Interns Need a Home, Too

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When Equus Capital Partners bought the apartment building at 2 East 8th Street in 2003, they quickly converted it into an 882-bed student housing facility, which involved extensive upgrades throughout the building. Now, the building has been sold for $59 million to a three-party venture intent on remodeling the building once again, this time for use as intern housing.

Chicago rentals have long been a popular option for area college students, but these properties are also popular amongst interns working short-term for area businesses. The new 8th Street project is targeting just that; the remodel, which is a joint venture between Marc Realty Residential LLC, Atlas Real Estate Partners and Angelo Gordon & Co., will consist of 330 units.

According to a recent report from Chicago Real Estate Daily, the three-party venture now plans to spend “a few million dollars” on various renovations. These updates are likely to include installation of new stainless steel appliances, new countertops and building new floors throughout the building.

But the 28-story apartment complex will boast more than interior updates. A retail space of approximately 20,000 square feet is planned for the building’s first floor. Residents will also have access to an all-new four-story parking garage; and for those who don’t have a car, the complex is within easy walking distance of area businesses and schools.

Because Chicago’s summertime housing market is driven largely by interns seeking short-term living solutions, and because the 8th Street project targets this demographic, MRR Principal David L. Ruttenberg is marketing the updated property specifically to local Chicago businesses.

While interns are the target demographic for current marketing efforts, they will not be the only residents to occupy the renovated property. Anyone seeking short-term housing will be able to apply, meaning there will likely be several college students expressing interest.

Is little the new big in Chicago?

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Forget massive skyscrapers with hundreds of apartments and condos—scale it down to newer residential buildings with 14-20 units. Recently, there have been several instances of local Chicago home builders capitalizing on this niche by focusing on small-knit communities.

Noah Properties LLC, a local development company, has experienced considerable success by this scaled down approach. In fact, their latest condominium project in Lakeview only plans to house 14 units. Focusing on more modest residential projects has been the company’s recipe for success.

On the corner of Ashland and Grace sits the abandoned Cy’s Crab House, an empty shell of a business, a rarity for the prosperous Lakeview neighborhood. Well, this highly visible location won’t be an eyesore for much longer as Noah Properties LLC has broken ground on a new 14-unit building on the once bank-owned parking lot.

The parking lot was purchased for $1.3 million dollars and the plan is to erect a mix of three-and four-bedroom condos starting at $430,000. This acquisition represents yet another example of local homebuilders investing in lower-risk condo constructions in highly desirable neighborhoods.

This strategy has become Noah’s bread and butter over the years; they’ve recently sold out a 24-unit West Town project in addition to single-family homes throughout Lincoln Park. The company remains active on the north side and also works in the Northcenter and Bucktown neighborhoods. As Chicagoans demand newer constructions, Noah has been leading the charge in bringing inventory to the market.

Due to an increase in sales and stabilized home prices, condo development in the city has picked up exponentially. In fact, Chicago home sales have increased 20% in February from the previous year. This represents the highest performing February in seven years.

The construction on Ashland will have eight single floor three-bedrooms priced at $430,000; two three-bedroom duplexes starting at $550,000; and two four-bedroom penthouses listed at $700,000. This building is located in the exceptional Blaine Elementary School District and residents are slated to begin moving in around the beginning of the upcoming school year.

A Unique Conversion Redefines Chicago’s Suburban Lofts

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Conversion lofts and townhomes aren’t uncommon in the Chicago suburbs, but a recent development in the Village of Libertyville is taking the conversion concept to a whole new level.

Check out School Street Lofts, where Central School has been taken over by local resident and developer/builder John McLinden. City officials have long yearned to revive the old school building in the city’s center and as it turns out, McLinden knew just how to do it.

What he created is a collection of 15 loft-style homes. A local landmark has been resurrected and been given new life as part of School Street’s redevelopment, which also includes 26 new, bungalow style homes.

One of the biggest challenges for McLinden was actually converting the Country Georgian-style elementary school into modern condominium lofts, while preserving the original structures best details. The school was constructed in 1938 and McLinden was determined to restore the building back to its original classic style. The windows are in the exact pattern as the originals and McLinden felt obligated to keep the authenticity of his initial vision.

The school was gutted in 2012 and configured to house 15 loft units ranging from 657 square feet to 1,568 square feet on three levels, including the basement. Price points for these units range from $179,000 to $425,000 depending on size and location of the unit. Nine of the 15 units have been sold, as many residents are intrigued by the distinct nature of this opportunity. Boosting big school windows and 12-foot ceilings, real estate professionals comment on the “height” and “light” of the units.

Another reason why this conversion is so rare, outside of the fact that it’s located in an outlying Illinois village as opposed to the city, is the fact that this building is in a desirable location. Situated downtown Libertyville, walking distance from shopping, dining, and the Metra Station, the School House Lofts provide residents with a connection to downtown and cultivates a more urban feel.

While this unique Libertyville conversion has garnered quite a bit of attention, there are Chicagoans that prefer more traditional suburban condos, like this three-bedroom unit with a private balcony in Wilmette, or this stunningly remodeled one-bedroom unit in Evanston.

Gouletas’ 13-Property Deal Collapses

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Nicholas Gouletas, head of Chicago-based American Invsco Corp., couldn’t secure the financing for one of the largest deals of his career.

According to Chicago Real Estate Daily, Gouletas inked a contract in May to pay $950 million for an apartment portfolio which included 13 properties, and 3,866 units. Deutsche Bank agreed to loan Gouletas $800, but he reportedly couldn’t supplement the rest.

The portfolio is owned by investors — among them, Starwood Capital Group – and includes properties in places as disparate as Houston, Atlanta, Phoenix, Las Vegas, Los Angeles, Stamford, Connecticut, and Tampa, Florida.

But among the 13 properties is one particularly impressive piece of Chicago real estate: the Lex, a 296-unit apartment building in the South Loop. The Lex is a 35-story tower built by Chieftain Group Ltd. that was completed, unfortunately, in 2009, when the condo boom came to halt. This left the developer with several units that could not be sold.

Chieftain couldn’t pay Corus Bank for the construction loan, and so the property was relinquished to ST Residential in 2011.

ST Residential is the Chicago real estate company that now manages the properties, and they’re reportedly planning on opening up the portfolio to other bidders soon.

Gouletas could still secure the money to purchase the properties, but in all likelihood, the portfolio will be broken up and sold to different investors. The California based firms Colony Capital LLC and CIM Group also placed a bid.

Gouletas gained a very favorable reputation for his company American Invsco in the late 1970’s and early 1980’s. They were regarded as highly productive developers, specializing in converting apartments into condominiums. Since the crash, however, the firm has been pretty quiet.

With so many players in the game now, all we can do is wait and see what the future of these properties holds.

Old Town Apartment Building Sold for Record-Breaking $158 Million

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Heitman LLC broke records with its acquisition of 1225 Old Town. The 250-unit apartment building sold for the highest price ever paid for an apartment building in downtown Chicago.

According to an article in Crain’s, the Chicago real estate investment firm has committed to paying $158 million, which translates to roughly $632,000 per unit — remarkably high for Chicago. This indicates that investors are looking to capitalize on low interest rate deals for properties that will be used for Chicago luxury rentals in the best Chicago neighborhoods.

It does look, however, like residents will be getting what they pay for. The building has several desirable amenities, including: parking for residents, a private dog run, indoor bicycle storage, outdoor heated pool and hot tub, fire pit and stainless steel bbq grills, a fully-equipped fitness center, private movie theater, a demonstration kitchen, and a cyber social lounge.

According to Chicago Real Estate Daily, this piece of Old Town property consists of about 33,000 square feet of retail space, and most of it is leased to the Plum Market grocery store.

It’s been said that the retail space boosts the property’s value — by $25 million to $28 million — complicating per-unit price comparison with other recent sales (and it’s perhaps worth noting also that  other Chicago luxury spaces, like the Grand Plaza, factor retail space into their price as well. And, value of retail space left out of the equation, it’s likely the Old Town apartments are selling at a record price.

Crain’s discussed this recent transaction as being just one example of what they’re calling a “golden era” for apartment landlords, in that those seeking Chicago real estate downtown have been favoring apartments over Chicago condominiums, pushing rent to record high levels.

Part of what makes these Chicago luxury rentals unique is that the building prides itself on being eco-friendly. They boast of a cooling and heating system which they claim will reduce the building’s energy consumption by 16%. Another green technology they use involves regional and recycled construction materials that are used to minimize the carbon footprint of construction.

An on-site recycling program is also offered as well as plumbing fixtures which save water, energy-efficient appliances, and windows which yield extensive daylight exposure into the unit, thus decreasing the need for artificial light.

Which goes to show you — you can live luxuriously in a piece of prime Chicago real estate and still be environmentally conscious.

Smoked Out

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Residents living in properties owned by Related Companies can soon breathe easy.  Related Cos. announced a portfolio wide smoking ban to affect 40,000 units covering seventeen states, including Chicago luxury rentals Park Tower at 800 North Michigan Avenue, The Residences on Lake Shore Park, and 340 on the Park.

Renters will no longer be able to light up in their apartment or on any private balconies or terraces.

Jeff Brodsky, President of Related Management said in a June press release, “In concert with Related’s commitment to sustainability and the wellness of its residents, we are proud to have proactively instituted a smoke-free commitment nationally.  As a company, we are constantly looking for new ways to improve our residents’ quality-of-life.”

As one of the nation’s largest landlords and dominant players in real estate, such a smoking ban is gaining both momentum and controversy.  Smokers and even nonsmokers believe the ban is overreaching and a type of privacy infringement.  Opposition believes Related Companies is trying to prohibit a legal private behavior.

Yet the larger issue isn’t a personal health debate, it’s the fact that secondhand smoke seeps and drifts from unit to unit.

You may have the legal right to smoke in your own Chicago home, but you have no ownership over the property if you’re a renter.  And with most metropolitan markets having less than 3% vacancies, today is a “landlord market.”  Landlords don’t need smokers or the additional costs associated with housing them, including higher cleaning costs and the reduced insurance rates to name a few.

Related Cos landlords are expected to go about banning smoking gradually.  The ban will be in effect during lease renewals to eventually get a 100% smoke-free building. The rule will be regulated similar to noise complaints.  With such complaints logged, residents would be in violation of the lease.

Do you believe that smoking should be banned in apartments, just like bars and restaurants?

Empty Bottle Owner Buys Thalia Hall for $3.2 Million

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Bruce Finkelman, owner of the Chicago clubs Empty Bottle and Longman & Eagle, has acquired a prime piece of Chicago real estate. He reportedly purchased the historic, four-story Thalia Hall (1215-1225 W. 18th St) in Pilsen with the intention of converting the space into a nightclub.

Chicago Magazine speculates that Finkelman may have his work cut out for him, as acquiring a city license and moving forward with renovation plans could prove difficult because the building has been a designated landmark since 1989.

According to an article from Blueprint Chicago, Pilsen attracted a large number of Bohemian immigrants in the mid to late 19th century. By 1915, Chicago ranked number two (behind Prague) for the world’s largest Bohemian population, concentrated in Pilsen.

John Dusek, a native of Bohemia, felt that Chicago’s burgeoning Bohemian population needed a space to serve as a community center, a theater space, and a place for political activists to meet. He hired the Faber and Pagels architectural firm to design what we now know as Thalia Hall, originally completed in 1893.

The design is a sort of Romanesque Revival style building. The theater itself was modeled partially after the Old Opera House in Prague. It was built as a multipurpose building with 21 apartments on the upper floors and a few commercial spaces on the ground floor to generate money to support the theater.

While the exterior has been restored, according to Blueprint Chicago, there’s much work to be done inside the building, as water damages and general disrepair are a concern.

Finkelman already has an important presence in some of Chicago’s best neighborhoods, considering the renowned shows that take place at Empty Bottle. Finkelman’s move to transform Thalia Hall comes at a time when the by-now-predominantly Mexican community of Pilsen is rapidly gentrifying.

So long as care is taken to respect those who live in the surrounding areas, this could be a terrific measure towards bring more cash flow into Pilsen. And given the size of the space, it could also potentially be helpful in creating jobs in a vibrant and historically vital Chicago neighborhood.

Luxury Rental Coming to Near West Side

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West Loop real estate just got an upgrade with the addition of the luxury rental property The Madison at Racine. Located in the bustling Near West Side area, the development includes nine stories and will sit on the northwest corner of Madison Street and Racine Avenue.

The project is a joint venture with Ascend Real Estate Group, locals at Team4 Development LLC, and Intercontinental Real Estate Corp.

Designed by FitzGerald Associates Architects with a 10,000-square-foot retail space on the ground floor, the building will feature 214 units that include convertible, one, and two-bedroom units, and 227 parking spaces.

Residents, who are scheduled to be moving in fall 2014, will enjoy a convenient location where they can walk to work and be just steps away from Chicago’s popular dining scene on Randolph Street. The long list of amenities includes Wi-Fi throughout the building, a courtyard for grilling, and a café bar in the lobby.

The glass-enclosed club room on the ninth floor allows for gorgeous views of the city and is stacked with lounge areas, televisions, and a bar and kitchen for hosting parties. Outdoors, the building’s landscaped sun deck includes seating, a fire pit, pool, and hot tub.

Besides being a luxury rental, striving for an environmental design also sets the building apart with the aim to achieve Leadership in Energy and Environmental Design (LEED) certification.

Planet-friendly amenities include Zipcar rental service, charging stations for electric cars, and bike room storage. And of course, the ability to walk to work, shopping, and entertainment as well as a close proximity to public transportation are another bonus. Pet owners can take advantage of washing stations and outdoor areas for their furry friends.

The Madison at Racine will be a great addition to a neighborhood that is “over the critical point of residential expansion,” as Rebenson points out in the Tribune article. “A lot of traditional and converted loft condos have been built, but there are no other luxury rental buildings in this area of the West Loop.”

Real Estate Investors Pulling Back as Home Prices Rise

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As the housing market – particularly home prices – are recovering, real estate investors are pulling back.

The Street, a leading digital financial media company, cited a recent Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which said that the percentage of homes purchased by investors decreased from 22% in April to 20% in May, looking at a three-month moving average —  “the sharpest drop in investor activity in three years” according to The Street.

The article also stated that The Investor Traffic Index, which projects future home purchasing activity, also consistently decreased over a three month period.

Meanwhile, current homeowners and home-buyers purchasing property for the first time accounted for 43.8% and 36% respectively of the homes purchased in May.

A rise in home prices has diminished the investor’s profit margins, the article explains. Generally, an investor will gain capital by buying a home and renting or flipping it.

To provide an interesting example of this, take the Wall Street firms Blackstone and Colony Financial. Both made profits by flipping thousands of homes — buying properties cheap, converting them into rentals, and raking in money on higher rent.

The survey showed that the sales of real estate owned (REO) properties and short sales (both of which are frequently purchased by investors), was on the decline in May.

As for the Chicago real estate market, MLS shows almost 19,000 properties in Cook County as currently listed as short sales, foreclosures, or REOs. Their total combined value is at $6.49 million. Increasing demand and the limited number of Chicago homes currently on the market seems to mean that foreclosures are no longer selling at the low discounted prices that they used to.

One wonders what the long-term implications of this trend may be for both the national and local market. Is it possible that we’ll see fewer properties purchased cheap, renovated, and then rented at a higher price? It sounds entirely possible, if these trends persist.

Pet-Friendly Amenities

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Pet-friendly housing in Chicago is increasingly becoming more common throughout the city. The fact that our furry friends are becoming less of an issue, makes buying a home in Chicago more appealing to pet owners and those who have thought about becoming one.

Gone are the days of city dwellers living in less desirable places that have pet-friendly policies or a landlord who doesn’t care enough if you sneak them in.  And it’s no surprise that this change is taking place, with an estimated 164 million pets sharing a home with humans in the U.S. today. According to KC Theisen, director of pet care issues for the Humane Society, in a Chicago Tribune article, landlords would eliminate nearly 50 percent of America from the tenant pool if they didn’t allow pets into their properties.

A great example of this growing trend in real estate is a recent listing for a 2-bedroom apartment at 652 W. Aldine Avenue that grabbed national attention when each photo featured a cute, brown dog gazing at the camera while depicting features of the property. The pictures were picked up by pop culture website and even appeared on Good Morning America. Tenants John and Sara Kanive, overwhelmed by the surge of responses, rented their apartment in less than 24 hours.

Of course, pet-friendly amenities come with strings attached. Pets increase the chance of damage to the property and landlords need to figure out a way to deal with noise, outdoor waste, and interactions with those other tenants who don’t like dogs. One solution for property-owners is to “interview” prospective tenants’ pets and outline rules and regulations throughout the lease. Renters can provide evidence of shots, training, veterinary reports, and proof of proper care.

Two Chicago condos that are pet friendly include 925 W. Darkin, a rehabbed vintage building in Wrigleyville, and the Echelon at K Station, a luxury apartment tower with a nearby dog park and occasional activities designed especially for your pooch.

These are just two of the many properties in Chicago welcoming your cute companion. There’s no doubt that pet-friendly homes in Chicago will continue to increase and be welcomed by the growing pet lovers throughout the city.