Most Downtown Chicago Condo Developers Have Forgotten First-Timers
Most downtown Chicago’s new-construction condominium developers are not meeting the demand for affordable units targeted to first-time buyers.
That is the conclusion of the “Downtown Chicago Benchmark Report,” Appraisal Research Counselors’ latest analysis of new-construction condo development for the fourth quarter of 2014.
“Six of the seven new downtown condo projects started marketing programs during 2014 are targeting the affluent, upscale buyer,” noted Gail Lissner, vice president of Appraisal Research.
Five of the seven projects are priced from $600 to $1,100 per square foot, and unit sizes average more than 2,000 square feet, which means prices typically range from $1.2 million to $2.2 million.
“Only one South Loop project is oriented towards the first-time buyer,” Lissner noted. The affordable project, developed by CMK Development, is 1345 S. Wabash which offers 144 units in a 15-story high-rise. The average price for an 891-square-foot unit is $289,575, or $325 per square foot. Fifty sales have been reported.
This building, which is currently under construction, targets price-conscious buyers who desire attractive, contemporary finishes and are not focused on building amenities, Lissner said.
“In an effort to keep monthly condo maintenance fees and development costs as low as possible, CMK does not provide any common-area amenities such as fitness rooms, sun decks and business centers,” she said.
Another affordable condo opportunity downtown is The Guild, a 176-unit high-rise at 1555 S. Wabash in the South Loop, Lissner said. Built in 2009, the 14-story high-rise was caught in the Great Recession and only 35 buyers closed on their pre-sale units. Formerly rented, the remaining units are now being offered for sale at prices averaging $346 per square foot.
“Although only five years old, The Guild’s condos are being extensively renovated to make them comparable to 2015 construction, with new finishes including new hardwood floors, cabinets, appliances and quartz countertops,” Lissner said. The building’s common areas also are being upgraded.
At the end of the fourth quarter of 2014, new-construction condominium developer inventory rose to 643 units downtown, up from 467 units at the end of the third quarter, Appraisal Research reported.
“Clearly, there has been a recovery in the condo market downtown,” Lissner said.
“However, with the limited development activity occurring, new development sales volume was extremely modest during 2014—totaling fewer than 400 units.”
Back during the condo construction boom, between 1998 and 2007, annual sales contracts ranged from 3,000 to 8,000 units, although some of these deals did not close after 2008 because of the real estate crash, Appraisal Research reported.
Other affordable opportunities can be found in the downtown condo resale market, where prices currently average $399 per square foot in 65 buildings surveyed by Appraisal Research. In 2014, closed resale condo prices were 4 percent below 2008’s peak price levels.
If you have tons of cash and are shopping for a new luxury condo unit north of the Chicago River in such neighborhoods as River North, Streeterville or the Gold Coast, expect to pay more than $650 per square foot for a residence with more than 2,100 square feet.
Mid-priced new choices include 100 West Huron and 400 West Huron, boutique condo buildings that started marketing in October of 2014. Both boutique buildings offer 26 to 28 larger sized units with average prices of about $650 to $685 per square foot.
The new construction ultra-luxury condo market also is reviving in the Gold Coast, where sales and construction are underway at 4 East Elm, Appraisal Research reported. Units ranging in size from 3,100 square feet are selling for an average of $950 per square foot.
About 60 percent of the 35 units are sold.
At the top of the market is 9 West Walton, where 70 ultra-luxury, new units now are being marketed at prices averaging more than $1,100 per square foot, Lissner said. The condos will feature an average 4,000 square feet of living area.
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.