What’s happening to the American dream?
It used to be a home in the suburbs with a white picket fence and an expanse of green lawn.
Starting in the early 1950s, the dream house was a three-bedroom ranch. Then it grew to two stories and four bedrooms. But it was always miles and miles from the city.
Now the pendulum is swinging back, and, in the Chicago area, the city is again viewed as a desirable place to live.
“The main reason we came back to the city was because of its vitality of life, and the variety of people, something not available in the suburbs,” said Bill Nelson, who moved with his wife, Leslie, from Northbrook last year to Lincoln Park.
“We like viewing the dramatic Chicago skyline and being able to walk to outdoor cafes, restaurants and the theater.”
Bill, a professor of finance, and Leslie, who teaches business, also find the city a convenient base for commuting to their jobs.
“We felt free to move to the city after our daughter graduated from high school,” said Bill, who added that there are a few negatives. “Parking is a problem in the city, and you get less space for your money than in the suburbs.”
But more and more home buyers seem willing to accept the challenges. And home builders are willing to satisfy their desires.
In the last three years, a residential boom has been building in Chicago, and it now is so hot that suburban home builders are being lured by the potential for profit. Already, two of them have decided to go downtown.
Sundance Homes and Concord Development Corp. have announced major projects, both in the trendy River North neighborhood, west of Michigan Avenue and north of the Chicago River.
Just getting under way, the two loft conversions involve gutting vintage industrial buildings and finishing them with new condominiums.
Sundance will produce 106 lofts priced from the mid-$90,000s to the mid-$380,000s, while Concord will offer 231 lofts priced from $125,000 to $500,000.
The popularity of warehouse chic is just part of the new housing trend in the city.
Many projects, large and small, are being developed all over the city, according to Steve Hovany, president of Strategy Planning Associates, based in Schaumburg.
“Urban living is back in vogue,” he said, adding that it comes at a time when suburban housing sales are down about 10 percent.
Hovany cited figures showing that only 298 permits for new housing construction were issued by Chicago in 1990, a total that jumped to 1,268 in 1995.
“People have discovered that suburbia is not nirvana–because of long commutes, a boring lifestyle,” said Hovany. “It’s a cyclical thing. Now people are missing the excitement of city life.”
Even the names of some of the new projects have a distinct urban ring to them, such as Central Station, East Water Place, Erie Centre, Haberdasher Square and the Filmworks.
“The city is witnessing a resurgence of large-scale condominium developments,” said Tracy Cross, president of Tracy Cross & Associates in Schaumburg.
As examples, he cited two new Gold Coast projects–the 180-unit Park Newberry, priced from $140,000 to $415,000; and the 95-unit Whitney, priced from $289,000 to $578,000.
But he stressed that the real action is in lofts, which now account for almost 60 percent of residential sales in the city.
“Once thought of as bare-necessity living in fringe areas, loft developments have sparked new life in city neighborhoods, including the Near North Side, Lincoln Park, West Loop, South Loop, Near West Side, Bucktown and Wicker Park,” said Cross.
One reason for the boom is because the city has become more affordable.
“In 1989, the average price in the city was $275,000, but that has dropped to $193,000 now, mainly because of the introduction of lofts,” said Cross.
Another factor is the tight rental market in Chicago.
“Now buying costs about the same as renting,” said Mary Spellman, senior vice president of Draper and Kramer Inc.
According to Cross, the city accounted for 23.4 percent of total condo and townhouse sales in the Chicago metropolitan area in the second quarter of this year, from only 13.2 percent in the first quarter of 1991.
“It used to be too much of a hassle to build in Chicago,” said Hovany. “But the attitude of city officials has changed. The city decided it wants to be in the housing business.”
That was confirmed by Greg Longhini, assistant to the commissioner of Chicago’s Planning Department.
“A ton is happening in the city, which is now undergoing as large a residential boom as anything since the 1960s.
Permits for single-family home construction hit 640 in 1994 and 620 in 1995, totals that are far above anything since 1972.
“The city is a magnet for young people from all over the Midwest. Many of them work downtown and don’t want to live all the way out in Buffalo Grove, for instance,” Longhini said.
“We’re very aggressive in fostering housing development, identifying areas, clearing land, and offering subsidies when needed. We target areas we want to develop. In low to moderate (income) housing, the market would not go there if the city did not jump-start it,” Longhini said.
While the city has been less active in promoting upper-end residential development, it has flourished on its own. The invasion by suburban builders is the latest wrinkle.
Why has Schaumburg-based Sundance, a firm that has built some 7,000 homes in the suburbs since 1975, ventured downtown?
Maurice Sanderman, CEO of Sundance Homes, credits Mayor Richard M. Daley for the inspiration.
“I served on a (mayoral) task force that was trying to bring suburban builders into the city,” said Sanderman. “But it took five years to get me here.”
Now Sundance, through its city division, Chicago Urban Properties, is transforming three attached loft buildings into 106 new residences at 375 W. Erie St.
Does Sanderman foresee any pitfalls in the city?
“Every town is unique, and building in Chicago has some advantages compared to the suburbs. We don’t have to seek annexation or rezoning in the city. We don’t have to improve raw land. We don’t have to pay impact fees for schools and parks. It’s a pleasure.”
But to make sure that Sundance will have a smooth path in the urban jungle Sanderman has hired John Mullen, who has taken part in a dozen residential projects in the city in the last eight years, as president of Chicago Urban Properties.
Called Erie Centre Lofts, the $20 million development will offer one- and two-bedroom units with 724 to 2,290 square feet. All will have fireplaces and balconies.
The typical lofts will feature 11- to 13-foot ceilings and exposed wood beams, but a contemporary twist will be some curved interior walls for architectural pizzazz.
A first-floor sales center is scheduled to open Sept. 21, with two models to follow by the end of the month.
Sanderman stressed that Sundance is planning a long-term commitment to the city. Part of that is the opening of another project called St. Paul Lofts. The 82 units in Bucktown are priced from $84,900 to $189,990. Other projects are on tap.
As for Concord, the Palatine-based builder has 14 suburban subdivisions and estimates it will sell 600 homes this year, according to Wayne Moretti, president.
Concord’s new project in the city is a joint venture with Chicago-based Kenard Corp. The six-story, 309,000-square-foot building at 500 N. Orleans St., just east of the East Bank Club, was built in 1916 of brick and terra cotta. It will be recycled into 231 lofts. In addition, 17 townhouses, each priced around $450,000, will be built alongside it.
The lofts will range in size from 750 to 3,000 square feet, while the townhouses will be from 2,400 to 3,000 square feet.
“Construction should begin by the end of the year,” said Moretti.
Harold Lichterman, president of Kenard, said two models and a sales center will open Dec. 1.
He estimated that 10 to 15 percent of buyers will be empty-nesters from the suburbs, but most will be in their 30s and work downtown.
Why the popularity of lofts?
“Not everybody wants to live in a high-rise on Lake Shore Drive. Lofts used to be considered arty and very basic, though now they have become a respectable way to live,” said Lichterman.
He added that the resurgence of residential construction is taking place because “people are bullish on Chicago; it’s a city on the move.”
Dan McLean would agree. One of Chicago’s leading residential builders, McLean has believed in the city all along. MCL Companies, his firm, has constructed some 1,500 residences in Chicago in the last 10 years.
Assessing the new competition from suburban builders, McLean commented: “They might learn some lessons here. It’s not like building in the suburbs. They might not be aware of the pitfalls of lofts.”
MCL is moving ahead with its own new projects. They include the Altgeld Club, with condos from $143,900 and townhouses from $349,900; the Homes of Mohawk North, with townhouses from $294,900 and condos from $124,900; Old Town Square, with single-family homes from $327,500, condos from $124,900, and townhouses from $235,900; Cornell Square, with single-family homes from $339,900 and townhouses from $189,900; and Central Station, with townhouses from $243,900.
Meanwhile, lofts continue to move toward the style of more expensive residences.
Nicholas Gouletas, chairman of American Invsco Corp., said his Home By Invsco division set out to redefine traditional loft living at Haberdasher Square, with 238 loft condos in the West Loop.
“Haberdasher Square is not spartan. We raised the level of luxury with a 24-hour doorman, indoor parking, and a rooftop with such amenities as a sundeck, barbecue and even a dog run,” said Gouletas.
He noted that the upscale approach changed the profile of buyers.
“We thought the market would be mostly 25- to 35-year-olds, but over 20 percent turned out to be empty-nesters in the 45- to 60-year-old range.”
Now Invsco is considering a loft conversion in Printer’s Row.
Is there a limit to the demand for new residences in the city?
“Most of the new loft projects are not huge, so we haven’t reached saturation yet,” Gouletas said.
OUTLOOK FOR NEW URBAN HOUSING IS ROSY
The boom in urban residential construction is gaining momentum in Chicago. Fueled by a strong demand, it includes many new projects. Here are some of them:
– Bicycle Station in the South Loop sold out its 52 lofts in just two months, according to Paul Marks, co-developer along with Paul Dincin.
“The depth of the market was stronger than we expected,” said Marks, who is launching a second phase of 10 units to be priced from $190,000 to $280,000.
– The Filmworks, also in the South Loop, also is entering a second phase after selling out the 86 loft units in the first phase.
Keith Giles, president of Wolverine Investments, said construction will begin in early 1997 on 16 condos next to the existing building at 1350 S. Wabash Ave. Prices are expected to range from $169,000 to $199,000.
– A development of 44 townhouses will be built on the former site of Temple Sinai at 5350 South Shore Dr. “Residents will look directly onto Lake Michigan,” said developer Tem Horwitz of Horwitz & Co. The residences will range from 1,800 to 3,500 square feet with prices starting at $270,000.
– Millennium, a four-acre development of townhouses, lofts, and possibly single-family homes, is planned for the area bounded by Clark Street on the west, Cermak Road on the south, State Street on the east, and 18th Street on the north. The $50 million development is scheduled to be completed by the year 2000.
– Union Square, a $45 million loft conversion and townhouse project, will be developed by Spectrum Real Estate Services at the former Union Special Machine Co. property at 400 N. Franklin St. in River North. The six-story structure dates from 1910 and will be recycled for 120 one- and two-bedroom lofts ranging from 700 to 1,250 square feet. In addition, four new floors (7 through 10) will provide for 58 more units. The final phase will be 40 townhouses.
– Michigan Avenue Lofts offers three types of residences in the old Standard Oil-Karpen Building. To date 90 of 262 units have been sold in the 20-story structure. The one- and two-bedroom lofts range in size from 856 to 1,881 square feet and in price from $119,900 to $359,500.
