Condo Developments Poised for Return in Chicago
It may be time for large-scale high-rise condo developments to return to Chicago, declares Related Midwest President Curt Bailey, speaking at yesterday's Marcus & Millichap/IPA Multifamily Forum.
By Dees Stribling, Contributing Editor
The time might be right for the return of large-scale high-rise condo development in Chicago. So believes Related Midwest President Curt Bailey, who spoke at the Marcus & Millichap/IPA Multifamily Forum Chicago yesterday, interviewed by Chicago Tribune business editor Mary Ellen Podmolik. One of Related Midwest’s current projects, One Bennett Park in Chicago’s Streeterville neighborhood, includes a condo component. The company believes there’s a market for those for-sale units.
“Some smaller developments have had success with condos recently, such as JDL’s No. 9 Walton, with 71 units that sold in excess of $1,100 and $1,200 per square foot,” Bailey said. “We’ve sold about 500 condo units in the South Loop, raising prices along the way.”
Bailey said he believes young households are, or will soon be, looking at the rent-vs.-buy dichotomy, and favoring buying. What it costs to finance a condo, especially considering that interest rates are still fairly new, compares favorably to renting, he said. “Someday, Millennials will want to buy. Right now, the market is supporting smaller projects, but eventually I believe there will be a shift toward larger condo developments.”
The market won’t shift completely away from rental, but there will be more condo developments in the next few years than in the last few, led by more confident younger households that believe owning property does not, in fact, “stick them” with a depreciating asset. That’s a lesson some Millennials thought they took from the housing slump beginning 10 years ago, but which no longer applies.
Whether marked by for-sale or for-rent properties in the future, Bailey said that there’s no doubt that downtown Chicago has fundamentally changed in the last 10 years as a residential neighborhood, and will change further as more people come to live there. “Downtown is more attractive than ever for young workers,” he noted.
Thus, developers such as Related Midwest have an important responsibility in helping to create more livable neighborhoods, Bailey added. “Placemaking starts with the mixed-use properties that are developed in a neighborhood,” he said. That’s why developers need to consider every detail of a property and how it integrates into its neighborhood.
In addition to One Bennett Park, Bailey detailed other projects that his company is working on in Chicago. Landmark West Loop, designed by Morris Adjmi Architects, will bring 300 rental units to the West Loop neighborhood later this year. The company is also in the planning stages of 400 N. Lake Shore Drive, which will occupy the site that had been planned for the Chicago Spire.
Farther south, Related Midwest will be the lead developer on 62 acres southwest of Clark Street and Roosevelt Road, filling what’s been called a hole in the center of Chicago. It will be an important chance to create a new neighborhood, Bailey said.