Crain's Chicago Business: September 6, 2004

Park stokes condo sales; New East Side views, locale wow buyers

By Alby Gallun

The buzz surrounding Millennium Park's July opening is stoking sales at nearby condo projects, with buyers standing in line for hours to put down deposits, and sales contracts being signed at a faster pace than any other downtown neighborhood.

The $475-million park is ''going to light up that area,'' says Jason Vargas, a 37-year-old marketing executive who, along with his wife, is buying a three-bedroom condo on the 15th floor of the Columbian, a 46-story tower going up at Michigan Avenue near Roosevelt Road.

''Without a doubt, (Millennium Park) was a big reason'' the Vargases want to live in the area-so much so that they waited three hours, along with 500 others, to make a deposit on a unit when the Columbian's sales office opened on a Saturday in mid-July.

''It was absolutely packed,'' recalls Myranda Zarlengo-Vargas, a 29-year-old photographer.

The Vargases declined to say how much they're paying, but three-bedroom condos at the Columbian range from about $700,000 to $1.6 million. So far, buyers have reserved 150, or 68%, of the building's 220 units, says Andrew Warner, vice-president of Chicago-based Equity Marketing Services Inc., the sales agent for the Columbian.

Looking south

The neighborhood, which real estate agents have dubbed the New East Side, stretches roughly from Millennium Park's northern border at East Randolph Street south to Roosevelt Road, the southern border of Grant Park. It includes projects like the Heritage at Millennium Park, a nearly sold-out 57-story tower at the park's northwest corner (Mayor Richard M. Daley is buying a unit there) and Britannica Centre, an 80-year-old Graham Anderson Probst & White-designed office tower at 310 S. Michigan Ave. that's being converted into a 220-unit luxury condo building.

''The opening of Millennium Park has had a huge effect on the market,'' says Gail Lissner, vice-president of Appraisal Research Counselors Ltd., a Chicago-based consulting firm that tracks downtown condo sales. ''It's really pulling that center of gravity (in the condo market) southward.''

According to Appraisal Research, buyers signed contracts in the second quarter for 226 condo units in the Loop/New East Side, an area bordered by Lake Michigan to the east, the Chicago River to the north and west and Congress Parkway to the south. No other downtown submarket had more new contracts.

Moreover, the Loop/New East Side accounted for nearly 24% of the new downtown condo contracts in the first half of the year, vs. 9% for all of 2003, according to Appraisal Research.

Sales have been brisk at projects like 340 on the Park, a 62-story, 343-unit building at 340 E. Randolph St. with units ranging from $315,000 to $4 million. The developer, Chicago-based LR Development Co., started taking reservations for units and had 140 by the end of June.

Though condos are still cheaper south of the Chicago River, the price gap appears to be narrowing.

In mid-2003, a three-bedroom, two-bath unit at the Heritage at Randolph Street and Wabash Avenue ranged from $633,500 to $683,000, or $383 to $413 a square foot. At the end of the second quarter of this year, the same unit listed for $760,500 to $795,500, or $460 to $481 a square foot.

The average price per square foot at the Heritage is now $592, which makes it the highest-priced project near Millennium Park, even more expensive than, say, Riverview Tower II, just west of Lake Shore Drive in Streeterville, which averages $455. Still, the most expensive downtown condo developments remain north of the river: Trump International Tower averages $880 a square foot, and a unit at 65 E. Goethe St. in the Gold Coast averages $812.

Perks, views

The appeal of the Millennium Park area, buyers say, is the mix of amenities-the new park, the cultural attractions and the proximity to Loop offices. Then there's the view.

''You're right on the lakefront. You've got incredible views anywhere you look,'' says Gail Fitzpatrick, a 52-year-old finance executive who's buying a two-bedroom unit on the 46th floor of 340 on the Park.

Park views command a premium. At the Columbian, for instance, east-facing units have sold for an average of $516 a square foot, 54% more than the $336 a square foot for units facing west.

To be sure, a parkside project is no slam dunk. A 129-unit redevelopment at 6 N. Michigan Ave. is on hold: Its lender foreclosed on the development, which was plagued with construction problems, and in July sued the developers for fraud. But that was more a matter of execution than location.

Condo speculators, who try to flip units for a profit, may also be driving the strong sales around Millennium Park, says Ms. Lissner of Appraisal Research. Speculators remain a concern for some observers, who worry they're inflating demand for units, giving developers the sales they need to get projects off the ground, leading ultimately to a condo glut. And some speculators never close on their units, saddling developers with extra inventory.

back to News Room main