Two real estate developers, Optima (with DeBartolo Development, LLC) and Habitat Co., have received financing to build two new Chicago apartments in downtown—one high-rise in the Streeterville neighborhood (near Navy Pier) and another in the River North neighborhood just north of the Chicago Loop. In 2011, due to rising occupancy rates and rents, there has been a new wave of development of Chicago apartments.

According to a November article in Crain’s, the new rental developments will add 775 more units to the already escalating number of Chicago housing options available for lease. With seven other projects that are under construction downtown, these developments will test the market’s vitality in about two years’ time. The developments will add around 5,600 new Chicago apartments to the downtown market by 2014, estimates Appraisal Research Counselors, a Chicago-based source cited in a recent post on Crain’s Chicago Real Estate Daily.com.

Optima Inc., based in Glencoe, IL, secured a construction loan from PNC Financial Services Group Inc. and HSBC Holdings PLC. The Chicago apartments are part of a joint venture including Optima and DeBartolo Development LLC, located in Tampa, FL. The project is a 42-story, 325-unit tower on the northeast corner of Illinois and St. Clair streets. The project is financed with a preferred equity investment from LaSalle Investment Management, a subdivision of Jones Lang LaSalle, Inc. Senior VP of Draper & Kramer Inc., William Barry, arranged the financing.

Habitat Co. is developing Chicago apartments at 360 W. Hubbard Street in the River North neighborhood. Habitat Co. received its financing from Bentall Kennedy L.P., a pension-fund adviser based out of Seattle. The building will contain 450 units.

Industry researchers reported that Chicago will see a softening of rents in 2013 but reassured that the increase in supply right now is in balance with the demand. Some of the other seven downtown developments that will house new Chicago apartments include: K2, a 496-unit project in River West; Coast, a 499-unit tower in the East Loop; and a development in River North containing 409 units.

The former residence of Chicago’s downtown flagship Carson Pirie Scott & Co. store, the Sullivan Center, has recently acquired a bidder, according to a November article in Chicago Real Estate Daily. The building is a national historical landmark designed by architect Louis Sullivan. It has been a Chicago favorite since it opened in 1889 and has long been a cornerstone of the city’s classic architectural beauty. Located at 1 S. State Street, the property is literally at the “center of Chicago.”

The Sullivan Center is currently owned by Chicago developer, Joseph Freed & Associates, LLC. Freed & Associates originally purchased the building in 2001 and immediately began renovation. In 2007, Freed took out a $133 million, three-year syndicated loan with National City Bank to fund the construction and refinancing. In 2008, when PNC acquired National City Bank, the loan increased to $148 million and has been paid off in part by the City of Chicago’s $8.5 million tax increment fund.

The reason the loan on the Sullivan Center reached default is because the owner did not pay the lender, PNC Financial Services Group Inc, for the matured loan in March 2011. This was after Freed & Associates negotiated a one-year extension on the loan with PNC in March 2010. Even though the renovation of this iconic example of historic Chicago real estate won awards, the owner has had difficulty finding and retaining occupants for the building.

Nine months ago, Target Corporation signed a 15-year lease for 125,000 square feet of the Sullivan Center’s retail space to house a new store that is scheduled to open in October 2012. Since then, Target has said it would extend the plans an additional 30,000 square feet for an even larger store showroom. The Sullivan Center building is currently zoned for multi-use and houses retail and office space. According to one report, the structure will be 82% occupied with the addition of the Target store.

This isn’t the first time Freed & Associates has had trouble paying for one of their properties. The group recently lost another piece of prime Chicago real estate—Block 37 of State Street—to foreclosure. Winthrop Realty Trust, a real estate investor based out of Boston, MA, currently holds the leading bid for the Sullivan Center. PNC reached an agreement with Winthrop Realty Trust that for every dollar of the building’s defaulted loan (now totaling $137 million), Winthrop will pay just 90% of the cost or 90 cents.

The two towers of Regents Park, located in Chicago’s Hyde Park neighborhood, have sold. Crescent Heights, from Miami Florida, finalized a sale of the Chicago apartments to Antheus Capital, through the firm RP Holdings, LLC, according to a November article on Globest.com. The $159 million sale marks the largest transaction for apartment sales in Chicago since the beginning of the recession. Crescent Heights initially bought the building from Vornado Realty Trust for $128 million in 2005.

Once a notably crime-ridden property, the Chicago apartments were renewed by developer Bruce Clinton. The towers, complete with 1,031 units, were originally built in the 1970s and formerly served as a resort hotel for the U.S. Army. Antheus Capital, which owns other multifamily Chicago real estate, has already begun operating the property.

The Chicago apartments are around 980 sq. ft. per unit and are priced for rent at approximately $1,400 per month. The south tower of Regents Park is 37 stories high; the north tower is one story shorter. At present, the Chicago apartments are 90% occupied and house a lot of students and faculty from the University of Chicago, which is located nearby. Some of the conveniences afforded to residents of the towers are an indoor play center for kids, a restaurant and gourmet market (that offers room service), a health club, an indoor heated pool with retractable roof for warm, summer days, and a heated indoor parking garage complete with 688 spaces.

The Midwest region of the U.S., particularly Chicago, has some of the strongest markets in the real estate world in recent times. And now, a new Case Shiller report has revealed that the Chicago-area is in the middle of a four-month run of price increases—for both detached homes and Chicago condo units.

While those who purchased Chicago real estate during the height of the housing bubble have definitely lost value (around 29.2% for a single-family homes and 28.2% for Chicago condos), there has been a notable improvement in prices as of late, according to Case Shiller’s home price data list released in August 2011.

Case Shiller’s August index shows the price of single-family Chicago homes is on a 4-month bounce, rising 8.4% over the period and 1.4% since July. Chicago condos have also demonstrated a short-term recovery with five months straight of price increases that totaled a 12.6% gain (however, up just 0.6% from July to August). Still, there is skepticism whether Chicago home prices have truly bottomed out or not. Many real estate experts are hesitant to declare a stabilization of values since the housing market has experienced this type of month-to-month improvement before.

The Illinois Association of Realtors released data in September that showed Chicago home sales rose 13.3% for the month for a total of 6,035 properties sold. However, the median price of $160,000 was an 8.6% decrease from the $175,000 documented last year. With the exception of DeKalb, all nine Chicago-area counties had similar findings: sales increases and lower median prices. The price decline was 5.3% in Cook County.

The third quarter is generally a robust quarter for Chicago homes, especially in neighborhoods containing a lot of families (since people like to settle into their new homes before the start of the new school year). The 2011 third quarter was remarkably strong, however, despite the growing jobless rate over the past eight months. There has been a spike in Chicago home sales, including single-family units and Chicago condos, according to housing data collected for July through September 2011.

According to recent data released by Lakeshore Analytics, sales velocity of Chicago homes improved 31% in the 3rd quarter over the 2nd quarter and had a 1.7% jump from the previous year’s 3rd quarter sales. Sales velocity for Chicago condos surpassed the last quarter by 25% and did 5% better than the 3rd quarter last year. The price of Chicago homes for sale has increased as well: 13% for Chicago condos and 14% for houses.

This news marks the third consecutive quarter of increasing selling prices and sales velocity among Chicago condos. It was the second biggest jump in sales velocity over the past five years for Chicago homes. The largest occurred after a catastrophic first quarter in 2009. This is good news for buyers, as there is a range of homes to choose from. But investors are quick to bid on the best foreclosures, so Chicago condo and home buyers may want to act fast.

The rise in sales velocity in Chicago real estate over the third quarter coincides with a recent dip in inventory. But more Chicago homes have entered the foreclosure process as of late and as these properties become bank-owned they will eventually be relisted on the market. According to economists, this trend could end the dip in previous inventory, which has been the lowest it has been since April 2010.

One senior economist for Moody’s Economy.com explains, “The decline in inventory is just a symptom of the overall anticipation by homeowners that the next two to three quarters are not going to be good,” Andre Carbacho-Burgos said. “It stretches out the amount of time it will take to (deal with) the housing inventory. The good news is by mid-2012, we will have prices rise slowly.” However, as with many things related to the real estate market, Carbacho-Burgos believes the decline in foreclosure properties that has occurred in the past couple months will be short-lived.

Historic Chicago real estate in the West Loop is getting a facelift and a new lease on life with a new renovation project that will bring more rental units to the neighborhood. AREA Property Partners and Martin Capital Group have procured a $12.9 million dollar construction loan to transform Chicago’s floral industry center into an apartment complex with commercial space. The new development will provide Chicago renters with yet another alternative to expensive high-rise living.

Chicago-based Martin Capital Group has partnered with New York-based AREA Property Partners to redevelop West Loop’s former florist center into a mixed-use building. Plans for the new project are complete with 70 Chicago lofts, a parking lot containing 70 spaces, and 27,000 square feet at ground floor for retail use. The neighboring building will also be renovated into 2,500 square feet of residential or office space, 5,000 square feet of retail, and a parking lot including 35 spaces. The goal is to complete the Chicago real estate projects by 2012’s third quarter.

The three-story industrial building located at 1313 W. Randolph Street was constructed in the late 1920s for the Wholesale Florists Exchange. The building was designed by Fox & Fox and contained businesses such as Peter Reinberg, Kennicott Brothers Co., JA Budlong Co., and Poehlman Brothers Co.

This fundamental piece of historic Chicago real estate remained an active floral market through post World War II. However, as noted in an application to the National Register of Historic Places, the Randolph Street locale started to struggle once air travel became more frequent in this country and the wholesale cut flower industry no longer thrived in the West Loop. According to a recent story on the future of the site, the industrial building has applied and is currently under consideration to be added to the register by the National Park Service.

AREA Property Partners has worked with local company Martin Capital Group to build several multifamily residential projects in the West Loop over the past few years. Their other projects include the five-tower complex at K Station, AMLI River North at North Clark Street and West Hubbard Street, and the unsuccessful Waterview condo project.

Similar to other parts of the country, local residents have become increasingly familiar with the existence of empty or abandoned Chicago real estate due to the recent economy crash. On a brighter note however, Chicago real estate located in the city’s South Loop neighborhood is starting to be redeveloped and repurposed. Renters are filling up Chicago condos that have gone through foreclosure and, although there is no news as to whether it will eventually offer Chicago condos for sale, a newer residential building at 1712 S. Prairie Avenue was recently snatched up by a pair of development companies that already have a hand in many projects around the city.

Developers Golub & Co. and Sandz Development Co.—the buyers of many Chicago condos—are the current owners of 1712 S. Prairie Avenue, which is referred to as the “X/O” building. X/O’s original owners, Keith Giles and Jerry Karlik, built the South Loop condominiums during the housing bubble. At the time, the duo dealt with a lot of community resistance to them building their properties, which include Chicago lofts and high rises.

According to a November 9^th article in the Chicago Journal, the original X/O developers faced many obstacles when they attempted to place these Chicago condos for sale. Second Ward Alderman Robert Fioretti initiated an ordinance to rezone the property, in order to limit the number of units within the building. Giles and Karlik filed a lawsuit to keep progress going and the ordinance was eventually withdrawn. Unfortunately, the economy collapsed soon after and the development ran into even bigger problems. Even though most of the real estate development in the South Loop neighborhood is seemingly high-rise rentals and condos, the Prairie District Neighborhood Alliance (a smaller community located within the larger South Loop area) actively protested construction of X/O. The complaint was due to a dislike of high-rise Chicago condos being built on this once-historic avenue.

Consequently, there was a lack of buyers for X/O and since the construction was not financed, the Chicago condos laid empty for years. Complaints were made to the alderman regarding poor upkeep in several abandoned South Loop buildings. But developers have made strong efforts to fence off property sites and clean up the areas to keep squatters at bay. The abandoned X/O site still has signs from the original opening in 2007 that boast “The Journey Begins Here” and “The Sexiest in the South Loop”.

It remains so be seen what Golub & Co. and Sandz Development are going to do with the old X/O condos, especially as demand for rental units inspires a new wave of apartment construction in the city. Other Chicago real estate has been purchased in the South Loop as of late, including a 53,000-square-foot lot that has been vacant for years on 18^th Street and Wabash. The property was purchased by Dynacorp in October for commercial development.

Those who have hesitated to purchase Chicago homes in the past may be able to move forward now. Many Chicago homes for sale that were well over $300,000 five years ago have lowered their prices due to the recent housing downturn. People who were in the military or in jobs that required travel may have stayed away from the long-term mortgage commitment. Due to the recent change in the housing market, though, many are rethinking their choice.

According to a current article in the Chicago Tribune, many developers of Chicago real estate are changing home designs and prices due to the increasing number of foreclosures and resale properties. Now that the prices have dropped and one gets more for the money, Chicagoans are more actively pursuing these purchases.

The National Association of Home Builders recently stated that Chicago homes for sale are among the Midwest homes that are averaging a $232,800 sale price. Developers are adding nicer interiors to attract buyers yet the prices are remaining low.

For those who live in the city, Chicago lofts for sale such as the historic Van Buren Lofts are on the market for a mere $239,000. These lofts have the additional amenities of a gym and a deck on the roof.

However, the low prices aren’t limited to city-dwellers. The suburban Chicago condos and homes are a deal, as well. For example, the Palatine R. Franczak & Associates development “The Heritage of Palatine” offers suburban Chicago condos, which run in the $200,000 range with such amenities as hardwood floors, granite countertops, and heated indoor parking. The penthouse is also selling for under $300,000, which is a steal.

The Villas at Fox Run, by Epcon Communities in Plainfield, consists of ranch-style homes selling in the $170,000 – $250,000 range. The development’s single-story homes with clubhouse and community swimming pool mirrors developments common in the western United States.

Chicago real estate suitable for the senior buyer includes Belle Plaine Commons. These stunning Chicago condos are selling to buyers 55 and older for under $200,000 for a unit with a high-ceiling, brand new appliances, and garage space.

For those who choose to leave Chicago apartments or townhomes behind to venture into the greener, single-family home pastures, affordable options are available. If one is having issues with selling the old townhouse, for example, purchasing from a developer like William Ryan Homes may provide an out. The company partners with property managers, which enable the buyer to purchase a new home while renting out the old one.

A proposed dual-building development for 410 E. Grand has recently changed its direction to exclude an 11-story affordable apartment complex. Now the developer plans to build a 45-floor residential tower and an 8-level commercial building, according to a recent article in the Chicago Sun-Times.

Developer Golub & Co. was originally set to put up two apartment buildings (one with affordable units) in Chicago’s prestigious Streeterville neighborhood so workers at nearby Northwestern Memorial Hospital could have more living options at lower price points. The concept was questioned by a local community group that had beef with the aesthetics of the proposed design, the Sun-Times reported.

Chairman of the Streeterville Organization of Active Residents said the quality and appearance of the lower-income apartment building paled in comparison to the soaring upscale tower, resulting in more of a “segregated” rather than an “integrated” feel. A meeting is being held by the neighborhood group and 42^nd Ward Alderman Brendan Reilly on Monday, November 14 to discuss the matter.

According to the article, Golub and famed architect firm Solomon Cordwell Buenz are working together on the project. While the senior vice president of Golub could not be reached for the Sun-Times report, the story includes a detailed rendering of the revamped buildings, which replaces the lower income apartments with a modern-looking medical office center. It also extends the original 42-story tower three more floors for a total of 45 levels of apartment units.

The Chicago Architecture Blog has been following the Golub development at 410 E. Grand as well. It posted blueprints acquired from the alderman’s office in addition to revised figures for the building’s height and number of residences, parking spaces, etc. For instance, the modified plans call for a total of 490 residences whereas the previous design had 443 units in the taller tower and 87 affordable units in the shorter section. Green roof square footage would be reduced by 1344 and bicycle parking would be decreased from 149 spots to just 50 spots. The new alterations would also reallocate nearly 30 spaces of residential automobile parking for office parking.

Sales of Chicago condos showed an improvement in September, as did sales of all existing homes in the city. According to an October 20^th article in the Chicago Tribune, new reports on the local housing market revealed year-over-year gains in residential real estate sales—for both attached properties and single-family homes. There were a total of 1,498 homes sold in the city this September, which is a 6.8% gain from September of last year.

Condo sales in the city reached 855 for the month, which is 6.5% higher than what was sold during September of 2010. Home price is doing well as compared to last year, too. Median price for the entire residential real estate market in the city of Chicago rose 5.6% in September. However, if you look at just condos, median price went down slightly from September ’10 to $235,000 in September ’11. That is only a 2.1% dip, year-over-year.

If you look at the first three quarters of the year, price for condos and townhomes in the city are steadily climbing. According to data from Lakeshore Analytics, Chicago had its third straight quarter of rising selling prices for attached properties. Median price almost hit $300,000 during the three-month period of July, August and September—a 13% jump from the second quarter selling price. Sales volume of condos and townhomes in Chicago is also on the rise.

A typically slower fourth quarter could result in a slip in Chicago’s current upward movement, which is bucking the national housing trend. Chicago is supposed to have an especially tough winter this year, one on par with 2010’s Snowpocalypse. Severe weather would further amplify the normal decrease in buyer activity that usually occurs during October, November and December. Plus, people often get busy with holiday plans and push buying a new condo or home back until after the New Year.

Another factor that will likely affect Chicago condo sales in the near future is the impending wave of foreclosures awaiting processing. As banks work their way through the backlog of foreclosed homes, there will be an influx of REO properties re-entering the local housing market. That could pose an issue for home sellers as it may bring down median price again.