condo in a new highrise, he looked at 15 to 20
different projects during four months of shopping. He checked out the
planned towers that have yet to sink foundations as well as condo
conversions and some lofts. In the process, he became something of an
expert on downtown residential real estate.