Ultra-luxury homes

340 on the Park
Chicago’s high end keeps getting higher

If it is ever possible to pity buyers of new ultra-luxury condos in downtown Chicago, now is the time. Never has there been more Grade A buildings to choose from in a broader range of locations and architectural styles.

And never has such a large pool of well-heeled buyers circled the offerings, judging the merits of one fabulous view over another, scrutinizing one luxury finish after the next, struggling to make distinctions among the best of the best.

During the first nine months of 2005, buyers with Benjamins to burn purchased 93 properties priced at $2 million or more in Chicago, according to the Multiple Listing Service of Northern Illinois. That’s more than triple the number of homes that sold in this range just three years ago, when MLSNI recorded 30 transactions of $2 million or more. Those figures were compiled by the Chicago Association of Realtors from MLSNI data and don’t necessarily reflect all sales in this range.

While this small club has indisputably grown larger, there also are signs that this end of the market may be growing a little crowded. The average time these plush residences spent on the market rose at about the same rate as their number – to 224 days in 2005 from 87 days in 2003, according to CAR.

The rise of the ultra-luxury market in Chicago has been well documented. Suburban baby boomers whose college-aged kids have flown the nest are the biggest buyers. As they browse for city condos, many are trading on the significant equity they’ve built in massive suburban homes during the ’90s real estate boom.

Others are looking for second homes or in-town residences. They want to enjoy the expanded cultural amenities, restaurants and buzz of a city that’s cleaner, safer and more polished than it’s been in decades. They want commutes they can walk and a life without lawnmowers.

Out-of-state buyers from Indiana, Michigan and elsewhere also want a piece of the action, along with homeowners in older downtown towers who have decided it’s time to trade-up.

Defining luxury

With an expanding market, developers are pulling out all the stops. So what exactly constitutes an ultra-luxury home?

The gauge for ultra-luxury housing has probably moved from $500 a square foot to $600 per square foot, and experts say that yardstick will likely shift upward again in the near future.

Yet some longtime observers, such as Parisian-born architect Lucien Lagrange, the designer behind some of Chicago’s top luxury developments, including 65 E. Goethe and The Elysian, say that a number of current developments that meet the lofty price criteria don’t qualify as ultra-luxury.

“They are not luxury, they are just expensive,” Lagrange says disdainfully. In his view, luxury is derived from things such as the quality of building materials, stone for one. The concrete favored by some developers is not a luxury material, he says.

At press time, New Homes counted 16 new-construction highrises offering luxury and ultra-luxury condos and penthouses.

What does that kind of money buy?

The Legacy at Millennium Park is one of several new kids on the block, a slender 73-story tower planned for 60 E. Monroe St. The team behind this development, Mesa and Equity Marketing Services, is the same one that built the successful Heritage at Millennium Park, and again they’re using architects Solomon Cordwell Buenz & Associates.

At press time, condos in the development had tentative pre-construction prices ranging from the mid-$300s for a one-bedroom to around $4 million for a penthouse.
If you are more apt to shop ’til you drop, the location of The Residences at 900 might be more your speed. This unusual conversion was born when JMB Realty Corp. lost a major tenant at what’s commonly known as The Bloomingdale’s Building, 900 N. Michigan Ave. What to do with eight vacant floors in a sluggish office market? Go condo, of course.

The developer is converting floors 21 through 28 of the 66-story building, which includes a vertical shopping mall and The Four Seasons Hotel as well as original condominium units. The 48 new condos range from $1.2 million to $4.6 million and will have their own association. Delivery is planned for 2007 at what is now the second conversion of office space to condos on coveted North Michigan Avenue (The Palmolive Building, at Walton and Michigan, is nearing a sellout).

If you would prefer to gaze on a vista of Lake Michigan and the South Loop’s Museum Campus, then The Enterprise Companies’ One Museum Park, underway at 1215 S. Prairie Ave., may be more your style. This showboat of a building has some units priced under $380 a square foot, but with others at the $600 per-foot mark, this Museum Park tower is bringing a new level of luxury to the South Loop.

Other ultra-luxury developments, including The Elysian, at 11 E. Walton St.; Trump International Hotel and Tower, at 401 N. Wabash Ave.; and Waterview Tower, 111 W. Wacker Drive, have pushed luxury to new heights by incorporating five-star hotels and services ranging from health clubs and room service, to 24-hour concierges and on-site housekeeping.

Designs range from the ultra-modern 30 W. Oak, reminiscent of Mies van der Rohe, to iconic Chicago buildings, which once housed offices and hotels but have been lovingly converted to residential buildings steeped in fascinating history. In that category is The Palmolive Building, at 159 E. Walton St., and The Ambassador, formerly The Ambassador West Hotel, at 1300 N. State Parkway.

Each project claims to be unique, and in a sense, each one is.

“Everyone has to do something a little different to move their product off the shelf,” says Peter Birmingham, of Schillaci Birmingham Development, developer of 30 W. Erie. The boutique design of 30 W. Erie means just two units per floor in a more intimate setting. LR Development Company is promoting eco-friendly high-design at 340 on the Park, 340 E. Randolph St., complete with bamboo flooring. For beachgoers, 600 N. Lake Shore Drive represents a rare chance to buy new construction on the lakefront.

Beyond the Gold Coast

Buyers in the ultra-luxury market might also need to put on their walking shoes or fire up the limousine. The natural habitat of the luxury highrise was once the vaunted Gold Coast, and while that fabled stretch remains the locale of choice for many, opportunities for new construction in the densely populated neighborhood don’t come around often.

The PinnacleAs competition for the empty nester dollar grows, developers and the market as a whole, are redefining just what constitutes ultra-luxury turf. Trump International Hotel & Tower set the tone when The Donald decided to break ground at 401 N. Wabash Ave., the site of the former Sun-Times Building, on the edge of River North. The high-profile project has commanded record prices and experienced strong sales. It’s clear that an area more known for housing billionaires in boardrooms than in bedrooms, is now considered part of the ultra-luxury market.

The luxury residential market also has pushed south to the Loop / New East Side, and even into the up-and-coming South Loop. The unveiling of the long-anticipated Millennium Park created a seismic mini-boom in the market.

A number of high-end highrises are reaping the benefits of proximity to Chicago’s newest civic jewel, and a couple have even worked the park into their names.

The eco-friendly 340 on the Park development, the fast-selling The Heritage at Millennium Park and now, The Legacy at Millennium Park, are all poised to benefit from a prime location that was once a lonely, isolated and industrial corner of the city.

“[Millennium Park] has become to Chicago what Central Park is to New York,” says Kathryn Chez of Coldwell Banker.

Andy Warner, of Equity Marketing Services, saw the potential of the park when he was selling The Heritage, but even he sounds surprised by the impact it and surrounding development have had practically overnight.

“When we first opened The Heritage, that area was deserted,” says Warner, who is now marketing The Legacy. “On Saturday, I went around the corner to the Starbucks on Madison. It used to be closed on Saturdays. This Saturday I went and I couldn’t wait; there were too many people in line. We’re creating a 24-7 environment, which is what the mayor has pushed.”

Market predictions
As the ultra-luxury market grows more sophisticated and multidimensional, prices too are rising. But observers say the asking rate for a top-end condo in Chicago still doesn’t come close to the towering heights of Manhattan, where $3,000 a square foot is not uncommon. Nevertheless, the surge in ultra-luxury housing in what has always been a more conservative, even-keeled Midwest housing market is unprecedented.

The $500-a-square-foot measure has become commonplace due to a growth in construction costs and land values, says Jim Letchinger of JDL Development.

The PinnacleWhile prices are pushing the $500 to $700 range, an abundant housing stock and a competitive market will likely keep prices at that point for some time, he believes.

Given the large number of units under construction in what is still a comparatively small niche of the housing market, will the party soon be over? Is the market nearing a saturation point? After all, there are only so many millionaires shopping for new homes in Chicago.

The answer, of course, depends on who you ask.

Gail Lissner, of housing analyst Appraisal Research Counselors, says that in the second quarter of 2005 around 2,700 new ultra-luxury units were being marketed. That’s a historically high number, but about 2,100 of those are under contract, and only about 600 remain unsold. These homes are projected for delivery through the year 2008.

“That’s not an alarming number of units,” Lissner says of the 600 unsold units, noting that more projects are in the pipeline. But, she says, not every project on the drawing board will reach fruition as developers compete for the same pool of investors.

And though talk of a housing bubble abounds, Charles Huzenis, of Jameson Realty Group, points out that many high-end buyers are insulated from rising interest rates. These are buyers who often pay in cash and have second homes in places like Florida, Huzenis says. They are the types of buyers Huzenis hopes to attract to his 50 E. Chestnut project, a 34-story development of full-floor units priced from $2.3 million to $3.1 million.

Prominent architect Larry Booth, who has designed several top-drawer projects, such as the current conversions of both The Residences at 900 and The Palmolive Building, believes Chicago bypassed the sorts of manic real estate bubbles that have consumed the coasts. In Chicago, he says, prices will hold up. David Pisor, developer of The Elysian, agrees, and cites strong performance at his project as evidence.

But others see signs of a potential slowdown.

Some recent projects saw early, healthy absorption of buyers, but have been slow to close out sales, says Jim Kinney, of Rubloff Residential Properties. He says if that trend continues, developers will slow down the currently brisk rate of development. But Kinney also noted that Trump and The Palmolive Building are enjoying steady, consistent success, while 840 N. Lake Shore Drive is seeing good returns on the resale market.

MCL Companies’ Michael Maier, developer of Riverview II, which is about 80 percent sold, says there seems to be a slight slowdown in buyers from the North Shore and a leveling off of prices.

Future projects
But for now, the city awaits the next ultra-luxury project. Next year, JDL Development will unveil 541 W. Cornelia, a 21-story building with one unit per floor in a stretch of Lakeview that has seen little new construction.

The Fordham SpireThe Fordham Company made a big splash when it announced The Fordham Spire, a svelte offering from renowned Spanish architect Santiago Calatrava that twists dramatically as it ascends. Critics, even those who admire the design, have expressed doubt that the project can be built after 9-11 and at a time when talk of a housing bubble is rife. But The Fordham Company’s Brian Carley says financing prospects are strong for what would be the tallest building in North America, and at press time, said he hoped to open sales in January 2006.

“There has been interest internationally, from Europe, South America, a law firm in London,” Carley says. “We are Midwestern, so it’s exciting.”

(Visited 187 times, 1 visits today)