May 24, 2011 - The recent Chicago real estate developments that have, in one form or another, switched from market rate condos for sale to rental units is helping to reduce the over supply of downtown Chicago condos. Investors have bought large blocks of condos in developments like Astoria Tower and are leasing them. Even the Gold Coast Walton on the Park is now renting units. And with the 82 unsold condos in Silver Tower up for sale, there is a good chance that those might be converted to rental as well.
A recent Crain’s article states that according to Appraisal Research Counselors, there were only 174 downtown condos sold during the first quarter of 2011. Last year (2010) there were 256 downtown condos sold in the first quarter.
But the good news for developers is that ARC reports that there were 2,031 unsold downtown Chicago condos at the end of the first quarter of this year (2011). There were 4,182 unsold downtown Chicago condos at the end of the first quarter last year (2010) and a whopping 8,222 unsold downtown Chicago condos at the end of the first quarter of 2008. ARC said in the article that the number of unsold downtown condos is close to the low levels in 1997, which is when they starting keeping records.
The drop in excess condo inventory isn’t due to sales but because of developers scrapping projects and the conversion to rental. Marketing firm Garrison Partners CEO and president Garry Benson told Crain’s that he believes that around six more downtown condo towers will switch to rental before the year is over.
Tomorrow we’ll speculate on which developments might be offering Chicago condos for rent in the future if sales don’t improve.