September 2007 Chicago Pre-Construction Condo & Real Estate Market Report

The Chicago real estate market in 2007 hasn't fallen apart as some people had predicted or feared, but it has slowed. While it is true that there are still many new construction condominiums and town homes being built and more waiting in the wings to get started, developers have seemed to tone down their overall construction pace. The projects that are being built and are being successfully sold are ones that are unique in some way or offer buyers high end finishes and building amenities. The condos that have made it past the pre-construction phase have tapped into a winning combination of several key factors.

According to research published by Gail Lissner of Appraisal Research Counselors, the first three months of 2007 showed a reduction of condo sales by 46 to 47 percent compared to the same period of last year. This could be due to the lack of potential home buyers or the fact that there were less new construction projects to begin with. The numbers balanced out somewhat if you consider that Lissner reported that despite that being the lowest first quarter number in four years, that total was comparative to the number of pre-construction projects that developers put on the market.

The initial estimated projects for 2007 had been totaled at over 10,000 but recent estimates put that number closer to just over 7,400. Of those, Appraisal Research Counselors reports that only a very small 3 percent are completed, while around 45 percent are currently being built and the remaining 50 or so percent are still on paper. Most of the condo projects that are slated to be finished within the next year or two have passed the 50 percent pre-construction sales mark, and some of the developments that have a longer time frame stretching into 2010 have even had strong sales.

So what makes certain projects successful even in the current competitive market? Is it the reputation of the developer or architect? Does a company name like At Properties or Rubloff immediately inspire trust and boost sales? Does the prospect of living in prime locations near the Lake, North or South Shore, Gold Coast, or near Millennium, Grant or Museum Parks insure the successful sale of new condos? Or can a buyer's head be turned by the ever increasing amount of luxury building amenities like in-house spas and unit perks like free indoor parking and plasma televisions? Does price or investment potential play a major role? The answer is probably a positive combination of all these components.

So which developments meet this criteria? Certainly some of the mixed use luxury combination hotels do. The Ritz-Carlton on North Michigan Avenue is scheduled for completion in 2008 and potential buyers have been impressed with the long list of services offered. Staff will provide laundry, catering, house keeping and away services like pet sitting. The Ritz's health center and spa also has personal trainers available.

The Trump International Hotel and Tower on North Wabash Avenue is posting strong pre-construction sales as well, with an inventory of 758 total hotel and condo units within its 92 stories. Again, residents will be treated to five star services like valet, concierge, maid, catering and dry cleaning.

The Waterview Tower and Shangri-La Hotel on Wacker and Clark, The Mandarin Oriental Tower on Michigan Avenue are all working towards an opening date in 2009 and are doing well in sales figures.

Developers are banking on the growing demand for an interest in total life wellness with two more projects they hope to have completed by 2010. Canyon Ranch Living is set for North Rush Street and will be a mix of hotel and condo units. The fitness center there is being billed as a Wellness Center, complete with trainers, physical therapists and nutritionists to help residents plan a complete program for their individual needs. On that same plane, XO Condominiums on South Prairie Avenue will consist of two high rise towers with a "dancing" stance and a lavish health and fitness center called Spa XO in the center.

A incredible amount of interest and publicity has been given to the many incarnations of The Chicago Spire, Santiago Calatrava's plan for a twisting 150 story modern landmark to be completed by 2010. The building will house 1,300 condo units and be the tallest in the U.S., with many buyers already expressing strong interest.

The collections of towers at Museum Park, including One Museum Park West, 1400 Museum Park, 1600 Museum Park, and Museum Park Tower IV have had no trouble finding buyers because of the beautiful location with spectacular lake views. The same can be said for The Legacy at Millennium Park, which is scheduled for occupancy in 2009.

Even loft living has experienced a resurgence with popular developments like The Lofts at Roosevelt Collection that should be ready next year, 1224 West Van Buren (VB1224) that is in construction and No.Ten Lofts that have sold well. Certain neighborhoods in Chicago have also seen successful condo construction projects. The Streeter on East Ohio and 474 North Lake Shore Drive, both in Streeterville, are good examples of units that have reached sales marks.

2007 so far has had its fair share of winners and losers in the real estate market in Chicago. With the list of developments still waiting to break ground and the list of condos nearing completion, it will be interesting to see what the second half of the year brings.