South Loop – is Edgewater a historical parallel?

by Joe Zekas on 1/3/09

Chicago Field Museum dinosaur

The past 10 years have seen a dramatic increase in the supply of condos in Chicago’s South Loop, the great majority of them in high-rise buildings. During the 1970s condo conversions exploded the supply of high-rise condos in Edgewater from nearly zero to more than 6,500.

Edgewater condos sold, on average, for $76,000 in 1979, prior to the market collapse of the early 1980s. During 1991 and the first 6 months of 1992 Edgewater condos sold for an average of just $56,570 according to a study I conducted at the time. Adjusted for inflation, the average Edgewater condo lost a staggering 60% of its value between 1979 and 1992.

Is the Edgewater example completely inapposite to the South Loop today? I’ll have the answer to that question for you about 10 years from now. If you have any insights on the topic, chime in here or join our Seeking solace in Chicago’s South Loop group at Facebook and start a discussion there.

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{ 22 comments… read them below or add one }

john January 4, 2009 at 12:31 PM

South loop location is downtown and atractive unlike edgewater

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Mark Boyer January 4, 2009 at 7:25 PM

What is the building pictured above?

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Geoffrey Vrba January 4, 2009 at 9:58 PM

I think its one of those neo classical Museum Park/Central Station buildings across from Soldier Field. Its an old photo, not a current construction shot. At least that’s my guess……

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Joe Zekas January 4, 2009 at 11:48 PM

The photo’s at least 4 years old.

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Abuyer January 5, 2009 at 8:54 AM

While the South loop area is much more conveinent for workers actually working in the loop, there is such a massive, overpriced inventory there, that there won’t be enough buyers able to scoop them all up.

Credit standards have pretty much eliminated potential suitors for some of these nice new constructions in the south loop.

I don’t think it will be as bad as Edgewater, since there isn’t as much crime in the SL (thanks Daley!), but it certainly will be taking a hit for a long time to come.

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SheridanB January 5, 2009 at 9:15 AM

Joe, are these the same condo’s selling for less or just an average price? I ask because there are a lot of bigger units (large vintage as well as newish high rise units) as well as a lot of small units, and it seem that the large units don’t turn over as much as the smaller units.

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Joe Zekas January 5, 2009 at 9:19 AM

Average prices, SheridanB. Inventory mix didn’t change much in Edgewater over that period.

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UptownR January 5, 2009 at 9:32 AM

Anecdotes like that scare the crap out of me as a condo owner in Buena Park. What do you do with a condo that has lost half of it’s value? Walk away with ruined credit? If my $280,000 condo in Buena Park (2005 purchase) were suddenly worth $140,000, I have to say that walking away might be a little tempting…

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SheridanB January 5, 2009 at 9:53 AM

The reason I asked was I wondered if a large number of bigger units had sold to long time tenants in that period and the average was pulled down by smaller units being resold more frequently.

What area boundaries are you using? I’m intrigued because I know people who bought new conversions for hardly anything in the mid-90s. I’m not surprised that high-rises lost value in Edgewater, they had a bad rep in the late 80s, with people having the entire contents of their units stolen while they were at work (this is in a big Sheridan Rd building too). It’s all Bob and Emily’s fault of course, had they not moved west…

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Joe Zekas January 5, 2009 at 10:08 AM

SheridanB,

I no longer have the details from my study, only the summaries. Given the duration of the timei periods I measured, I doubt whether the unit mix changed very much, but can’t document that gut feeling.

UptownR,

Although the real values (adjusted for inflation) dropped significantly, the nominal values didn’t take that big a hit.

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Sir Isaac Newton January 5, 2009 at 2:17 PM

I don’t think that there is much of a historical parallel. Yes, the supply of condos in both neighborhoods skyrocketed, and skyrocketed over the a period of 5 years or so, before the market collapsed, but that’s probably where the similarities end.

As John succintly put it, the South Loop location is downtown and attractive, unlike Edgewater. Yes, the South Loop currently has a large inventory of unsold units, however, the South Loop is a very attractive place to live unlike Edgewater was/is – and while it will take quite some time to absorb this inventory, it will be absorbed much more quickly than Edgewater, due to it being so attractive to live in the South Loop.

Also, while I agree with most of what Abuyer had to say, I disagree with his comment that the inventory in the South Loop is overpriced. There may be a couple buildings with units that are overpriced, but most of unsold units in the South Loop are such a bargain compared to other neighborhoods that are close to the Loop such as Lakeshore East, the Loop, Streeterville, River North, Gold Coast, or even the West Loop and River West neighborhoods. When the overall market begins to pick up again, the South Loop’s inventory will be absorbed a lot more quickly than the inventory of these other neighborhoods, given that the South Loop is a better bargain.

Will the South Loop’s condo prices takea a little bit of a hit, due to the overall market’s problems? Of course. But I don’t see anything even close to the 60% loss Edgewater suffered between 1979-1992, happening to the South Loop from 2008-2021.

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IrishPirate January 5, 2009 at 4:38 PM

Taken from an online inflation calculator:

What cost $100000 in 1979 would cost $193157.31 in 1992.

So at least if you had a mortgage on an Edgewater condo in that time period and theoretically paid no interest your real debt would almost be 1/2 of what it was. I always see the glass as being half full. Full of what is the question?

History never repeats itself exactly. It repeats itself in “themes”.

I imagine that the South Loop will do ok after the next 2-5 years. It is a larger area than the area in Edgewater in question and is better located to downtown. Really in Edgewater you were talking the stretch of Sheridan from 5200-6200 north or so.

Now you may see some condo buildings loaded with renters for the next 5-15 years. That happened in many Edgewater buildings in that period and some adjoining Uptown highrises also.

Ask me in ten years. The older I get the less sure of anything I am.

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Sloopin January 5, 2009 at 4:47 PM

I agree with most of the comments. The South Loops proximity to the loop and the numerous Chicago landmarks make it a very attractive neighborhood. Ok…I concede that we need to take solace in the fact that we don’t have bars and retail, but I’d much rather have easy access to Grant Park, the Lake, Museum Campus, The art institute, world class architecture on Michigan ave, and on and on then drinking with Big Ten frat boys in Lincoln Park…

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SheridanB January 5, 2009 at 5:04 PM

I much prefer Edgewater since it’s more of a traditional neighborhood, has better recreation along the lake than downtown areas and plenty of shopping and entertainment options – I think it’s the variety of it which is a plus, not solely one housing type.

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John January 6, 2009 at 9:55 AM

Like I said before the South Loop neighborhood is one of the most attractive neighborhood in the city have any of you tried to see the views from the condo’s some of them are priceless.
The museum, soldier field, grant park and the lake front is the playground of the south loop what does Edgewater have??
While the inventory is high at this point nothing is selling and after 2009 no more condo’s will be added to the pipeline.
I think the south loop is in a great safe location and time will tell.

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SheridanB January 6, 2009 at 11:34 AM

Everybody doesn’t like high-rises and new construction, the south loop is very homogeneous (so far) and your access to the lake is blocked by the IC tracks and the museums which bring crowds and traffic.

Though I think it will hold value relatively well, since household growth is in the demographic which will likely want to live closer to downtown, though transit in the south loop is rather poor, being far from the relatively few el stops in that area and being bus dependent.

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John January 7, 2009 at 2:39 AM

SheridanB, have you been to the south loop?? If you’re on Michigan ave that’s probably the most reliable bus in the city and if you are close to Rossevelt we have the el right there.
I am sorry but edgewater fells almost like the suburbs to me.
By the way the museum campus has multiple bridge access as well as soldier field access and not everything in the south loop is a high rise.
I am sorry but you could not pay me to stay in Edgewater, I love having all these attraction around me. My neighborhood is busy in the summer for festivals in the fall for football games now tell me what’s around the Edgewater area because I have no idea.

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SheridanB January 7, 2009 at 8:57 AM

That’s ONE el stop for an entire neighborhood, Edgewater has five. There’s no tourists or baseball fans clogging streets during the summer and we have more restaurants and retail (multiple grocery stores within the actual neighborhood for instance) by far. You need to get out of your little world and explore the city more I think, since, quite frankly, the south loop still feels like a wasteland in a lot of ways.

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John January 7, 2009 at 9:45 AM

You need 5 stops since it takes you 45min to get downtown unlike my 5min.

Also I don’t mine the tourists or football fan that’s part of True city living unlike the suburbs.

By the way this article was about how bad your area was and hopefully mine will not turn like your wonderful Edgewater since everybody loves it so much right.

As far as restaurant we already have quite a few in the south loop but remember unlike you I can be anywhere Downtown in 10min I personally don’t own a car and I don’t have a need for one.
I am sorry but I love being so close to everything downtown if I can’t be I’d rather move to the burbs.

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123 January 7, 2009 at 9:55 AM

SheridanB, I know it’s popular to crap all over the South Loop, but you’re just wrong. This is coming from somebody who lived in Uptown before moving to the South Loop, so I am very well familiar with your hoods up there.

There are more than 1 stop. On Roosevelt you also have Green and Orange, and there have been talks about adding another stop on either 18th or Cermak, plus Chinatown stop is practically at the edge of the ass end of the SL. There’s also Metra.

I take the train to work every day. It works well, but also got a car in the household. Easy access to LSD and the interstates saves so much time, you don’t know what you’re missing. Transportation wise I think the SL is one of the best, if not the best hood in the city.

We have multiple Grocery Stores as well in the actual hood (seriously every hood has grocery stores, what kinda silly argument is this anyways?).

Tourists and baseball fans aren’t a problem. Just don’t try to go over the 18th street lake bridge after a game is out. I did that mistake once… but other than that SL is not crowded at all. Even riding my bike through the museum campus during the summer I had no problems.

Having said that, I really like the hood, but there’s some absurdly priced condos here and because of all the inventory you’ll see some pretty good price declines. Some buildings will fare better, some are gonna crash hard. There’s some towers so god awful ugly with crap floorplans and finishes that hardly anyone would wanna live there; like the Marquee. Buildings like that will lose a lot of value.

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SheridanB January 7, 2009 at 12:27 PM

I love how defensive you SLoopers get. You couldn’t pay me to live there.

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Edgewater January 27, 2014 at 8:24 PM

This is an old article but I had to chime in… You could not pay me either to live in the South Loop..
I live in a high-rise off Granville/Sheridan Redline stop.. LOVE IT.
It has a classic Chicago city feel with Lincoln Park and Lake Access right across the street.

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