Buying new Construction in Lincoln Park? Bring plenty of cash - and patience

Maura Grace spent two years shopping for a new condo before she found one she liked and could afford. Paul Breytman looked at only one project before buying his condo because, he says, there was virtually nothing else available. Another pair of buyers spent around $700,000 on a standard city lot so they could build a custom single-family house. They will spend another $2 million in construction costs and wait more than a year before they can move in.

Welcome to Lincoln Park.

Bounded by North Avenue, the lake, Diversey and the river, it is one of the city’s prettiest neighborhoods. Perched on a stretch of lakefront park that contains the nation’s oldest zoo, the Chicago Historical Society, a new nature museum and two beaches, it has more than its share of institutions and scenic beauty. West of the lakefront, it’s bistros and boutiques, extravagant Victorian mansions and overpriced vintage apartments, gobbled up each spring by boys reluctant to let the frat party end.

The neighborhood, or at least its market for new residential construction, also has taken on a Disneyesque flavor. Buyers scrape and save and finagle to get into the Park and then must elbow through the crowds and wait patiently in line before they even catch a glimpse of the right ride.
Or any ride.

At press time, New Homes counted only half a dozen new buildings with condos available underway in the neighborhood, and several of those had only three to six units. Only a handful of single-families are currently on the market in Lincoln Park and most are west of Ashland, on the neighborhood’s formerly industrial fringe.

Lincoln Park remains one of the city’s most desirable neighborhoods, but as the real estate market begins to slow, exorbitant land costs and the scarcity of tear-down properties (old houses bought and cleared for development) have kept new condos and single-families to a trickle in the exclusive enclave, especially in the prime blocks east of Racine.

“There is no new construction in Lincoln Park, not at all,” says Paul Breytman, who recently bought a 1,400-square-foot condo at the Palladio, a 10-unit building under construction at 2042 N. Clark. “At the time (I bought), this was the only one I knew of.”

While it might be an exaggeration to say there is no new construction in Lincoln Park, for particular buyers, there often is no new construction for them. Breytman, a 45-year-old Russian immigrant, is vice president of operations for Real Estate Mortgage Network, in Skokie. Now that their daughter is in college, he and his wife wanted to sell their house in Deerfield and downsize to a condo in the city. They insisted on a good location in Lincoln Park (close to the lake) in a building that was not too big and not too small with a high level of finishes.

The Breytmans’ criteria didn’t leave a lot of options at the time they were shopping – to their minds, none beyond the Palladio. Marilyn and Ray Cohen, another pair of empty nesters, faced the same dilemma when they decided to move from their Lincoln Park townhouse to a condo within the neighborhood.

“I did look at the papers every week for real estate,” Marilyn Cohen says. “We bought property in Lakeview for an investment, and we always look through the real estate section. There hasn’t been anything offered in Lincoln Park. When they say penthouse, they mean a duplex, and we wanted something all on one level.”

Cohen is 57 and her husband is 59. When their children were grown, though still living at home, the Cohens moved from Winnetka to a brand new Lincoln Park townhouse, five years ago. Now, with the children gone, the couple, who own their own mortgage company, want a new penthouse unit in the neighborhood. It had to be on a single level (Ray’s knees aren’t what they used to be); it had to have an elevator; it had to be large; and it had to have ample outdoor space (an average balcony wouldn’t cut it).

“It was spur of the moment when I saw a blurb in the paper saying Lincoln Park, new construction, penthouses, one floor, elevator,” Cohen says. “I went on the Web site to find out where, and said, This is for us.”

She saw the ad, for a six-unit luxury building now under construction at 2442 N. Southport, and bought within a few weeks – without bothering to look at another development.

Maura Grace, a 33-year-old consultant, had been looking for a larger condo in Lincoln Park for a couple of years, but unlike the Breytmans and the Cohens, her preference was for vintage.
“I’d placed a couple of bids on vintage units, but things were so expensive it never worked out,” says Grace, who is single. “I live on Wrightwood now, and there’s been a lot of construction there, huge single-family homes, but I don’t think I cold afford the garage on one of them.”

Neighbors convinced Grace to take a look at the Delta on Lincoln, an 18-unit new construction project at 2762 N. Lincoln, less than two blocks from her current condo. The new condos have two or three bedrooms and are priced from the $330s to the $390s. Though she was reluctant to purchase new construction – she’s heard the horror stories – she liked the wide floor plans and settled on a two-bedroom, two-bath unit of about 1,400 square feet.

The buyers interviewed for this story differ widely, but they agree that shopping for a brand new home in Lincoln Park is a little like hunting an endangered species. If your standards are high – generally the case for buyers plunking down anywhere from $300,000 to several million dollars – you’d better have as much patience as money, they say. There is so little new construction available in Lincoln Park, and the prices even on small condos have risen so high, that it’s not unusual for buyers to wait a year or longer before they find an acceptable home.

The 2700 Club may be the largest of the new developments, with 35 new condos underway at 2700 N. Halsted. Prices range from the $270s for a one-bedroom with a den to around $605,000 for a three-bedroom unit with three baths, but half of the project already is sold.

The five-unit building under construction at 1117 W. Armitage has only one condo left, a two-bedroom two-bath space for $539,000. The 10-unit Palladio is more than half sold and a couple of smaller buildings only have one or two units that aren’t spoken for. At press time, the only new single-family home developments advertised for sale in Lincoln Park were six five-bedroom units on the 2700 block of North Paulina, starting in the $920s, and seven others on the 2600 block of Paulina starting at $900,000, though the developer of the second project is also willing to sell the vacant lots to individual buyers.

The homes planned on Paulina are technically in Lincoln Park because north of Fullerton, the street sits on the east side of the river – the neighborhood boundary. The Paulina corridor isn’t exactly what most people think of when they imagine Lincoln Park, but the scarcity of land and dizzying prices have pushed development to the edges of the neighborhood, west of West DePaul.

The question then is, why bother shopping in Lincoln Park? Chicago continues to see a massive amount of new construction in neighborhoods ranging from the Near South Side to Edgewater. New homes may not be cheap in neighborhoods like Roscoe Village, Wicker Park, Ravenswood and the South Loop, but they’re much cheaper than in Lincoln Park. And there are plenty of places to shop, especially in a neighborhood like the West Loop, where dozens of new developments are selling hundreds of units.

For many buyers, however, Lincoln Park is the only neighborhood. Even Lakeview, similar in many ways and at a slightly lower price point, is too far north.

“The location is important because this building is more about location than a view,” says Beata Niedziolka, of Coldwell Banker Residential Brokerage, exclusive sales agent for the Palladio. “It’s so close to the park and the lake and the zoo. These are buyers who love Lincoln Park and want to stay there. Lakeview is too far for them.”

The Cohens talk about Lincoln Park’s convenience, but they will make a reverse commute to their office at Lake Cook Road and the Edens to stay there. Breytman also will drive out of the city to get to work, in Skokie, so that he can live in the neighborhood.

“It’s the most prestigious location in the city,” Breytman says of Lincoln Park. “And in that specific location, one step to the left is the park, to the right is downtown; it’s close to the lake. It’s perfect.”

Grace has lived in Lincoln Park for 10 years and while she’s considered other neighborhoods, she would much rather stay put.

“I did look at Dearborn Park, which is interesting, and at Bucktown and Wicker Park, but they’re too far from the lake,” Grace says. “I wanted something less edgy, with a lot of green space that was close to the lake. I’m a big runner and walker, and the lake is calming.”

The price of a two-bedroom condo at the Delta on Lincoln, where Grace bought, would buy her a four-bedroom house with a yard and garage in some parts of the city, but she thinks her new place is worth the money.

One advantage to buying in Lincoln Park, buyers say, is that although prices are high, there are few hidden costs. Most projects in the neighborhood have a level of standard finishes that makes upgrades unnecessary.

“Our units are fully loaded,” Niedziolka says of the Palladio. “There is nothing you need to upgrade here. We have hardwood floors throughout, master baths with Jacuzzis, oversized steam showers with granite benches, ceiling heights of 11 feet. In each unit we have floor-to-ceiling columns inspired by the Renaissance; the fireplace mantle is one piece hand-sculpted from Italy.”

The 2700 Club also offers standard finishes that would be upgrades in other locations, according to Katherine Brennan, a sales agent for Koenig & Strey, exclusive sales and marketing agent for the project.

“All the upgrades are included in our purchase prices,” Brennan says. “We have under-mount sinks in kitchens and bathrooms, Grohe fixtures, granite counters, crown moldings, hardwood floors in all the living areas, fireplaces with granite or stone surrounds...”

Buyers have come to expect a high level of finishes from new construction in the neighborhood, just as they have come to expect extremely high prices. Many of those like Grace, who already live in the neighborhood, would not have been able to afford larger spaces and better finishes if not for the quick appreciation they’ve seen on their current properties.

“Buying a condo in Lincoln Park was the best investment I’ve made in my adult life,” Grace says. “I had more than $100,000 in equity when I went to sell.”

The Cohens tell a similar story. The brand new townhouse they bought in Lincoln Park for $425,000 five years ago was worth $675,000 when they decided to move.

According to the Chicago Association of Realtors, the median condo in Lincoln Park was priced at $310,000 during 2000. The median is a mid-point, meaning half of all condos sold for more and half for less than this price, and it is based on more resales than new construction, which tends to be priced higher. The 2000 median represents a 30.8 percent jump over the median price during 1998.
With the softening in the stock market and a slower general economy, however, there may be signs that appreciation in the neighborhood also is slowing.

During 1999, 73 new condos closed in Lincoln Park, with a median price of $389,000 and an average market time of 69 days. Last year, the number of brand new condo units closed grew to 167. But the average market time also was up, at 88 days, and the median price fell to $360,000. If the market is not getting cool, it may be moving from hot to warm.

The nature of development in the neighborhood also has changed. A couple of condo projects have come on-line in Lincoln Park to test prices and then shut down or postponed to reconfigure the product when sales didn’t materialize.

Luxury single-family houses, which tend to be priced in the $1.5 million to $3 million range, are rarely built “on spec,” or without a buyer, anymore. Instead, buyers in this range usually have to work with a broker to find a lot and commission a new house from a custom builder.

“We used to build on spec, but we don’t anymore,” says Marcel Freides, of Freides & Casa Grande, one of Lincoln Park’s premier custom home builders. “We can’t afford the properties anymore. In East Lincoln Park lots cost $650,000 to $700,000.”

Charlie Grode, of BGD&C Corp., another top Lincoln Park luxury builder, says buying land in the neighborhood is generally too expensive and risky.

“Lots are $700,000 to $800,000 for a teardown,” Grode says. “You’re paying for location. People call me wanting to sell land, mostly because they think we’re going to pay major bucks, and sometimes I will, if it’s worth it. On the other hand, we have to be very careful. We don’t do spec anymore; we’re more conservative than that. Who wants to be stuck with a $2 million to $3 million house?”

There is intense competition within the neighborhood for the smattering of teardown properties that do become available for development. A small group of real estate brokers, such as Sean Conlon, a principal in Sussex & Reilly, have gained reputations for putting deals together by finding and controlling lots in premium locations.

“We’re known for efficiency and our use of technology now, but what people have lost sight of, is that I made it knocking on doors finding land,” Conlon says.

His advice to would-be condo buyers in the tight Lincoln Park market is to keep in touch with the brokerages that sell new construction in the neighborhood and have a steady inventory coming on line. Buyers can then get sneak previews of projects still in the planning stages and might have first crack at the right unit – possibly the only one they’ll see for a year or two – before it’s advertised.