I dropped by the Appraisal Research Counselors 2008 Forecast Luncheon today to hear remarks on ARC’s upcoming benchmark report.
At the luncheon, Gail Lissner, a vice president with ARC, pointed to 235 Van Buren as last year’s absorption leader – though she suggested that investor sales played a large part in that lead.
ARC found that the 46-story high-rise sold 50 percent of its 714 units in a single quarter. Since then, though, the project has reported just a handful of additional sales, as Joe Askins reported at the end of January. Look for more on CMK Companies‘ 1720 S. Michigan in the March issue of New Homes Magazine.
From what I’ve read in various blogs, 235 has been the darling of investors because of cheap prices and 5% down. That bodes ill for the long term success of the building. I sure wouldn’t want to be buying in this one if I actually wanted to live in it. It’s going to be full of renters and it will be hard to sell on the secondary market for years. (Think American Invsco!)
The real problem with the american invesco buildings is that they sell 10-20 year old products at prices similar to or higher than new construction in the same area. So for those people who bought in 440 Wabash, 345 LAsalle, 10 E Ontario… they will be lucky if they sell at 10% below their purchase price. People bought one bedrooms in the 440 Wabash building at 415K, 3 years ago. I think there will always be a demand for new construction that is entry level especially in the downtown/loop area. While there may be a large number of investors initally over the next 3-5 years you will see that number dwindlw down as the market rebounds in 2010-2012.