chicago-condos & Chicago Real Estate pcherry on 30 Jun 2009 09:52 am

Olympic Village Could Add 2,600 Units To The Market

June 30, 2009 - What if a Chicago real estate developer right now proposed constructing $1 billion project with 21 12 story low-rise buildings and between 2,500 and 2,600 units and a promenade from the buildings east over Lake Shore Drive to the 31s Street beach? Anyone with any knowledge of the current housing market might think that was utterly unrealistic, but not if it’s part of the 2016 Olympic bid plan. According to an article in the Tribune, the city of Chicago will purchase the Michael Reese Hospital site for $86 million and begin demolition of all but the main historic building.

The Olympic Committee will announce the host city on October 2nd, and there are more than a few who are skeptical about whether or not the housing market will have recovered enough for that many units will have buyers or renters in 2016. Granted, that’s a long way off, but according to Appraisal Research Counselors, right now there are 1,167 new condos without buyers in the downtown area and 2,184 more under construction. Those numbers would have been far higher if 3,800 Chicago condos hadn’t been cancelled by developers and never built.

The city believes there will be a market by then and the novelty of living in a former Olympic Village will carry some weight. The plan is to have the cost divided among multiple developers and lenders, with work starting in 2012 if Chicago gets the Games. The units would be pre-sold as a combination of affordable condos and rental apartments plus possibly senior and student housing. The units will be “retrofitted” with kitchens and more open layouts after the Games and would be ready for buyers or renters to move in about six months later.

The article stated that so far 11 developers have “submitted their qualifications,” and 3 or 4 more are interested along with 2 AFL-CIO investment trusts. Ron Shipka of Enterprise Cos. was quoted as saying, “We are ready to go.” And Jerry Karlik of Kargil Development said, “That’s extremely attractive in this market,” of the 15 year finance note with no payments the first five years.

But David Ruttenberg of Belgravia Group was more skeptical. “Lenders will finance 80 percent of a project in a stronger economy, but that’s yesterday’s market. Today, if you’re lucky, you might get 50 or 60 percent, but you need presales or preleasing.”

We’ll know in a few months if one of the biggest developments we’re likely to see for several years will get off the ground. And by 2012 we’ll know if buyer’s appetites for Condos In Chicago improves.

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