Related Midwest is about to announce the sale of the last units in the Museum Park development that it had taken over after the original developer ran into financial difficulties.
Chicago, Illinois, May 12 2015: A large overhang of condos is soon to be expunged from the Chicago property market, and developers and investors in the South Loop could benefit. Related Midwest, nearly three years after taking over three failed residential towers, has only 15 condos remaining, and expects to sell these within the next month.
The towers had originally been developed by Ronald Shipka Sr. and Gerald Fogelson, who found themselves unable to meet their debts when the property market crashed. The lenders, headed by Bank of America, called upon Related Midwest to recharge sales. Despite the assertion of Nick Anderson, Related Midwest’s VP of Acquisitions, that “We knew we had the last big piece of new-construction inventory. Eventually people were going to want it as the economy began to heal,” the process was more than simply sitting tight and hoping for the best.
With a target of three years to sell, the company managed the majority in just two years, netting a major profit from condo sales of $300 million.
The strategy followed included:
- Spend $25 million on renovations and rename the buildings
- Change the look of the buildings to a more modern façade
- Reducing prices to 75% of their original price at relaunch
This is further evidence that the South Loop is becoming a sellers’ market. In fact, some of the condos sold by Related Midwest have been sold above those original prices set at the height of the boom period. The residential market here is rebounding strongly, and developers are now rushing to pick up land and property for development. CMK is closing on the construction of a 144-unit condo tower at Wabash Avenue, and the owner of 141 rented condos in a failed project has put them back up for sale as demand outstrips inventory numbers.
Colleen Harper, of @properties in the South Loop, sums up the effect a good developer with foresight can have on an area when she says:
“They (Related Midwest) upped the profile here, they changed the dated looks of those three buildings to more luxurious finishes. People stopped thinking of the South Loop as the place you go to get the lowest low prices from developers who were in trouble.” She says that this has made a huge difference in bringing buyers back to the South Loop.