What Do Miami, Las Vegas and the South Loop have in Common?

If you said, “real estate internet blogs and message boards trying to compare them”, you win.

Someone on yochicago’s message board recently brought up the question, so we tried to defend the Sloop. Although the housing boom can be credited for the large amount of development in these three places, in our opinion that’s where the comparisons should stop:

I understand peoples desire to compare Miami and Las Vegas to the South Loop, but it's really not a fair comparison. Compare Miami to Phoenix or Houston.

If you want to compare the South Loop, compare it to Soho, Chelsea or Harlem in New York. These areas had similar booms to the South Loop. Although they may not be in as good as shape as the upper east/west sides of New York or comparably the Gold Coast in Chicago, they're desirable neighborhoods in large, dynamic cities. As long as Chicago and New York remain viable global cities, these neighborhoods will be well positioned for the long term (unlike Miami and Vegas).

Not a Good Time to Be a Landlord

According to Crain's Chicago rent in the downtown market has fallen to it's lowest levels in 7 years. The article goes on to call out the South Loop specifically saying:

The new South Loop projects “have hit the market at the worst time, if you want to live in the South Loop, you have lots of options. That has really slowed down the leasing.”

This isn't a big surprise especially since there are also a lot of condo owners who would rather try to rent their properties instead of selling them.

More Real Estate Stats for Sloopin

Recently we had some correspondence with Lakeshore Analytics about the real estate market in the Sloop. For a .pdf with in depth information about our specific neighborhood check this link out. When we asked them to provide their thoughts on the South Loop's real estate market here is what they said:

1. The neighborhood has very high incomes for Chicago ... over $45,000 per capita, like the fifth highest in Chicago. Neighborhoods with higher incomes have generally more stable households. (Good.)
2. This was one of the hottest neighborhoods in the city for a while, but it didn't experience lurches up or down because of the new construction. The fact that so much was new actually helped smooth things because those sales are all pretty high and developers don't panic-sell the way some existing home owners do. (Good.)
3. Along similar lines, the loan-to-value ratio in the neighborhood averaged 77%, one of the lowest in the city. This is good because people will in general be less susceptible to default if they have more equity. It basically signals a buyer who's got a strong handle on his or her finances. (Good.)
4. The development cycle for a high rise is very long. So when there are signs of trouble somewhere near where I live (northwest side), a developer can call off a condo conversion. You live with your decisions for like a year in the northwest side, but a high rise new construction could take two or three years to complete the development cycle. (This is bad.)
5. The key question marks that I don't have access to are, How many condo's are on the market currently and how many are coming online in 2009? You may have a better idea of that. It could well be there is a long backlog of homes left to be sold and more coming online -- that doesn't necessarily mean lower median prices, but it does portend a difficult time for an existing owner if they want to sell and move. The early evidence is that the number of existing homes sold has been increasing every year -- people are still able to sell their homes -- so I would guess that existing owners have escaped some of the pain so far. (This is mixed.)

Interesting stuff.

For more information on the greater Chicago real estate market check out their website. Also they're providing a $10 discount for Sloopin readers who are interested in purchasing their entire report, The Neighborhood Report 2009 (simply type in "SLOOPIN" when purchasing). Check it out, we found it interesting.

South Loop is Chicago's Vegas?

Interesting video and bit on yochicago.com about the South Loop:

The South Loop gets a lot attention, but from what we've read it's doing no worse then any other area in Chicago. Obviously it's not a good time to sell given the amount of high rise inventory on the market (especially in the neighborhood), but the video brings up some good points as to why the long-term prospects for the South Loop remain strong (proximity to the center of the city, parks, museums and lakes).

Printer's Row Condo Auction!

A sign of the times...Vetro (at 611 S. Wells) is auctioning off it's final 40 units on Saturday, March 7th. If you're in the market for high rise living and a potential deal, I would recommend taking a serious look at this opportunity. Here is a list of the units being auctioned:

Obviously it's an auction and prices will go up, but as I poked around their website most of the floorplans looked sensible and practical. I also imagine there are some great views from this building.

The Real Estate Market: Sloopin

As everyone knows, the real estate market is the great unknown right now. Credit has stopped flowing and as a result not many people are buying. The proposed federal stimulus package is trying to help potential home buyers out by offering them a $15,000 tax credit. Although I would think this would help entice people to get off the sideline and buy a place, unfortunately it's not going to help me since I bought a place last year (However I realize its goal is to help the real estate market and economy in the long run, so hopefully it will help all of us eventually). As my accountant told me when I asked about this proposed tax credit:

I am sorry to say that you're right. In retrospect, you took things into your own hands to personally jump start the Chicago South Loop real estate market without any stimulus benefits.

First off, everyone can thank me for personally taking matters into my own hands! Second of of all, I said 'my accountant' to act special, but who am I kidding it's my uncle. Regardless, it still means that I'm not getting a stimulus tax credit.

However, I did run into this 'median price heat map' chart on chicagotribune.com. According to this chart, the Sloopin area (excluding printers row) had the largest median price % gain over the past 12 months.


This makes me feel special, but something tells me that next year we could be the largest % decrease in the area. Like usual, I'm going to be pessimistic and expect the worst. However, could the South Loop be in a good position to weather the current economic storm? What do you think?

Does the Chicago Spire depend on the Olympics?

Although we realize that the Spire isn't technically in Sloopin's jurisdiction, it's probably the best and highest profile gauge on Chicago's real estate market. Two years ago all systems were go. The largest propose building in North America was under construction, a new icon would be added to Chicago's legendary skyline, and surprisingly to some sales at the Spire seemed to be doing well.
However, times changed, the bubble burst and today we're left looking at a gigantic 7 story hole at one of Chicago's most high profile and important pieces of land (at the intersection of the Chicago River and Lake Michigan).

According to a recent article in the New York Times, the Spire is on hold (which is obvious if you drive by the site). Most people probably read the writing between the lines an infer that this project is dead. However, according to Garret Kelleher (the developer) it's not over. At this juncture, Sloopin's going to take a cynical approach and hope we're proved wrong.

In the NYT article one of the most interesting quotes from Mr. Kelleher is his statement about the Chicago 2016 Olympic bid and it's impact on the Spire:

Specifically, Mr. Kelleher is waiting for next fall, when the city will learn whether it will be the site of the 2016 Olympics. “If Chicago lands the Olympics,it will certainly be a boost to the local economy,” Mr. Kelleher said.

Why is this interesting? It seems as if many people in the business world are on the edge of their seats to see what happens with the Olympic bid. As you know, we're all for the Olympics here at Sloopin, but it does raise a red flag when we hear talk like this. What happens if Chicago doesn't get the Olympic bid? Will this loss spell even more deflation in development and business in Chicago?

Conversely, winning the bid would probably help the local economy a lot (which is what Mr. Kelleher is saying). Obviously Chicago would get a lot of free international publicity which would help Mr. Kelleher sell units to across the globe.

So what do you think? Does the Spire need the Olympics to actually get built?

1720 S. Michigan

Although the real estate market is down, it's still fun to look at some of the properties around the sloop. With that said, check out this 2bed/2bath at 1720 S. Michigan. From what it looks like, it's listed at $340,000 for 1,134 sq. feet. If a highrise is your thing, then this could be yous...

Buyer Beware

If you put money down for a condo in a new construction building within the past couple of years this story unfortunately probably sounds way to familiar. This article on Crain's Chicago talks about a number of horror stories, but of particular relevance for Sloopin readers is the proposed Glashaus development at 1327 S. Wabash Ave:

Buyers of units in stalled condo tower projects face a tough decision: walk away and lose their deposits, or wait in hopes that the condos of their dreams will be built eventually.

Manish Shah is all too familiar with this bind. He agreed in December 2006 to buy a two-bedroom unit at the GlasHaus development, 1327 S. Wabash Ave., and plunked down $24,000 in earnest money.

This is unfortunately seems to be a sign of the times and something many people are dealing with around the neighborhood and city.

However, based on this long (but interesting) thread of comments on YoChicago.com, Manish and others at Glashaus have been able to get their money back. Hopefully others will be as lucky.

Sloopin's Public Housing Situation

A recent article in the Chicago Journal detailed new plans by the Chicago Housing Authority (CHA) to close more buildings at the Harold Ickes Homes (which is located at the far southwest corner of the near south neighborhood).

The topic of Public Housing and gentrification always proves to be a touchy subject and this is no different. From their controversial conception in the 1930’s to the current dilemmas they face now, Public Housing tends to be viewed negatively, but as a necessity for poorer, underprivileged citizens.

Without getting into to much detail and nuance, the “older” public housing complexes (like the Ickes Homes) tended to only be comprised of poorer citizens that couldn’t afford housing. As you can imagine and have probably read, these complexes bred illicit and underground markets (such as drugs and prostitution) where gangs fought for control and power. Many documentaries, books and movies have chronicled this history (most famously in the Cabrini-Green complex on the near north side).

More recently, the federal department of housing and urban development (HUD) in conjunction with other local government agencies has started a ‘new’ initiative that tries to encourage mixed housing with people of different socioeconomic backgrounds (public housing, affordable housing and market rate housing). The idea is to have a diverse neighborhood with a variety of different types of people.

Public housing continues to be a tough situation, but the newer approach seems to make more sense then grouping large numbers of underprivileged and sometimes desperate residents together (however, who buys the market rate housing? Would you?).

In the near south side neighborhood resides two complexes, the Ickes Homes and the Hilliard Homes (as seen on the map). The Hilliard Homes is comprised of two unique buildings that are considered architectural gems and are on the national register of historic buildings. In 2002, the city started a project to convert the complex into the new mixed housing model (and includes public housing, affordable housing and senior living). Across the street, The Harold Ickes Homes are currently listed as 'TBD' in regards to their future plans.

Given the proximity to McCormick Place, other proposed Olympic venues and the cities general plans for the near south side neighborhood, it will be interesting to see what happens with the Ickes Homes. If the Hilliard Homes (which sit across the street) prove to be a success, maybe the government will implement a similar strategy here. If not, who knows?

One thing seems inevitable though, the Harold Ickes Homes probably won’t be around much longer in their current form and for many residents of the South Loop and Near South Side neighborhoods that’s probably welcomed news.

"Major" Developers Line Up for Olympic Village

Chicagobusinesss.com is reporting that some of Chicago's biggest developers are interested in taking on the Olympic Village project assuming Chicago wins the bid. This is good news for the bid and city as it will alleviate some of the fears citizens and the IOC might have with this 'privately' funded portion of the plan:

The willingness of well-known developers to take on the project boosts the
credibility of Chicago's Olympics bid, which relies heavily on the private
sector. At an estimated cost of $1.1 billion, the athletes' village, planned for
the site of Michael Reese Hospital near 31st Street and Cottage Grove Avenue,
was the most expensive and perhaps riskiest element of the plan.

To us this isn't surprising. We figured that a developer would be salivating at the opportunity to develop this high profile and great piece of land. Obviously the city is making this area a priority for its future plans and it seems like a no brainer for most developers.

Previously our only reason for concern was how the current economic and real estate situation could effect this plan, but this article puts those fears to rest...well sort of puts them to rest.

Do You Have $2.3 Million?

If so, you can have a spectacular condo in One Museum Park, which is the immaculate new building on the south end of Grant Park. What this gets you is 3 bedrooms, 2,910 square feet and ridiculous views:


For more One Museum Park coverage check out these Sloopin stories.

More on Sloopin Real Estate from Crain's

Brief news bit on Real Estate in Chicago and specifically the South Loop. Gail Lissner, VP at Appraisal Research Consultants, is "cautiously optimistic about the South Loop" in the long run (1:46 seconds in)...

Interesting Discussion at YoChicago about SL

For those of you who don't know, YoChicago is a website devoted to covering the real estate market in Chicago. And as you can imagine, the South Loop is one neighborhood that is often covered due to its recent growth.

About two days ago YoChicago posted a conversation starter comparing the South Loop in its current state to Edgewater a couple of decades ago (According to the website real estate in the Edgewater neighborhood lost approximately 60% of it's value from 1972 to 1992). Although this has garnered a fare share of comments, most of them seem to think that the South Loop is nothing like Edgewater. In my opinion here was an insightful post comparing the two:

I don't think that there is much of a historical parallel (between the South Loop and Edgewater). 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 succinctly 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.

Cool Down

In terms of real estate and development, the South Loop is going to feel some pain in 2009 according to an article today on Chicagobusiness.com. This probably isn't the biggest surprise for residents in the South Loop, but as you can imagine it's a little disheartening to hear.

Although I'm not arguing the facts of the article or the current real estate predicament, but if you don't have to sell your place tomorrow I think you should be fine. As the article states, the South Loop neighborhood has a lot of attractive attributes for it's residents, such as close proximity to the loop, lake, Grant Park, Museum Campus, public transportation and major highways.

As they say in real estate, it's all about location, location, location...and I think that should help the South Loop continue to evolve.

Museum Park One Update

Museum Park One has become the corner stone and symbol of the South Loops recent boom, however the building isn't even completely done. Yes, people have started to occupy the building, but the developers won't be putting the finishing touches on the building until early next year.

According to YoChicago 64 original units are still on the sale block:

Most of those are priced above the $1 million mark, but there are a few two-bedrooms left in the low $800s and even a single 955 square-foot one-bedroom priced below $500,000.

There are also currently 22 units that are being sold through brokers and 20 units available for rental.

Two South Loop High Rises Get the Axe

Not a huge surprise given the market and financial issues right now, but today Crains Chicago reports that developer Warren Barr has decided to not move forward with two high rises at 830 S. Michigan and 1000 S. Michigan.

830 S. Michigan would have been the tallest building in the South Loop standing at 80 stories and 855 feet.

Museum Park West Starts to Grow

Yo Chicago has a new post about Museum Park West. As of now the building is supposed to be done and ready to live in by the end of 2009. They also talk about the other buildings planned for Roosevelt...take a look at the post.

Here is an old Sloopin post about these buildings on Roosevelt.

Grant Park Tower 3 & 4

Thanks to Jeremiah D. for directing us to the latest plans for the prestigious developments along Roosevelt. For those who are not familiar with the plans, Musuem Park one (far left) is almost done and Museum Park Two (second from the left) just started construction this summer. I hope these buildings still are constructed. It would frame the South End of Grant Park beautifully and really be a sign of the South Loops architectural influence on the city.

This article also reports good news about the vitality of the South Loop in a tough economy and marketplace (even though this was prior to the financial issues that hit us in Oct.):

Even with declining Chicago condo sales in many neighborhoods, one section seems to be holding its own and maybe even gaining ground. Central Station is still attracting buyers and Chicago real estate developer Gerald Fogelson of Fogelson Companies is confident enough to move forward with the first of two new towers.

Museum Park One

Here is a picture from the weekend of Museum Park One. The building looks great and is an impressive new symbol of the South Loop rising.


What do you think about this building?