After a drought of several years, lofts are back, more stylish than ever.
There was a time, several years ago, when I never wanted to hear about another loft development. During the 1990s lofts grew in popularity and sophistication, appealing to a wider and wider market, until by the fall of 1997, New Homes counted 60 loft conversions totaling around 4,000 units underway in Chicago.
Some of those developments were substantially sold out, but many others were just getting started. No longer did lofts simply dominate the new-homes market, they were the market. The years 1998 and 1999 continued the trend, with massive loft sales and deliveries, and then something amazing happened.
The loft market died.
Not completely. Projects still popped up here and there, but the frenzy of loft building and buying and boasting – the worship of all things lofty – stopped.
Had we had too much of a good thing? Not according to developers and brokers, who say the demand for chic loft condominiums is as high as ever. The problem was that builders ran out of lofts.
“So many buildings had been converted; it was just supply and demand,” says Terrie Whittaker, of New West Realty, a company that is developing and marketing several current loft projects. “At one point there was just not that much adaptive reuse product on the market.”
“Adaptive reuse” in Realtorize refers to the conversion of a building from its intended purpose, in this case as a commercial warehouse, printing plant, cold storage building, office complex, etc. into another use – upscale condominiums.
Traditional condominiums are built on empty or cleared lots, which are always available if a builder is willing to pay enough. True lofts, on the other hand, are finite. The massive timber and concrete buildings that house them generally were built only in certain areas between the turn of the century and the 1940s. Once those buildings are converted, the supply of fresh lofts is gone.
Developers can design and market new-construction projects as “lofts,” imitating certain loft features – exposed ductwork, oversized windows, open floor plans – but these buildings are not, by definition, true lofts. A loft is the conversion of a commercial building to residential use, and builders couldn’t match the kinds of features found in the best ones – 14-foot ceilings, muscular timber beams, massively built floors – if they wanted to.
Loft buildings were constructed at a time when labor and materials were cheap for companies concerned with maximizing natural light, open space and support for heavy equipment. Even the best-intentioned builder could not reproduce this type of construction today and remain solvent.
So what’s a loft lover to do?
Well, the loft craze of the late ’90s may be over, but the last year has seen a resurgence in loft development. At press time, New Homes counted about two-dozen loft condo projects underway, totaling nearly 2,800 units. A number of these were close to sold out, but some were just entering the market. They range from intimate buildings of fewer than 20 units, such as Michigan XIV and East 47th St. Lofts to behemoth University Commons, which has more than 800 loft condos in the old South Water Market. After several dry years, lofts clearly have returned.
What of the theory that all of the good buildings in all of the good locations already have been converted?
There is something to this idea. Take a walk through the corner of the West Loop promoted as the “Fulton River District,” for example, and you’ll see an entirely new neighborhood created from the conversion of nearly every available and suitable industrial building. There’s almost nothing left to convert.
But what was true in 1999 – all of the prime locations are played out – is not, after several years of a robust real estate market, necessarily true in 2005. The former Midwest store of W.A. Wieboldt and Co., a six-story terra cotta and brick building at 130 S. Ashland, is a good example. The building was slated for a conversion more than half a dozen years ago, but sales stalled and the project was scrapped.
At press time, however, New West Realty was marketing a new conversion at 130 S. Ashland and had sold nearly 80 percent of the loft condos at “Paramount Lofts.” What changed?
“For us, with the Wieboldts building, which is now Paramount Lofts, we’ve had it on our radar for years,” Whittaker says, “but it took a long time to put the deal together, to find the right partners, the right architect…” And in the meantime, as the West Loop boomed, the 100 block of South Ashland, which might have seemed like a peripheral location in the mid-’90s, became much more desirable.
The same thing happened with New West’s University Station project, a 231-unit loft conversion at 1500 S. Blue Island, according to Whittaker. What had been an “off-the-beaten-path location” now sits next door to the massive new University Village development, a new commercial strip on Halsted, the emerging ABLA redevelopment and University Commons, the largest loft conversion underway in the city.
As Chicago’s residential real estate market continues to boom, development has expanded from the Loop in concentric rings, and areas that once seemed desolate or dangerous are suddenly ripe for building. Another factor spurring loft development is that while residential sales are still healthy, new projects are not moving at the lightning pace of the late ’90s. In that superheated market, the owners of aging and obsolete commercial buildings could hold out for top dollar as developers bid up prices. Today, they’re less likely to sit on buildings hoping the market will bring higher prices down the road.
“Prices are still high to pick up old buildings,” says Tina Guziec, vice president of operations for MCZ Development, which built many high-profile lofts during the ’90s. “The owners want to maximize their dollars, but after a little bit of a slowdown they are a little more reasonable.”
Because first-time buyers are a major share of the audience for most loft projects, Guziec says, developers have to purchase the properties at the right price to make the deals work. Otherwise, prices for the finished condos become too high for entry-level buyers.
MCZ’s current loft project, co-developed with Centrum Properties, is No. Ten Lofts, a 266-unit conversion with units starting in the $230s – competitive pricing for the West Loop. The development, which at press time was nearly 80 percent sold, highlights another ongoing trend in the loft market: the level of comfort and amenities at these developments continues to improve.
MCZ borrowed a page from its development work in Florida and approached No. Ten Lofts as a “lifestyle” project. The Owners’ Club has a party room, a café, a restaurant-style kitchen, a billiards room, a barbecue patio, a private theater and a business center. Activities will change with the tastes of the residents, but current plans also call for classes in everything from salsa dancing and yoga to cooking and spinning offered on site.
“The idea is to create a community and not just a building,” Guziec says. “By having services like that, you foster a human development. People want to have fun and that’s what this building offers. People love the idea of a yoga class on Monday nights with their girlfriends down the hall.”
New West Realty has taken a similar approach at Van Buren Lofts, 1224 W. Van Buren. “We have a movie room, a fitness center – we’ll have one room on each floor designated for different amenities,” says sales manager Michael Jacobs.
Like most current loft projects, both of these developments offer a high level of standard finishes too. While the latest spate of lofts retain a lofty look – exposed timber beams or concrete columns, exposed ductwork, partial-height walls, high ceilings – they are nothing like the earlier artists’ lofts that came with indoor plumbing and not much else. Typical features include granite counters, hardwood floors, marble baths, oak or maple cabinets, track lighting, nice appliance packages and balconies.
“My philosophy is to keep things very simple and give people high-quality standard finishes that they don’t have to spend tens of thousands of dollars upgrading,” says David Wallach, whose company W Developments is building the 70-unit Odyssey Lofts, at 775 W. Jackson, in the West Loop. “We have granite counters, marble master baths, all Kohler Home fixtures, and because we have so much volume, we include eight-foot solid core interior doors, which I don’t think you’ll find anywhere else.”
In a design move that’s become common in new loft projects, Wallach is adding two new floors to the original six-story building at Odyssey Lofts, which is being marketed by Jameson Realty Group. Many loft buildings are well suited structurally for additional floors, and the extra units can mean the difference between making a conversion feasible for a builder or not. A new construction component also adds variety to the product offered.
At his new North Beach Lofts project, 1225 W. Morse, developer Bill Markle will have more new construction units than original ones. He’s adding three floors of new construction to an existing two-story concrete loft building.
“It’s a really intriguing development because we’re building a three-story building inside of a two-story building and not reusing any of the existing concrete columns for structural support,” Markle says. “We’re bringing new steel columns through the existing building with new footings in the floor.”
The units at North Beach Lofts, also marketed by Jameson Realty Group, range from the $240s to the $330s. The 10 units in the original building will have 13-foot ceilings, while those in the 33 condos in the new floors will have ceiling heights of 10 feet. Markle says that’s a good combination for Rogers Park, which has seen much less loft development than neighborhoods closer to the Loop.
“Rogers Park is a mix. Here you get people who want things that are very traditional and people who like lofts,” Markle says. “You can’t be too lofty and you can’t be too traditional.”
Another side effect of the ’90s loft craze, which occurred primarily downtown, is that loft conversions are becoming more common in neighborhoods like Rogers Park, which have seen little or no loft development. Tandem Developers last year sold out the first lofts in Bridgeport – Union Lofts, at 941 W. 35th – and new projects, including University Commons and University Station, have pushed loft development into industrial areas southwest of the Loop that are increasingly residential.
At press time, the Habitat Company was about 60 percent sold at McKinley Park Lofts, a 163-unit development on the Southwest Side. The units are priced from the $190s – much lower than comparable lofts in the West Loop or South Loop – and buyers from all over the city and suburbs have been attracted to both competitive pricing and quick commute times to the Loop, according to Nicole Greifenkamp, of Habitat.
In central neighborhoods where years of loft conversions have used up the supply of raw buildings, developers have turned to constructing “new lofts,” according to Robbie Frankel, of Frankel & Giles Real Estate. At his Loftworks project, where brand new units will have 10-foot ceiling heights exposed spiral ductwork, hardwood floors and some partial-height walls – only three units, priced from the $220s, remained for sale at press time.
Frankel’s new 100-unit Lakeside Lofts development will take a similar approach in the 2000 block of South Indiana. The condos will be new construction but with the same kind of lofty design features that appealed to buyers at Loftworks. Both projects also include a number of “green” elements. Lakeside Lofts will have formaldehyde-free insulation, water-saving fixtures, rooftop solar panels and sunshades on the south and west windows that let in light to help heat units in winter and automatically block it at midday during summer.
As loft conversions expand into new neighborhoods and the supply of fresh loft developments dwindles downtown, Frankel says, we’ll continue to see more “new construction lofts.”
“The inventory of loft buildings, especially heavy timber lofts, is low,” Frankel says. “But people still like high ceilings and a lot of light and open space.”