Robert Darrow, @properties

Archive for the ‘Construction’ Category

Your guides have been watching developments throughout the downtown market for signs of life.  But instead, they seem to be dropping like flies.

The latest news on Wacker Drive at the Waterview Tower is that the hotel planned for a portion of the building has served notice to the developer that they are terminating their agreement to open the Shangri-La Hotel inside the building.

The developer, Teng & Associates, has been unable to get new financing from sources in China, and construction crews stopped working on the building in the fall last year.  Nothing has been happening on the construction site since then.

Remarkably, Chicago has not had many construction projects that go belly up during construction.  Besides this development, the only other unfinished eyesore is the mid-rise condominium building located at the corner of Fullerton and Clybourn on the west edge of Lincoln Park.

Over at Trump Tower, the developer and the bank have agreed to set aside their differences and try to work out a solution to the final sell-out of remaining units in “The Donald’s” Tower.  Financing restricted the developer from lowering prices on the remaining units which has caused sales to grind to a halt even though competing re-sale units in the building are tens, if not hundreds, of thousands less.

Although there are several un-sold units remaining for sale, the building is practically complete. 

Your guides weren’t seeing things.  All the seemingly un-related stories about the slowing or halting of construction on condominium high rises all over Chicago are the direct result of the credit crunch and sour economy. 

Although there are a record number of condominiums scheduled for delivery in 2008, and a remarkable number still in 2009, construction on anything with delivery in 2010 and beyond has pretty much ground to a halt.

The Chicago Tribune reports on the Appraisal Research Counselors latest figures in today’s paper.  It looks like that despite finishing 4,900 condominiums in 2008 and 4,600 in 2009, developers are projected to complete and deliver only 500 in 2010.

The report is specific to condominium deliveries in high rise buildings – defined as twelve stories or more.

Developments that have slowed or stopped construction in the downtown area include:

• Most famously – the Chicago Spire, where work has slowed except the finishing work on some utilities and caisson work.
• A new development in the New East Side near the Aqua has been put on hold indefinitely.
• At the Waterview Tower on Wacker Drive at Clark Street the developer has indicated that alternative financing is in the works, but the construction site has been quiet for months.
• A hotel development called Stabridge Suites at 127 W. Huron in River North has been idle since July.

While it’s never good news when there’s trouble in the marketplace, we’re relieved to hear that the pace of construction is going to slow to match demand.  It’s the first step in a recovery to a more balanced market.  It should be an interesting ride along the way.

From the newspapers on Thursday and Today, as well as local media outlets, the message is clear:  the market is still in turmoil.

The Illinois Association of Realtors released statistics on Wednesday that showed that residential sales were off 30% from the number of homes sold one year earlier.  Home prices were also lower – 5.7% lower than August a year ago.

Headlines on Thursday reported that Donald Trump is having a hard time selling the last 30% of the units in Trump Tower.  “The days of building towers like this are over” Trump was quoted.  The Donald says he is lucky (along with Chicago) that his was finished.  The Loop skyline is now littered with construction sites that are sitting idle and developers are looking for ways to slow the pace of building.

Trump is also looking for buyers to purchase the lower 4 floors of the Tower.  Consisting of retail space and restaurants, the sale of the space would help payoff some of the reported $640-million in loans on the project.  The retail floors could sell in the $115-million to $130-million range.

On Wacker Drive, the shell of the Waterview Tower and Shangri-La hotel is quiet.  Calls to the developer by the Chicago Tribune went unanswered.

The developer is trying to figure out how to slow down construction at 400 North Lake Shore Drive after initial sales of 30% then ground to a halt.

Local media outlets reported Thursday that construction is also halted at the Chicago Spire – the 200-story high rise planned at the Riverfront and Lake Shore Drive.  Over the weekend, your guides saw activity on site, and we think the foundation is being finished.  But local TV stations were reporting that any more construction is on hold.

From Crain’s Chicago Business yesterday:

Vacant houses may be a scourge of poor neighborhoods, but these days they are showing up all over, even among high-end properties where construction starts only to fizzle and then stop cold.

The back stories of these real-estate “white elephants” usually can be traced to three causes: Developers or homeowners run out of money; a DIY-er underestimates the work involved, or work begins just before the birth of a child and “becomes overwhelming,” says Joel Berman, president of Joel Berman Architecture & Design Ltd. in Chicago.

The house above sits in your guides’ neighborhood – at Wellington and Honore.  The home will be in the $3.5-million range, although the exact price won’t be know as the owners purchased the land and are having the home built for themselves.

It’s interesting to note that neighbors complained over the weekend that the house is in its third year of construction, and then the article above appeared in Crain’s.

Neighborhood annoyances include the workmen arriving to the jobsite early, temporary fencing falling down, the ever present overflowing dumpsters and the construction debris that inevitably finds its way out from inside the jobsite.

Here, neighbors mostly complain about the crumbling sidewalks and the broken glass.  Where the sidewalks are uneven, a puddle of water too large to jump across appears, and this is the only street for three blocks to take residents from east (where there’s shops and groceries) to west (to their homes and the neighborhood park with Field House.)  The broken glass?  Who knows.

Here are photos of the home taken one year and a day from today:

I must say, workmen have been on site nearly every day.  But near as I can tell from comparing photos, the only things that have changed are the addition of the exterior cladding/siding and windows.  Hmmm.

And of course, some photos of the houses that started construction at the same time, located next door:

On the downside, these three homes still sit on the market for sale. Ouch.  Can’t tell you which is worse.

So the news over the last few days has not been good. The number of homes sold across Illinois, as well as inside Chicago is down from one year ago. And the average price of a home in Illinois, and in Chicago is down.

One interesting statistic is that the average price for a condominium (attached property including townhomes, condos and co-ops) in the City of Chicago is up 7%. The number that have sold in Q1 2008 is down dramatically from Q1 2007, but prices are holding up. Very interesting.

For example, in Lakeview, the price for a typical 2 bedroom, 2 bath condo is up 4% from last year, but the price for a typical single family home is down 3.3%.

Other news today, Appraisal Research Counselors report that in the Downtown area, nearly 6,000 condominiums are scheduled to come on the market as they near finishing of construction. This will be the greatest number of new condos to go up for sale in history – even counting the boom years in the early 2000′s.

On the downside, sales of newly built downtown condominiums plummeted by about 83 percent during the first quarter, to 201 units from 1,207 units a year earlier, according to the same report to be released Wednesday by Appraisal Research Counselors. Yikes!

Most of the buildings that make up the figures contained in the report are already under construction, so most likely can not be cancelled. Your guides predict a mass conversion to apartment buildings later this year. These will be pretty darn nice apartment buildings as most of the condominiums under construction are quite luxurious.

From the Uptown Update

A reader wrote in on Friday: "This building was unveiled today and its restoration is gorgeous!"

We went by this morning to take a look, and we agree. The details on this building are stunning. Even with the downstairs still being gutted, it took our breath away.

Thank you, Thaddeus Wong, for giving this amazing building back to Uptown.

From today’s Crain’s Chicago Business

A few days ago, a group of 30-something Loop office workers decided to let off a little post-5 p.m. steam. Being a healthy lot, they headed not to a bar, but to the 3-acre public park plopped amid the huge Lakeshore East residential and office complex on East Randolph Street for a pickup soccer game.

A few minutes later, the cops arrived—and busted one and all for violating an ancient and unknown city law that restricts sporting activities to sites specifically designated for sport. As reported by WFLD-TV/Channel 32, the coppers had been summoned by an adjacent condo building’s management, which says it just was trying to protect the wet turf but clearly considers the “public” park to be mostly private.

This begs the question:  Can you "play" in the "park?"

In our neighborhood, there is a bit of a struggle between parents and dog owners over whether pets should be allowed inside the newly constructed Chi Che Wang Park on West Wolfram in West Lakeview.

Under a little known statute in Chicago, dogs are prohibited from any parks that do not have paved walk ways through them.  Chi Che Wang Park is three-acres of lawn with nary a path, toy, object, or impediment inside its boundaries.  It’s filled with families and children playing soccer, football, baseball, softball and Frisbee.   On weekends, some organized Soccer Clubs have been setting up full soccer games.  Nets, goals, uniforms, spiked shoes – the whole shebang.

And if a dog sets a toe-step inside, a neighbor usually calls the police.

Hmmm.  I wonder if a vengeful – oops – I mean – observant – area dog owner were to keep his eye out for one of these "sporting" events being held in this "non sporting" venue – could he call the police?  Or will he just get the brush off?

Sunday, April 6

942 North Fairfield – Open Sunday from 11 to 1

Six luxurious condominiums inside a restored Greystone.  Just reduced some prices this week. Two beds from $255,000

www.fairfieldgreystone.info

Warren Corner Condominiums – Open Sunday from 2 to 4

2036 W. Arthur and 6504 N. Seeley

Twenty condominiums ready for occupancy located in West Rogers Park near Warren Park. Great pricing with homes priced from $135,000.

www.warrencorner.info

A customer recently posed the question:  Should I buy a new duplex-up or a turn-of-the-century SFH?  I’m looking to buy in the Chicago near north area. Both are similarly sized and in good condition, just built a century apart. Which will have better appreciation/resale?

It’s such an interesting question because usually the same buyer would never be considering both at the same time. 

Here in Chicago, the history of the popular neighborhoods is such that they began their lives as working class neighborhoods filled with modest homes that do not lend themselves to modern living.  In the photograph above, this Victorian was the original farm house for the township built in 1889.  Despite its obvious charm, the inside layout was a jumbled mess of rooms that did not make any sense.  The basement was not accessible from inside the house.  Bedrooms were scattered throughout both levels of the home.  Some rooms were long and narrow, others did not have closets.

We were the third listing agents to try to sell this property, and after several months of reaching out to neighborhood residents who might enjoy this superior location in Lincoln Park, we pitched the property to a developer.  The lot was extra long, extra wide, and the zoning was generous (R4) to allow a large condo building to be built.

We sold the house to the developer for $700,000.  When the condominiums were completed, the developer’s agent sold the largest condo – the duplex on the first floor – for $741,000.  This was in 2005.

In 2006, the same condo sold again for $818,000.

I suppose that says volumes about the popularity of condominiums, and of the duplex floor plans.

Based on this anecdotal evidence (as well as a bunch of experience) our advice would be to only purchase the single family house if it’s a very good value and is sitting on a parcel of land that a developer would be very interested in when you’re ready to sell. 

Otherwise, the popularity and salability of new condominiums can’t be beat.

Your guides have finally heard that the construction will begin this summer on the new Dominick’s grocery store located at the now-vacant parcel at 3030 North Broadway.  You’ll recall that this parcel was the site of the former grocery store which burned down in 2004.

The project is a five-story building with 45,000-square foot Dominick’s grocery store at street level and topped off by 53 condominium units.   Commercial space also includes a National City Bank.

Phase one construction is expected to begin this summer.  Residential units are being marketed by @properties.  Dominick’s is expected to open in fourth quarter 2009 and the residential units ready for occupancy 90 to 120 days later.