Belgravia Town Homes Outpace Sales in South Loop

Crain's Business reports average market time of forty-two days versus submarket average of 180 days

By Laura Bianchi
July 28, 2008

By all rights, the 23-story condo building at 1717 S. Prairie Ave. should be a hot property. Located in the up-market Prairie Avenue Historic District of the South Loop, the red-brick units have glorious views of the lake and Soldier Field and are near the beach and an emerging restaurant scene.
But just four years after the first units were built, homeowners have been pummeled by a $6.5-million special assessment to repair leaky windows. Jane and Tom Justic are paying $47,000 on a two-bedroom condo they purchased new three years ago for $520,000. That's on top of a $12,000 assessment they just forked over to help repair the garage.
"It's just ridiculous," says Ms. Justic, 63. "The value of the units has gone down. If we wanted to move, we can't unless we put $50,000 in escrow."
Special assessments have been a major issue affecting the South Loop market since the late '90s. Coupled with today's boggy market conditions, they are dampening sales and some property values, says Tina Feldstein, real estate agent with Koenig & Strey's River North office.
"I could name 10 buildings going through special assessments because work was not done properly," says Ms. Feldstein, president of Prairie District Neighborhood Alliance. "It's had a huge effect on property value; people are very hesitant to buy."
At 1717 S. Prairie, one unit, purchased for $1.7 million in fall 2006, is now listed at $999,000, a 41% reduction. At 2001 S. Calumet Ave., the two-bedroom, two-bath units dropped from the mid-$300,000 range to the low $300,000s. Some of these troubled properties are landmark buildings in need of expensive tuckpointing, a fault not discovered until after units were sold. One such building is at 2000 S. Michigan Ave., where condos have been carved out of a 100-year-old former automobile showroom on historic Motor Row. Ms. Feldstein says one resident's share of the special assessment is $40,000.
"If I was looking to buy in the South Loop, I would buy in a solid building just finished, with repairs and special assessments paid," she says. "Prices are very favorable to savvy buyers; then wait it out and ride the next wave."
A case in point: 2001 S. Calumet Ave., which recently completed a tuckpointing project. A two-bedroom unit that should sell for $350,000 is now around $300,000, Ms. Feldstein says.
Amid such jitters over special assessments, some of the hottest properties in the neighborhood are the Kensington Park townhouses, from 1700 to 1850 S. Indiana St., built by well-regarded Chicago-based Belgravia Group Ltd.
Mike Moynihan, attorney with Freeborn & Peters LLP, and his wife, Kala, an executive at Oracle Corp., bought a four-bedroom unit for $600,000 five years ago, partly because Belgravia's reputation "made us comfortable," Mr. Moynihan says. The Moynihans also were drawn by the four-story, 4,000-square-foot floor plan allowing their two young children to sleep on the same level.
"We didn't find anything else that large, particularly that wasn't tall and narrow," Mr. Moynihan says. Proximity to the 18th Street overpass to the lake, historic Clarke House Park across the street and to his Loop office also were selling points.
"These town homes are holding value in a market that has put a lot of downward pressure on prices," Ms. Feldstein says. "They outsell comparable town homes in the area," and quickly. Recent sales have clocked in at 42 days and 62 days, vs. an average market time in the South Loop of 180 days.
Š2008 by Crain Communications Inc.