Chuck Gullett’s Blog

The decade long dream for residents in the West Loop, a nice neighborhood park off of Greektown, is finally becoming a reality.  As a Realtor showing property in the neighborhood, I would point out the vacant city block bordered by Adams, Monroe, Peoria and Sangamon and explain that one day this rocky, dirt covered lot will be developed into a lush greenspace instead of another new construction highrise.  Rolling their eyes in disbelief, clients would ask about whether it would be completed in their lifetime. Then I would get a hearty chuckle when I replied that the park is scheduled for completion by Summer 2010.  Unbelievable?  Not anymore.  According to the project manager I spoke with, the Lombard Construction crew will work until the ground freezes this Winter and finish it up by next July.  Since the groundbreaking in early October, progress has been good.  The old utility poles and transformers have been removed, the land graded and the reinforcement is being added for the berm on the Adams Street side.  When complete, Adams St Park will have a large seating/ gathering area, a dog friendly section and playground area for children.  Being just a stones through from the Best Chicago Properties office, I am already excited for the Summer ahead and enjoying lunches in the park.

Photography by ThreeSixtyChicago Media

Best Chicago Properties is a boutique brokerage that recognizes the value of quality agents and understands that it is all about you!

We pride ourselves on providing personalized care with great attention and dedication to our clients. We understand the value of exceptional agents by rewarding hard work and supporting your career aspirations. Again, it’s all about you, which is why we want to make sure you have every opportunity to reap the rewards of your hard work, both professionally and personally. 

We offer:

• Free quality leads from broker referrals, walk-ins, our website, Internet marketing executions, and MLS search
• Extremely competitive compensation
• Professional brand and strong image
• A supportive working culture
• Ongoing training and development
• Task specific office and wireless technology
• Free listings coverage when you go on vacation
• No charge on the purchase or sale of your primary residence
• Preferred pricing with local virtual tour photographer
• Realtor.com Showcase for all listings

Low impact transfer costs including free:

• Errors & Omissions Insurance
• Initial BCP business cards, For Sale signs, and Open House signs
• Professional headshot photograph

Call Jeff Payne at 312.563.5300 to take your business to the next level and grow with us!

Chicago’s own gateway to the west, sprawling over the Eisenhower (I-290), is finding a fate similar to other slow selling properties in the market.  This former US Postal Service office is being auctioned off to the highest bidder on August 27, 2009.  With an opening bid of $300K, equivalent to the price of a small 2 bedroom condo, it is attracting a lot of interest from qualified buyers and interested onlookers.  This low of an opening bid was a smart move by Rick Levine and Associates to generate a lot of property buzz and possible bidding frenzy.  The last Rick Levine and Associates auction I saw in the neighborhood was a few years ago at the infamous “River City” condo/ marina development at 800 S Wells in the South Loop.  Oddly enough, the old post office is even more distressed than River City!  Anyway, back to the pricing discussion… at 3 million square feet, the bidding will be starting out at 10 cents per sq ft.  This is ridiculously lower than the resale prices at around $300+ sq ft or some of the recent developer closeouts at $265+ sq ft.  I should also point out that there is no minimum bid, so the property could be snapped up for much less than the opening bid.  A property is really only worth what someone will pay for it.  With a building this massive, it is hard to imagine what it could be used for.  Is it possible to subdivide into smaller parcels and actually flip this property to investors and developers?  The site would make a great place to expand the Children’s Museum and add some convienent downtown parking with mixed retail spaces.  Could this behemoth space take advantage of federal funding and be converted to an alternative energy center?  There are tons of possibilities, and, if you have any great ideas for it, I’d be in for a few square feet.

Photography by ThreeSixtyChicago Media

More great news for the first time home buyer…
First Time Buyer Tax Credit Can Be Used for Down Payment
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.
Mortgage rates in Chicago also hit 4.82% this week and home prices are still low.  There has been a lot of recent activity on listings, so this combination will definitely get first time buyers off the fence.  It is just a matter of finding the right property.  I wish I was a first time buyer in this market… what an opportunity!!

The world of real estate joined with the world of art at the Best Chicago Properties office at 847 W Monroe, in Chicago’s trendy West Loop.  One of my clients and a brilliant local artist, Emily Rutledge, suggested hanging some of her work at a listing open house or in the office.  Fortunately, Jeff Payne, the broker/ owner of Best Chicago Properties, designed the office to showcase artwork.  The people, place and timing were perfect to put together a show.  Emily enlisted the help of two other local artists, Jay Boeldt and Jeff Bryner, to design a show around their perspectives of life in Chicago.  The 18 piece show titled, “A Taste of Chicago” opened on April 17th to a packed house.  The three artist’s distinct styles blended together perfectly and turned our office into a masterpiece.  A total of 7 pieces sold, but others are still on display in the office for the next month.  If you would like to come by and take a look, please contact me at chuck@bestchicagoproperties.com to set up a time.  Due to the success of this event and the huge amount of positive feedback we received, Best Chicago Properties will be hosting another event with three more local artists this Summer. I can’t wait!

Photography by ThreeSixtyChicago Media

This weekend felt like 2005 again!  Buyers and Realtors were out everywhere.  South Loop new construction sales centers were bustling because the deals are unbelievable!  I had to wait in line with my clients to talk to the onsite sales reps even though we had appointments, and I can understand why.  I was actually blown away by the huge price reductions that I saw at Printers Corner and Library Tower.  One bedroom condos in both developments were priced in the $240-260K range… including parking!  Just a month ago, the pricing was in the low $300s.  Last year, their prices were absolutely firm and the developers were not even taking offers.  Right now, with the low rates, buyer incentives and low prices, buyers have the opportunity of a lifetime.  Let me put this into perspective, one bed resale units in the South Loop (newer buildings, less than 5 years old) are listed at $250-275 + $30-35K for parking… so $280-310K all in.  At 900 sq ft, we are at $333 sq ft.  That is a decent price and about average for a resale in South Loop.  Get this… brand new, never lived in developer units are now selling around $275 sq ft! Some of the Vetro auction units even dipped to $250 sq ft.  I suspect that the developers are feeling the pinch from their investors and banks to sell off the inventory at cost or take a loss.  I’m sure they don’t want to get caught holding the bag if the economy continues to decline.  This is the first time I have seen developers price themselves ahead of the market and it looks like they are reaping the rewards, at least in terms of sales volume.  At one development, we were scheduled to look at one of their three remaining one bedroom condos.  I made the appointment on Thursday.  By Sunday, all three were under contract.  Once they are sold, that is it.  Since the price drop three weeks ago, they have sold 14 units.  Previously the average was 1 per month.  Let’s go snap up the deals while they last!  BuyTheLoop.com

The sounding bell for Earth Hour 2009 strikes in Chicago on Saturday March 28th from 830 – 930pm.
Sponsored by the World Wildlife Fund, individuals and businesses are asked to voluntarily turn off their lights for one hour – Earth Hour – to make a global statement of concern about climate change and to demonstrate commitment to finding solutions.  Chicago happens to be one of the key cities participating.  In 2008, 2.7 million residents of the Chicago area participated and we reported an electricity savings of 7 percent - the carbon emissions equivalent of taking 1 million cars off the road for one hour or planting 158 acres of trees.  That is really stunning data and speaks to the amount of electricity that we use every hour.

For 2009, city skyscrapers, hotels, Millennium Park, Navy Pier, and shops on North Michigan Avenue will turn off their lights for 60 minutes.  I plan on participating by not only turning off lights, but turning off my computer, unplugging chargers and even shutting off the phone for an hour.  Sure, I will probably be drinking beer in the dark, but that is a sacrifice I can make for mother earth.  Please join in!

This new legislation was quietly listed on the Chicago Association of Realtors website as “Public Act 095-0988”.  Sounds boring, so who would click on that?  Apparently, just me.  I was actually looking to see if CAR was notifying Realtors of this crazy law for Cook County Real Estate transactions.  It is out there, but there is no catchy title or any indication of what Public Act 095-0988 entails.  I actually got word of it through a Fox News bit that was condemning the governments reach and violation of privacy be this act.  I wasn’t sure if it was true, but it unfortunately is.  Signed into law in the Fall of 2008 by our illustrious Ex-Gov Blago, the “Illinois Notary Public Act” has provisions to reduce fraudulent real estate transactions.  Section 3-102 (c)(6) states,

“The notary public shall require the person signing

the Document of Conveyance (including an agent acting on

behalf of a principal under a duly executed power of

attorney), whose signature is the subject of the notarial

act, to place his or her right thumbprint on the Notarial

Record. If the right thumbprint is not available, then the

notary shall have the party use his or her left thumb, or

any available finger, and shall so indicate on the Notarial

Record. If the party signing the document is physically

unable to provide a thumbprint or fingerprint, the notary

shall so indicate on the Notarial Record and shall also

provide an explanation of that physical condition. The

notary may obtain the thumbprint by any means that reliably

captures the image of the finger in a physical or

electronic medium.”

So, effective June 1, 2009, Cook County notarized residential real estate transactions require a thumbprint or fingerprint from the seller or the seller’s authorized agent. Today, at closings, all parties to the real estate transaction are already required to provide state issued identification.  A copy of the ids are made and kept by the title company.  This new legislation takes a huge step, seemingly backward, with the requirement of fingerprints.  The fingerprinting privilege is usually just given to those making an unplanned visit to Cook County jail.  Perhaps I am reading into the law too much, but are there security issues with our state id’s that make the fingerprinting process necessary?  I am all about preventing fraud in real estate, but law this is truly ridiculous.  Anyone up for a petition to get it reversed??

The entire act can be found here: Notary Public Act

Today’s auction for the Vetro development was the climax of a month long campaign by Accelerated Marketing Partners.  Anyone in Chicago and surrounding areas with any interest in real estate knew about this auction.  Between the giant ‘auction’ signs, Tribune ads, email blasts and news coverage there was no missing it.  For those unfamiliar, the Vetro is a 232 Unit condo building in Chicago’s South Loop neighborhood.  The development is a 31 story full amenity building with a 7th floor terrace, business center, workout room, spa facilities and 24 hr doorman.  The style is modern with cobalt blue hallways and exposed concrete ceilings.  Sales hovered around 50% for about a year and the developer opted for the property auction of 40 units to reignite sales and determine the market value.

The auction took place in the W Hotel at 172 W Adams.  When the auctioneer asked how many people in the room had never attended an auction before, about 70% of the room raised their hands.  The 250+ attendees included rival developers, real estate brokers, investors, first time home buyers, couples and curious lookers.  Bidding opened with the penthouse units.  The first unit, 3105, went for $557,000. The next penthouse, 3101, sold for $485K.  For 1869 sq ft 2 bed + den and lake view, unit 3101 was a steal.  Winning bidders were ushered off to another room to secure financing, fork over their $5000 earnest check and sign the sales contract.  With about 12 units remaining in the auction, the crowd started to thin out, but the bidding got more aggressive.  The lower priced units went fast.  The lowest sales price was on unit 1710 at $145K, including parking.  With parking valued at $35K, the unit sales price is $110K…you don’t see new construction prices like that in Chicago, especially in the South Loop.  Average sales prices in the South Loop are around $350 sq ft and these units were going for $255-270 sq ft.  After 90 minutes, the last unit (1202) sold for $170K. There are still 60+ units remaining under the developer.  I suspect another auction or more concentrated marketing with sales of single units based on the auction sales prices.

If you would like a complete list of the final auction sales prices, send me and email request - chuck@buytheloop.com or you can view Chicago SOLD data at BuyTheLoop.com.

The idea of writing this article reminded me of a middle school homework assignment… “Class, by tomorrow, please compare and contrast two hotel-condo developments in your city.”  Well, the two I have choosen are the two most noted and most likely to succeed projects in Chicago. Trump International Hotel and Tower at 401 N Wabash and The Elysian at 11 E Walton. All other new constrcution hotel-condos in the city have either stalled or have been cancelled.  If the concept proves successful in Chicago, these will be the frontrunners.  I visited both developments with a prospective investor over the weekend.  What I thought were two directly competitive properties couldn’t have been more different.

I will start with the Elysian, which is still under construction and is scheduled to open for business in June 2009.  The Elysian is designed by Lucien Lagrange and looks very similar to the Park Tower hotel with the mansard roofline and a very classical, European feel including a cobblestone courtyard.  The Elysian will have 188 hotel-condo suites comprising floors 7-26 of the 60 story building.  The Trump International Hotel and Tower designed by Adrian Smith, dwarfs the Elysian by adding another 32 stories of sleek glass and concrete for a grand total of 92 sparkling stories. Trump International Hotel and Tower, I learned on the tour, is the tallest concrete building in the world.  Floors 16-28 are comprised of 339 hotel-condo rooms, so Trump has built almost twice as many hotel suites as the Elysian.  Both developments are currently 70% sold on the hotel-condo side and 75% sold on the residence side.  Both downtown locations are excellent, but I really prefer the Trump location on the Chicago River with close access to the Lake.  The city and lake views from Trump are spectacular!  The Elysian is not yet open and isn’t providing tours of the actual building… all you can see are the model units and scale models at the sales center, so it is difficult to comment on the actual views.

Pricing is very intersting… in the area where these developments are located, they are priced 3-4 times higher per sq foot than resale condos.  Starting developer prices for remaining units are $510K at the Elysian and $1.05M at Trump.  However, there are resale units at Trump for a significant discount.  (I would be happy to email a list of available resales) Since Elysian hasn’t closed on any units yet, there are no resales available.  Two things commanding the $850 sq ft price at Elysian and $1300 sq ft price at Trump is 1) exclusivity and 2) potential to generate revenue when you are not staying in the unit. The revenue possibility is what attracts investors to these properties, but the rental agreements are structured very differently.  At the Elysian, there are three different rental structures depending on the number of days for owner occupancy throughout the year. Option A) 14 owner nights = 42% revenue share, B) 35 owner nights = 36% revenue share, C) 90 owner nights = 18% revenue share.  The monthly assessment and maid service are both paid by the Elysian, but there is a 4-5% fee collected for the FF&E (furniture, fixtures and equipment) Reserve.  Trump differs with no limitations on owner nights, but charges an assessment, a fixed hotel management cost and a nightly per use charge of $62.

Both claim their main competitors are the Four Seasons and The Penninsula, but do not compete with each other.  Based on my perceptions, Trump appeals to upscale business travellers with it’s ammenities and character.  You could easily conduct business here or enjoy a great vacation.  The Elysian, on the other hand, appeals to upscale leisure travellers looking for privacy and elegant seclusion, but still want the excitement of Chicago’s bustling downtown. Both developments are outstanding and will be landmark buildings in Chicago, but they definitely cater to very different styles.

I put together a detailed spreadsheet, so my client could perform ‘what-if’ scenarios based on purchase price and occupancy rates for the different rental programs.  I would be happy to discuss either property with potential buyers.  Please visit BuyTheLoop.com for my contact information.