Big condo sales likely to spread
By Brian J. Rogal
05 June, 2017
Kennelly Square at 1747 N. Wells St. in Old Town. The condo association has brought in a broker to handle a possible sale.
CHICAGO—As reported in GlobeSt.com last week, an increasing number of
condo associations in Chicago are looking to sell their buildings to
developers that plan to convert the units into rental apartments.
Strategic Properties of North America for example, just bought Bel
Harbour, a 207-unit building at 420 W. Belmont Ave. in Lakeview, for
$51.5 million. The same firm also completed the $35 million acquisition
of Clark Place Condominiums at 2625 N. Clark St. in December.
Several other condo associations on the city’s North Side and its
downtown have hired brokers to examine the possibility of selling. And
experts say several factors, including the demographic reality that
millennials still prefer to rent, and the high costs of new
construction, means the condo owners should find developers willing to
“It’s not so surprising in light of the existing barriers to
multifamily development in the city, and it will probably be the case
for a few more years,” Sonny Ginsberg, an attorney with Ginsberg
Jacobs, tells GlobeSt.com. He has represented buyers and lenders on
these kinds of deals, and spoke on a panel at Marcus & Millichap’s
recent Multifamily Forum in Chicago, where condo deconversion was a big
He also believes it’s possible the trend will expand beyond the
downtown and popular lakefront neighborhoods on the North Side. There
are a number of older condo buildings along the South Side’s lakefront
with deferred maintenance issues, and that may make their associations
willing to sell at attractive prices.
But he cautions that any group of condo owners contemplating a sale
needs to do their homework. Associations need to gain agreement from
75% of their members to sell the entire property to a developer, and
reaching that threshold means each individual has to feel if they were
getting a fair value.
“It’s hard to implement on a unit-by-unit basis,” Ginsberg says. The
fair value of a particular unit is based not just on size and number of
bedrooms, but on which floor it’s on, whether it has an obstructed
view, whether it’s a corner unit, its condition, and other factors.
Not doing this type of work could result in failure. A recent attempt
to sell the South Loop’s River City, for example, failed when only 58%
of owners in the 448-unit complex approved the proposed deal. “The best
people to come up with a value is the condo association,” Ginsberg
says, but in the case of River City, an investor had gone to the owners
with a proposed bid.
In contrast, the owners of Bel Harbour and Clark Place Condominiums
brought on CBRE to figure out values and field offers. And Ginsberg
says the recent moves by other condo associations seem more likely to
be successful. The owners of Kennelly Square at 1747 N. Wells St. in
Old Town, and Park View Tower at 2740 N. Pine Grove Ave. in Lincoln
Park, for example, have brought in brokers to handle any possible sales.
“It’s a good sign that associations are getting out in front and doing their due diligence.”