All adaptive reuse condominiums in the city are not created equal.
According to Appraisal Research Counselors’ latest “Downtown Chicago Residential Benchmark Report,” a whopping 1,703 adaptive reuse residences were marketed in 2004, and 1,318 units were sold.
There are many advantages to historic buildings that were not originally built as condominiums and are later converted, including classic architecture and solid construction. But only a few adaptive reuse buildings come with the special landmark tax break that can save thousands of tax dollars during the early years of ownership.
Under a state program, the developer of an owner-occupied historic residential building can apply for a tax break that “freezes” the assessed valuation of the homes near pre-development levels for eight full years following the completion of the rehab, with an additional three years of gradually increasing assessments.
At the upper rung of the landmark condo market is the Ambassador, a 1920s vintage hotel at 1300 N. State Parkway, which recently received approval for an 11-year assessment freeze. The former 225-room Ambassador West Hotel is being converted to 38 luxury condominiums in Chicago’s Gold Coast by L3 Development.
“Designed and built between 1919 and 1920 by the Chicago architecture firm of Schmidt, Garden & Martin as the original Hotel Ambassador, the building is an important contributing structure in the Gold Coast Historic District,” noted landmark expert Daniel Bluestone, professor of architectural history and director of the Department of Preservation at the University of Virginia.
Bluestone noted that buildings in the Gold Coast Historic District “contributed to one of the most notable dramas of late 19th century Chicago urbanism” – the relocation and re-concentration of wealth and fashionable residences from the Prairie Avenue district south of downtown to the area now known as the Gold Coast, north of the Loop.
“The growing prestige of the neighborhood attracted luxury highrise apartment and hotel construction starting in the 1890s that slowly gave the area its dynamic contrasts,” Bluestone said.
“The presence of the highrise apartment buildings and hotels in the district, well exemplified by the Hotel Ambassador, concentrated wealth in the neighborhood and provided a density of people and quality architecture that is central to the identity of the Gold Coast as a social and architectural system.”
“The landmark status of the Ambassador not only recognizes the architectural and historic importance of this prestigious building, but it will greatly benefit condominium buyers…” said Fernando Leal, partner in L3 Development.
“The building’s landmark status gives purchasers of luxury residences at the Ambassador the benefit of a tremendous break in their real estate taxes,” Leal said. “The best part of the program is that it is a benefit for the first owner occupants, not for the developer,” noted landmarks consultant Philip Krone.
The typical buyer at the Ambassador will save more than $100,000 in real estate taxes over the first eight years of ownership, Krone said. Prices at the Ambassador range from $1.15 million to $6.5 million.
At the affordable end of the landmark adaptive-reuse market is University Station Lofts, a historic 231-unit adaptive reuse condominium conversion underway at 1550 S. Blue Island, on the fast-growing Near West Side. Sales have passed the halfway mark and demolition is now underway at University Station.
“One reason sales have been strong at University Station is because the building’s landmark status offers buyers a tremendous break in real estate taxes,” said co-developer Ted Mazola, president of New West Realty and a development partner in the project.
The vintage 11-story building, which originally housed the Produce Terminal Cold Storage Co., recently was listed on the National Register of Historic Places, Mazola said.
“That means buyers at University Station will receive a tax break that limits their tax bill to approximately $200 a year for 8 years,” Mazola said.
Approximately 115 lofts have sold to date at the popular development, said Cindy Molitor, sales manager for New West Realty, exclusive marketing and sales agent for University Station Lofts.
“A nice selection of upper-floor residences are still available with dramatic, unobstructed downtown views,” Molitor said.
Prices begin at $180,900 for a one-bedroom unit with 719 square feet of space and range upward to $428,900 for one remaining three-bedroom loft with three baths and 1,715 square feet of living space.
Real estate columnist and media consultant Don DeBat has written about Chicago-area housing and mortgage markets since 1968. He is chief executive officer of DeBat Media, Inc., www.dondebat.net.