Edgewater condo owners seek buyer for 188-unit building on Lake Michigan

Before long, there may be another 188 apartment units available for rent in Edgewater, along Lake Michigan.

Condominium owners in the 12-story building at 5815 N. Sheridan Road have hired CBRE to find a buyer for the entire building. If a sale occurs and the building in the Far North Side neighborhood is converted into apartments, it would be one of the largest deals of its kind in Chicago, by number of units and price.

Apartments-to-condos projects, called condo deconversions, have become more common in recent years as soaring apartment rents have created opportunities for owners who’ve been unable to sell their individual units to cash out as part of a group.

The trend “seems like it has legs,” said CBRE Vice President Sam Haddadin, who is representing the sellers. “There’s already a huge demand for multifamily product. That demand has driven up prices of apartment buildings, and condo pricing hasn’t caught up. That leaves a big spread on a per-unit basis.”

He declined to say an expected price for the building. He expects it to top last year’s $35 million sale of the 133-unit Clark Place condo building in Lincoln Park, but come in below the $51.1 million price for the 207-unit Bel Harbour building in Lakeview.

The Bel Harbor price is believed to be a Chicago record — until the expected $100 million-plus sale of a building at 1400 N. Lake Shore Drive with 391 residential units and 11 commercial condos is completed by early next year, Haddadin said.

The Sheridan Road building was completed in the 1950s, and all but a few of the apartments are one-bedroom units. Despite its age, the building has a few attributes likely to appeal to developers and institutional apartment investors: a roof deck overlooking the lake, direct beach access and 140 parking spaces.

Before the last recession, it was more common for apartments to be converted to condos and sold off individually.

In many cases, deconversion deals allow owners of outdated condos to avoid funding a costly, major repair or to sell a unit that has been underwater since values crashed nearly a decade ago. Selling an entire building can result in a higher price for each owner.

By Illinois law, owners of at least 75 percent of a building’s units must agree to a sale price. If that happens, all the units are included in the sale.

Backed by low interest rates, economies of scale on construction costs and more expertise with property management, developers can pay up for condos and still make a relatively high-percentage return on their investment, said David Ruttenberg, a principal at Chicago-based Marc Realty Residential. The developer has converted more than a dozen properties, ranging from five units to more than 100, to apartments from condos.

Developers can add higher-end finishes and new amenities and push rents well above rates individual condo owners had been offering for rent in the building.

“For these older buildings where there’s a big special assessment looming and the residents are unable to run their building as efficiently as an apartment owner can, it creates a perfect storm where the value of an apartment is higher than the value of an identical condo,” Ruttenberg said.

Apartments-to-condos conversions seem to be more common in Chicago than in many other large cities, Ruttenberg and Haddadin said.

“There are some deconversions down in South Florida, but when you talk to New York property owners they’ve never heard of a deconversion because condo prices are so high there,” Ruttenberg said. “It’s pretty unique to Chicago that there’s such a big spread in values.”

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New ‘L’ station announced for State and Lake in the heart of Chicago’s Loop

Yesterday, Chicago Mayor Rahm Emanuel announced a plan to completely overhaul the Loop’s ‘L’ stop at State and Lake after securing a $56.9 million federal grant to help fund the project. Serving the CTA’s Pink, Green, Brown, Orange, and Purple lines, the station is the Loop’s second busiest ‘L’ stop with more than 3.1 million annual riders.

Curbed Chicago Flickr pool/Debbie Mercer

The plan calls for a modernized station and a widening of the existing platform. Despite dating back to 1895, there’s little remaining historic architecture at State and Lake compared to stations like the well-preserved Quincy stop. Over the years, the State and Lake superstructure was rebuilt multiple times and most recently saw the addition of an illuminated exterior curtain wall that can change color with the seasons.

The newly announced upgrade project will also include new elevators to bring the elevated platform to ADA compliance as well as provide a link to the Red Line subway system below. The improvements will help the CTA move—albeit still slowly—towards its goal of achieving complete system-wide accessibility by the year 2036.

With a large portion of the project’s funding secure, the Chicago Department of Transportation can now focus its energies on selecting a design for the new station and establishing a timeline for its completion. CDOT is expected to issue a formal Request for Proposals (RFP) for the project before the end of the year.

The full cost of the stop will not be determined until the design process progresses but it is likely to exceed the $75 million construction cost of the recently opened “super station” at Washington/Wabash. The State and Lake project is anticipated to coincide with the implementation of a new Green Line stop at Damen and Lake on Chicago’s Near West Side.

New wave of downzoning measures introduced for Milwaukee Avenue

Yesterday, 35th Ward Alderman Carlos Ramierz-Rosa introduced two new measures to the Chicago City Council to rezone a number of Milwaukee Avenue blocks in the Logan Square and Avondale communities. If approved, the properties located between 2610-2787 N. Milwaukee Avenue, 2800-2957 N. Milwaukee Avenue, and 3015 N. Elbridge Avenue would be reclassified with low-density B2-1 zoning. The properties located along these blocks currently consist of a mixed-density blend of commercial and residential designations.

The plan to downzone these stretches of Milwaukee Avenue appears to have originated from a group of small business owners and property owners called the Milwaukee Avenue Stakeholders Alliance. A letter from the group provided to Curbed Chicago includes a request that the alderman downzone these properties to B1-1 in order to protect the neighborhood from the new wave of development that has reshaped other stretches of Milwaukee Avenue in Logan Square.

“There is still time to get out in front of the changes inevitably approaching,” stated the letter. “B1-1 is the appropriate zoning for the street as it is today and the most immediately effective action you can take to a stretch of historic ‘Old Chicago’ while keeping future property taxes lower and making it easier for small businesses to invest here.”

While the alderman ultimately opted for the slightly less restrictive B2-1 designation, it’s clear the authors of the letter got through to the elected official. Lynn Basa, a property owner listed as one of the letter’s co-sponsors, declined to comment on the measure. Staff of the 35th Ward could be reached but were not prepared to comment on the pending legislation.

This fresh batch of ordinances isn’t the first time Ramirez-Rosa has utilized downzoning measures along the busy Milwaukee Avenue corridor. In April, the alderman introduced a similar ordinance at 2700 N. Milwaukee where long-time property owners Barbara and Victor Diaz looked to market their 1.6-acre, three-building parcel for redevelopment. The alderman also sought to utilize the same legislative tool at 2747 N. Milwaukee Avenue to thwart property owner R.P. Fox & Associates from building a 60-unit apartment project at the site of the former Pierre’s Bakery building.

The news of the fresh downzoning ordinances from Ramirez-Rosa comes after the Chicago City Council voted this week to approve a measure introduced by First Ward Alderman Proco Joe Moreno to downzone the former Double Door building at 1572 N. Milwaukee Avenue in Wicker Park—a move viewed by some as a punitive zoning measure against the property owner. According to DNAinfo, landlord Brian Strauss alleges that his “civil rights are being violated” and is countering with a federal lawsuit against Moreno and the city.

Meanwhile, just down the street from the old Double Door space, a 1st Ward property at 1431-1437 N. Milwaukee Avenue is getting a zoning bump from B3-2 to B3-3 to allow an existing eight-dwelling building to be converted into 18 apartment units.