To counteract the glut of larger new-construction condominiums downtown, some of Chicago’s most savvy developers are starting to think small, real estate experts say.
According to Appraisal Research Counselors, the smallest new-construction condo units continued to sell fastest during the second quarter of 2003.
“Buyer sensitivity to prices continued to drive demand for the smaller and less expensive units in typical downtown developments,” noted John R. Jaeger, vice president of Appraisal Research, the city’s top condo appraisal firm.
“One-bedroom and one-bedroom-plus-den units continue to sell out prior to the inventory of larger units in most buildings,” Jaeger said. “Brokers are also reporting strong interest in two-bedroom units with parking included at a price under $300,000, which is rarity in the new-construction market.”
With more than 4,400 new-construction condominiums scheduled for delivery downtown this spring, Jameson Development, LLC took a hard look at the initial design of Jefferson Tower, a 24-story new-construction highrise planned for 200 N. Jefferson St., northwest of Chicago’s Loop.
Noting the abundance of two-bedroom units currently available in the downtown market, developers Harry and Charles Huzenis asked architects Loewenberg Associates to redesign the contemporary concrete, granite and glass building to include special tiers of more compact one-bedroom residences, and fewer one-bedrooms with dens.
“The original plan had 176 units; we now have 198. We took two tiers of two-bedroom floor plans and changed them to one-bedrooms,” Huzenis said.
While Jameson Development is redesigning its building, developer Donald J. Gianone is starting from scratch to design a “back-to-basics” new-construction loft-style condominium on the northeast corner of Jackson and Sangamon in the West Loop.
“We want to bring back the affordable artist loft of the 1970s and 1980s,” said Gianone, president of Oculus Development, LLC. “It’s all about market-driven design-building condominiums priced under $200,000, including parking.”
Pre-construction base prices at Jameson Development’s newly redesigned Jefferson Tower range from $189,800 to $364,800. There are 10 different floor plans from which to choose. The plans have one bedroom and one bath or one bedroom with a den and 1.5 baths. Living areas range from 623 to 1,072 square feet.
Preliminary plans for compact one-bedroom units in Oculus Development’s proposed mid-rise condominium at Jackson and Sangamon call for 750 square feet of space, while two-bedrooms would feature 1,000 square feet. Prices for one-bedrooms may start as low as $160,000 and two-bedrooms would start at less than $250,000.
Interiors would be Spartan, with no fireplaces, laminate countertops instead of granite, 36-inch kitchen cabinets instead of 42-inch and wall-to-wall carpeting instead of hardwood floors. However, all the usual upgrades would be available as options for buyers who want them.
“Although there would be less square footage, the residences will be efficiently designed, with kitchen islands that also can double as breakfast bars and dining tables,” Gianone said. Closets would be designed with double-stacked racks.
Appraisal Research’s quarterly Downtown Chicago Residential Benchmark Report also made the following observations about the condominium market in the central city:
Condo deliveries up. The number of new-construction condominiums offered for delivery in 2003 will more than double, to 4,400 units compared with the 2,000 units offered for delivery in 2001 and 2002.
“The good news is that 81 percent of the 4,400 units are already under contract, while only 19 percent of these are unsold,” said Gail Lissner, vice president of Appraisal Research.
Incentive boom. Sales incentives continue to be offered to help spark transactions. “While many developers are aggressively advertising their concessions, other developers and marketing agents are still reluctant to discuss sales concessions publicly, preferring to utilize them as point-of-purchase concessions for interested prospective buyers,” Lissner said. “The bottom line: developers are willing to do whatever it takes to entice a serious buyer to sign a contract,” she said.
Higher-end finishes. Because of the great amount of competition in the new-construction condo market and a need to differentiate their units, developers are increasing the level of standard finishes offered in their projects.
Real estate columnist and media consultant Don DeBat has written about Chicago-area housing and mortgage markets since 1968. He is president of Don DeBat and Associates, www.dondebat.net.