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.

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.

Home builders from other parts of the country continue to dominate sales of new residential real estate in Chicago, including new construction condos. According to an article in Crain’s this week, publicly held companies control practically half the marketshare when it comes to new home sales in the Chicagoland area. The number has grown from around 10% ten years ago to nearly 50% today (and over 60% if you’re talking about the suburbs alone).

Companies from Michigan, Ohio, Texas, California, Miami and New Jersey are among those with big investments in the Chicago area’s new construction housing. National home builders from these states are especially prominent when it comes to attached unit listings. Many of the new condos and townhomes in Chicagoland were developed by big businesses like Pulte Group Inc./Centex Homes/Del Webb (based out of Bloomfield Hills, Mich.) and D.R. Horton Inc./Cambridge Homes (from Fort Worth, Texas). The former sold 314 new homes in the city and suburbs in the first three quarters of 2011, making up almost 14% of total sales. The latter had 274 sales so far this year, which equals roughly 12% of the market.

Developers and building companies like to focus their resources on multi-unit projects partly because they draw first-time homebuyers. First-timers are desirable because they do not have another property to sell before they can purchase again. So the sale is not contingent on another sale, which can take a long time in today’s real estate conditions.

With so many distressed properties available, big companies can get land (or developments that ran out of money during construction) for extremely discounted prices. They generally have the capital to invest in large condo projects, something smaller businesses may not be able to afford. This gives them a leg up on the competition and presents a hard act to follow for many private builders.

According to data from Tracy Cross & Associates Inc. cited in Crain’s, only four of the top ten new home construction companies in the city and suburbs are actually located in the Chicago area. CMK Cos. and W Developments LLC are both in the city, making up 1.6% and 1.9% of total new homes sales in Chicago, while Stonegate Development of Illinois Inc. in Oak Brook and William Ryan Homes of Schaumburg are both in the suburbs, taking 2.6% and 1.8% of marketshare respectively.

There are over a dozen apartment projects underway in Chicago suburban communities after plans to anchor downtown areas with new condominiums came up short. The local suburbs may increase rental inventory by as many as 2,000 units in the next year and a half, according to developer estimates cited in an October issue of Crain’s Chicago Business.

Apartment developers are moving into the suburbs, despite previous resistance from suburban officials who wanted to use condo construction as a catalyst to revitalize their downtown centers. However, a weak economy and low buyer activity has replaced proposals for condominium buildings with those of apartment complexes. It is a trend that has already taken hold in the city of Chicago, which experienced a rash of rental construction this year.

Since 2004, the number of new apartment units built in the Chicago suburbs rarely exceeded 250 per year—whereas it ranged between 1,000 and 2,700 per year between 1996 and 2003. In 2010, only 85 units were added to the market. With occupancy rates at their highest in four years, the apartment dry spell has led to a shortage of available leases in many Chicago-area towns. In addition to an increased demand from renters, rental rate is also on the rise. The median net rent marked a record price per square foot in 2011 at $1.18 (up from around $1.00 in 2004).

In Evanston, a North Chicago suburb that shares its southern border with the city, a development company broke ground on a 214-unit apartment building in September. There is also a 190-unit building set for construction in Elmhurst and another 295-unit complex slated for development in Wheaton. All three of these projects will be in the villages’ downtown areas, exactly where community governments had previously hoped to build residential units for purchase.

While demand for apartments is on the rise at the moment, there is some risk associated with building scores of new rental units. For one, developers will have to charge fairly high rents in order to recoup their money and if the market is flooded with new apartments it could drive the average rate down somewhat. Also, a shift in consumer confidence for real estate could result in more people investing in homes as opposed to renting, which would leave apartment developers high and dry.