Susan Gold likes the free summer concerts in Grant Park.
Richard Constantine likes Chicago’s pro sports teams-“all of them,” says his wife, Joanne, not too patronizingly.
Ken Winemaster, who grew up in a Detroit suburb, likes the city’s excitement, the theaters and the restaurants. “In Detroit you can’t live donwntown,” he said.
All are recent condominium buyers in Chicago, and they and others like them are the primary reason the city is experiencing a condominium boom reminiscent of the first surge of condomania in the 1970s.
The first stirrings of the current wave came in 1988 when Nicholas Gouletas, a titan of Condomania I whose nationwide empire almost vanished in the interest-rate spasm of the early 1980s, converted his last major property, Lake Point Tower.
The moment was not propitious, coming at the start of a nationwide economic slide, and the building’s image-and Gouletas’-had been tarnished by his long, nasty battle to maintain control of it with lender Continental Bank. But sales exceeded all expectations, and most of the landmark building’s original 879 units were sold by 1992.
That success and the financial returns fueled Gouletas’ comeback, and he started on a new round of apartment building purchases, taking advantage of bargain prices on structures whose owners had gone bust after the madcap building activity of the 1980s.
Other developers and property moguls saw dollar signs and followed Gouletas in the hunt. At the same time, interest rates started sinking, increasing the potential pool of homebuyers.
The result is Condomania II. In the past year, condo conversions of more than 1,600 units downtown and on North Lake Shore Drive have been announced, according to Koenig & Strey Realty’s Gold Coast office. Another 1,300-plus are reported in the pipeline.
And those numbers don’t include many hundreds of units in big and small loft condo projects under way or being planned from the near West Side to Bucktown to Lakeview. Most of these are rehabs of industrial buildings or all-new construction and represent net gains for city housing rather than conversion from existing apartments.
The Bell Federal Savings building survey reports that for the first eight months of this year, 1,360 permits for new multifamily homes were issued in Chicago, almost double the total for the same period in 1993.
“The stampede started early this year,” said Charles Huzenis, president of Jameson Realty, a real estate firm on the North and Northwest sides. “From May until now, a lot of product has come on the market to meet the demand.”
Huzenis and others say the demand slowed with the 1990 recession as people became uncertain about their jobs. With the return of confidence and the low rates, many who had been renting for years suddenly decided it was time to buy.
They were further encouraged because the decline in interest rates wasn’t accompanied by a rise in prices. “People could afford a lot more than they could a few years ago,” said Frank Baloun, owner of Re/Max Lincoln Park and project manager for three condo conversions, including 3410 Lake Shore Drive.
At the same time, building owners, who have been unable to raise rents much in the last few years, decided they would get better returns by converting than by continuing to run the properties as rentals, Baloun said.
Ken Winemaster, 30, a manager for a diesel engine distributor, is typical of the new generation of condo buyers. He and his wife, Adrienne, a title company analyst, have signed a contract for about $160,000 on a newly constructed two-bedroom condo in Bucktown on the Near Northwest Side.
“I’ve been living in the city for six years and renting the whole time,” said Winemaster, who will be moving from an apartment in New Town. “I’m now in a position where I can buy, but I can’t afford a single-family home. So I thought the best thing to do was get into a condo to have something under my belt.
“I saw the rates coming down, and I really wanted to get into the market, but I couldn’t do it because I couldn’t get the down payment together. Now I’m in a position to get in there before the rates go up further,” he said.
The other big group in the condo market is made up of empty nesters such as Gold, who with her husband, Allan, is buying a 2-bedroom unit in the high-$200,000 range at Buckingham Plaza, at 360 E. Randolph St., in a cluster of lakeshore high-rises.
The couple came to Chicago from the East Coast three years ago, initially moving to Northbrook, but decided to try downtown living and had been renting in the 305-unit building.
“Once we started living at the Buckingham we realized we really loved the area of the New East Side,” said Susan Gold, 47, an accounting manager for an engineering firm. The New East Side spreads out from the banks of the Chicago River east of Michigan Avenue.
One factor uniting the Winemasters and the Golds is that their jobs could well have taken them to the suburbs to live. Ken Winemaster works in Elk Grove Village; Allen Gold, a structural engineer and architect, works in Northbrook.
That they decided to buy in the city suggests that reverse commuting is a persistent phenomenon. As Joanne Constantine, another new condo buyer in Bucktown, put it: “Although I’ve always worked in the suburbs, I can’t ever seem to leave the city.” Constantine is communications coordinator for a medical association in Oakbrook Terrace.
The city’s continuing appeal, despite the well-publicized flight to the suburbs, is a key element in the condo revival, said Daniel Levin, president of the Habitat Co., owner of the Buckingham Plaza and a leading multifamily developer in Chicago for two decades.
“The city’s not disappearing,” Levin said, citing revived commercial investment, new Michigan Avenue stores and restaurants, the expansion of the Chicago Symphony Orchestra space, the renewal of Navy Pier and other developments.
“Chicago has more of a core downtown than many other cities that have had difficulty with changing populations and income base,” said Levin, who lives downtown. In terms of physical structure, he added, the downtown is stronger than it was 15 years ago.
A good sign for the future is that Condomania II is spurred almost wholly by homeowners rather than investors, who bought up big blocks of units in the 1970s condo boom, according to Baloun.
He cited one prominent Near North Side conversion in which only 37 of 193 units were bought by homeowners, with the rest being investors. The investor condos were rented out, and the investor groups ultimately defaulted on their loans, he said.
The only non-homeowner buyers purchasing today are parents getting units for children going to school in the city, Baloun said.
The homeowner occupants “make for a stabler Chicago,” he added. “They’re showing a confidence in the city lifestyle.”
The new condo wave is also characterized by a wide range of type and price. Buckingham Plaza is a 1980s high-rise with some expansive 3-bedroom units carrying price tags pushing $400,000; at 3410 Lake Shore Drive, a 1950s building, studios go as low as $39,000.
Gouletas is in full stride with the conversion of 111 E. Chestnut St., a 57-story, 444-unit project that will be renovated with more than $25 million in planned improvements. Prices in the building will start at $94,200 for studios, $144,700 for one-bedroom units and $253,500 for two bedrooms.
“The North Michigan Avenue-Streeterville area has changed a great deal since the property opened its doors (in 1972),” Gouletas said.
The addition of swanky retailers such as Escada and F.A.O. Schwarz and the competition from upscale residential projects such as One Magnificent Mile and 900 North Michigan meant 111 E. Chestnut had to spend money to keep up “with the high standards of our neighbors,” he said.
Then there are loft condos in rehabbed old warehouses, and even loft condos in new buildings designed to look like old warehouses, such as Bucktown Park at 1831 N. Damen Ave., where the Winemasters bought their unit.
With all the activity, some developers are beginning voice anxiety about a potential glut.
“It’s not making me feel absolutely terrific that everybody in the world is doing this right now,” said Bill Moran, developer of Bucktown Park. “I think some people are going to get hurt in the end. Some people are jumping on the bandwagon whose projects are not so well thought out.”
For the moment, however, the band is still playing. “At this point, everything coming in is being absorbed,” Baloun said. “It’s going like gangbusters.”
