Near sellout on one Lakeview condo project, developers plan second

Crain's Chicago Business
Aug 20, 2013
By: 
David Lee Matthews
Photo of 2930 N Sheridan Road.

A hedge fund-led venture that bought two failed Lakeview condominium conversions out of foreclosure two years ago is on the brink of selling out one of them, an encouraging sign for neighborhood landlords looking to go condo.

Buyers have closed on or signed contracts to buy 65 of 67 condos at 2930 N. Sheridan Road, a rental-turned-condo high-rise controlled by a joint venture between Greenwich, Conn.-based Contrarian Capital Management LLC and local firm Conlon & Co., said Conlon Chief Administrative Officer Melissa Archer-Wirtz. The venture plans to start marketing 63 similar units nearby at 3033 N. Sheridan as early as next month, she said.

“I don't think we could've hoped for the success we had, but we got it,” Ms. Archer-Wirtz said.

The imminent sellout and new project bring more positive signs for the city's condo market, which has come back from the crash amid a pickup in demand and lack of new condos for sale. Conlon, a junior partner in the venture marketing the relaunched developments, opened sales last October at 2930 N. Sheridan, about a year after the venture paid about $14 million for the 130 unsold units in the two buildings, the venture’s first local deal.

The condos, many of them in unfinished “white-box” form, were seized through a deed-in-lieu of foreclosure after original developer Robert Kroupa failed to pay off a $76.4 million loan.

Conlon has marketed the condos to first-time homebuyers in the area straddling Lakeview and Lincoln Park. County records show the condos at 2930 Sheridan, a mix of one- and two-bedroom units, have closed for between $165,000 and $358,000 depending on floor and views. Similar pricing and finishes, including hardwood floors, stainless-steel appliances and granite countertops, will be used at the new project at 3033 N. Sheridan, said Ms. Archer-Wirtz, who declined to disclose costs for either project. Forty of the condos have two bedrooms and a private balcony.

“We saw the deal as great value for entry-level product in a very strong submarket in the city,” said Contrarian Vice-President Drew Herold, who is pursuing other distressed real estate opportunities in Chicago.

With new condo construction yet to roar back, some observers are eyeing conversions of apartment buildings as an immediate source of future inventory. Developer and broker Charles “Chip” Cornelius Jr. of Chicagoland Realty Services LLC has heard “rumblings” of other properties being queued for conversion, a trend he sees continuing through next year before new condo buildings are delivered.

“I don't think we're going to be lost for buyers,” he said. “We're looking at a really solid return to condominium product because it's just not out there.”

There were just 12 active downtown condo projects comprising 645 unsold units through the first half of the year, the lowest new-condo supply since at least 1997, according to Chicago consulting firm Appraisal Research Counselors. Developer inventory is scarcer in the neighborhoods outside of downtown, Mr. Cornelius said.