South Loop offers new rentals
The Terrazio Condos located at 1935 S. Wabash may be the latest new construction project in downtown Chicago to transition to the rental market. While some of the rentals at 1935 Wabash have been marketed as early as August of 2010, it seems as if the few remaining for-sale homes in the building are now listed between $1,550 for a one-bedroom and $2,800 for two bedrooms. Searching this property on the MLS or popular real estate websites such as Trulia only bring up rental units and even the Terrazio website now contains “leasing information” rather than a sales page. This strategy is certainly nothing new to the Chicago real estate market as many other mid to high-rise buildings in the Loop and surrounding areas have converted to short-term leasing. One of the most recent and highly publicized buildings to make this transition is the Mod, which was purchased by a group headed by Sam Zell earlier this year and will be renting out the remaining 56 units on the market.
While this may be a more lucrative opportunity for developers in a down market, what does this do forthe buyersthat have already bought in this building? Many worry that their long-term investment may be severely hurt by having rents right next door. Obviously, renting is much more feasible to someone looking for a new condo and not going through the home buying process and putting down a substantial down payment allows for a broader clientele of residents, which generally isn’t as desirable for those already obligated to a mortgage payment every month. The same can be said for the nearby Astoria Tower, which was just bought by Crescent Heights, Inc, a development company out of Miami, Florida. So what’s the plan for this property? As expected, Crescent Heights hopes to develop and aggressive sales strategy and undercut the prices of surrounding apartments. According to an article in Crain’s Chicago Business, the new rental rate for Astoria is expected to be between $1.70 and $1.90 per square foot while the rest of the South Loop market demands a range between $2.10 and $2.40 a square foot. Despite seeing considerable progress to the market from this time last year, this hybrid sales/rental model will undoubtedly discourage future buyers to purchase within large high-rise projects. A quote I read from a condo owner in a completely unrelated building appropriately said, "I didn't buy in this building for it to be turned into a rental. If the bank did that, it would be very unfortunate for the buyers here because it would make the values go down, and they should offer to reimburse us." Unfortunately in today’s times, this idea may be an even bigger dream than buying into an absolute fee simple building.
The luxury South Loop building known as the Terrazio will include 10-foot ceilings, spa-like bathrooms, a private balcony, and an updated kitchen with beautiful stainless steel apartments. This location is also very pet friendly with an on-site dog walk and within walking distance to Grant Park and the lakefront bike and walking paths. For more information on Downtown Chicago rental properties, contact Ted Guarnero / Baird & Warner at (312) 810-6693.
Ted Guarnero, REALTOR® is a full-time real estate agent with over 1000 homes sold and $400 million in sales. Working with Compass real estate offering professional and effective real estate services to help you succeed in the local real estate market. Visit www.seeChicagorealestate.com for information on downtown Chicago real estate and to get in touch with an expert in the Chicago real estate market. Before you hire your next Realtor call Ted Guarnero 855-See-Chicago, it's on the House !