With home-loan rates hovering at historic lows, experts say now is a good time to purchase a condominium conversion residence for quick occupancy and lock in a low-interest loan.
Developers sold a whopping 972 condo conversion units in the first quarter of 2005, according to Appraisal Research Counselors, a firm that tracks performance of the condominium market in Chicago.
“Downtown developers placed a total of 1,360 apartment units on the market for conversion to condominiums in the first quarter,” said Gail Lissner, vice president of Appraisal Research, which just published its 2005 “Downtown Chicago Residential Benchmark Report.”
When the condo conversions launched in April and May of 2005 are added to the total, Lissner said, more than 2,500 highrise and mid-rise apartments will have been placed on the market so far this year.
“We think that ultimately, the total condo conversion offerings will hit 3,500 to 4,500 units by the end of 2005,” Lissner said. “This would make it the best condo conversion market in downtown Chicago in 25 years.”
Appraisal Research reported that only 652 conversion units were marketed last year, and 562 were sold by the end of 2004. In 2003, a total of 857 condominium conversion units were sold, up from 730 units in 2002.
Experts say a condo conversion is a good choice for home shoppers who don’t have the patience to wait two years for completion of a new-construction highrise. But if you find a unit you like, better grab it. These days, they tend to go fast.
Conversion activity is strongest in River North, Streeterville, the New East Side, the Gold Coast and Lincoln Park, noted Lissner.
And buyers aren’t the only ones who like quick delivery times. Roughly 20 percent to 25 percent of the condo conversion units downtown have been purchased by investors in recent years and now are being rented, Lissner said.
What are the attractions of condo conversions?
“Condo conversion prices generally are lower than new-construction condo prices, and the buyer can count on fast delivery,” Lissner said.
While most well located new-construction condo developments are selling for more than $300 a square foot, the appraisal experts say some conversions and renovated walkup buildings can be found for less.
Buildings currently being converted range from newer highrises and mid-rises to vintage walkups.
The Park Millennium, a 52-story luxury highrise at 222 N. Columbus, is one of the most prominent conversions underway. The project was launched in mid-April near Millennium Park, on the New East Side. The $155 million conversion, being developed by Centrum Properties and MCZ Development Corp., will have 480 luxury condominiums when complete.
“More than 160 residences already have been sold at Park Millennium,” said Jennifer Arons, senior vice president of Centrum Properties. “We are selling an average of 12 units a week.”
Grand opening prices at Park Millennium start in the low $200s and range upward to more than $700,000. First occupancy is scheduled for this summer.
By contrast, Deming Row Condominiums comprises 106 apartments in a series of six vintage buildings in coveted Lincoln Park locations on North Hampden, West Deming and North Clark.
Phase I of the development, a joint venture of Kenard Corp. and Wexner / Greenberg Associates, involves the conversion of the 64-unit Hampden Park Condominiums East, at 2600 N. Hampden. The building has studios and units with one to two bedrooms. Prices on remaining condos in phase I range from the $190s to the $350s. Forty-eight units have been sold in a sneak-preview sales campaign, which started in early April.
“Four other vintage walkup brick and stone buildings with six, eight and 13 units in each are scheduled to follow, four along Deming and one fronting Clark St.,” said veteran developer Harold Lichterman, of Kenard Corp. Duplex condominiums and flats in later phases will range from $245,000 to $1.5 million. One building will be renovated into a custom single-family home priced at about $3 million.
Lissner’s report listed the following conversions launched in River North during the first quarter: the 468-unit Ontario Place, at 10 E. Ontario; the 450-unit 400 N. LaSalle apartment tower; and the 245-unit 2 E. Erie highrise.
Crescent Heights is marketing 460 units in the 56-story condo conversion of 30 E. Huron, also in River North, where one-bedrooms start in the mid-$200s. The developer also is marketing the 442-unit “Skyline Residences” at the 55-story Park Place Tower, at 655 W. Irving Park. One-bedroom residences start at $224,000, and two-bedroom two-bath residences start at $316,000.
Other first-quarter conversions include the 505-unit highrise at 474 N. Lake Shore, in Streeterville; the 380-unit vintage building at 1400 N. Lake Shore, in the Gold Coast; and the 133-unit Clark Place highrise at 2625 N. Clark, in Lincoln Park.
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.