Geoffrey Ruttenberg remembers when a million dollars was a lot of money.
“There was a time when $1 million got you the best house, whatever you wanted, wherever you wanted. Now people are paying close to that just for the land in some neighborhoods,” says Ruttenberg, president and CEO of the Brixton Group.
Whether you’re looking for a penthouse in a new skyscraper or a luxury single-family home in Lincoln Park, a million dollars has become the low end of high-end housing in Chicago.
A wide range of projects from the Loop to Lakeview still have penthouses that come in under $1 million, but a growing number top out at anywhere from $2 million to $9 million. The top units at River Bend, a new highrise at 323 N. Canal, hover around $2.5 million. The new highrise planned for Randolph and Wabash, the Heritage at Millennium Park, has units priced up to $2.75 million, and the best unit at the Fordham, 25 E. Superior, is $4 million.
Those numbers may seem high, but they apply only to a small percentage of units in projects that contain many other, more affordable condos – if the word “affordable” can be applied to apartments costing $300,000 or $400,000.
Other new buildings, however, have little or nothing on the market for less than $1 million. A new boutique building at 18 E. Division, La Schola, is offering four units priced from $1.93 million to $2.75 million. The conversion of the former Blackstone Hotel, 636 S. Michigan, includes 39 condos of 4,000 to 7,000 square feet priced from $3.4 million to more than $8.5 million. And LR Development’s highrise at 840 N. Lake Shore has 77 condos priced from $1.4 million to – hold on to your trust fund – $8.9 million.
Those sorts of price tags have been common on the coasts for a while now, but stolid, Midwestern Chicago has always been more conservatively priced. It also has avoided the vicious boom-and-bust cycles of real estate in California and the East. As the economy shows few signs of perking up, developers may soon find out if they have been overbuilding at the steepest price points.
But some experts say housing here, especially luxury housing, has simply been underpriced for a long time. And despite the slowing economy and dot com disasters, an unprecedented span of growth has created more than a few local millionaires. The city has rebounded in a big way, with a new residential core downtown and a growing demand for ultra-luxury housing. This type of product might not sell overnight, but developers so far have been steadily moving a surprising amount of product priced at more than $1 million.
What does this sort of cash get you?
At the 22-story former Blackstone Hotel, 636 S. Michigan, it can get you a duplex “townhouse” in which the rooms have 24-foot ceilings and views of Grant Park through 14-foot arched windows. At River Bend, a 37-story riverfront highrise, it gets you valet parking and private boat slips. At the Heritage, it gets you lake views, an indoor pool, a concierge and 15 to 20 stores and restaurants in the building.
At virtually all of the new buildings and homes in this price range, it gets you the best of everything in finishes and amenities – the best granite and marble, fine woods, multiple fireplaces, appliances by Sub-Zero and Viking, storage for expensive wine and wiring for video conferencing.
In a highrise, it gets you views of whatever you want, the lake, the river, the skyline; In a house, a leafy street in Lincoln Park or Lakeview, seconds from the lake.
It gets you space. How much? How much do you need – 3,000 square feet, 5,000? If you’re willing to pay, the former Blackstone will combine units for a full floor of 11,000 square feet.
Most important, the million-dollar-plus price tag gives you control over what you’re buying and a developer with good ears.
“This is fully custom, the highest of the high end,” says Laura Molk, of LR Realty. “(840 N. Lake Shore) is on the lake and park, with beautiful views of Navy Pier and the water.”
The French-influenced boutique building has only 77 units and caters to its well heeled buyers’ every whim.
“When we say fully customized – if you want Terrazzo floors, bird’s eye maple paneling – whatever you come up with, they can match the profile and create what you want in your home,” Molk says. “We have 25 architects in house for buyers to work with. Having that flexibility without the strain of coordinating it is wonderful. Buyers also can purchase space there raw if they want.”
Another recent LR project, the ultra-luxury Park Tower highrise, next to the old Chicago Water Tower, offered units only as raw space, to be finished by buyers. A number of current luxury developments offer two sets of prices on this sort of product – one for finished space and one for unfinished.
“We offer a finished level of pricing with an exceptionally high level of amenities, and buyers also have the option of buying a white box, where everything but the drywall is left up to them,” says Greg Eldridge, of Colwell Banker, exclusive sales and marketing agent for La Schola, 18 E. Division.
Eldridge is selling the project for developer Equity Development Group, which has built a lot of high-end housing in Lakeview and Lincoln Park.
“It’s split down the middle,” Eldridge says. “Some people want to totally create their own space, and a lot of people want our package of finishes, which is absolutely the top of the market.”
Kinzie Station, in the West Loop, offered finished penthouses in its first phase, but the development is selling all but one of its phase II penthouses as unfinished.
“At the upper end, the buyers always come with their own architect and their own designer anyway, so we’re just giving them a credit and selling it as raw space,” says Susan Tjarksen, vice president of development for CMC Heartland Partners. “In phase I the penthouse buyers all did something totally different.”
Buyers of cramped $250,000 condos with views of the building next door might take some comfort in the fact that the penthouses 30 or 40 floors up cost several million dollars more – and don’t include flooring or kitchen sinks.
Of course, buyers at the high end can spend another million to finish the space just so. But even developers selling their penthouses and luxury single-families as finished space leave plenty of room for customization. Buyers plunking down several million dollars for homes expect to have some say in how they look.
“For the kind of money they’re spending, our buyers’ expectations are high,” says Geoffrey Ruttenberg, of the Brixton Group. “We understand that some of those expectations revolve around the finishes, and others involve being able to sit down with us and our architects and engineers to get the product they want to see.”
Ruttenberg is currently selling a new single-family house under construction at 1119 W. Altgeld. The 6,500-square-foot home, on an extra-wide lot, is priced at nearly $2.7 million. The house will have six bedrooms, six full baths and two powder rooms, a three-car garage and extremely high-end finishes.
The issue of building “on spec,” or without a buyer lined up, is an important one in the luxury single-family home market. Unlike highrise developers, single-family builders don’t have a couple hundred moderately priced units sitting beneath the gems, and they can’t always afford the cost of starting construction without a buyer.
Ruttenberg says that he builds on spec when possible because buyers are wary of committing to what they can’t see. Other luxury single-family home developers will only build custom houses now in places like Lincoln Park, where the cost of lots has become outrageous.
“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?”
Buyers at this price point often must find a builder or a lot first and then start thinking about a house. The process can be lengthy, but no more so than in many highrises, where penthouse purchasers can wait two or more years to see their units finished. Developers say that buyers not only expect that time frame, they want it. After all, you can’t dispose of your previous manse, and decorate and furnish 6,000 new square feet overnight.
The question for builders of all of this high-priced product during sluggish economic times is, How long will the party last? Buyers at this level generally have a little more discretion than at the $200,000 range, where a couple is probably shopping for shelter. It’s easier to take a wait-and-see stance if you’ve got a couple of million to spend and a nice place to tide you over.
So far, however, builders say they aren’t worried.
“We’ve only been open a short while, and we’ve sold very well at the higher end,” says Herb Emmerman, of Equity Marketing Services, which is selling the Heritage at Millennium Park. “We’ve been selling for six weeks and we have 200 sales, so am I worried? No.”