Welcome Back, Neighborhood Condos
Condo developers have returned! (We'll assume they were on a long sabbatical filled with canasta and shuffleboard in Boca.) After years of strategizing, they’re scooping up prime infill sites.
Since it's nearly impossible to finance 200- or 300-unit projects at this point in the cycle, developers have narrowed their focus to more manageable sites in top tier, transit-oriented locations, SVN | Chicago Commercial’s Tim Rasmussen (snapped with his daughter Jackie) tells us. He just repped Candea Development in its $1.6M purchase of 20k SF of land at 5820-5826 N Clark St in Edgewater. (CBRE’s Keely Polczynski repped the seller, some family members behind New World Van Lines.) Candea is planning about 20 condos with ground-floor retail. The significant zoning changes should be a breeze, given Alan Candea’s from the neighborhood and the firm just presold six units (and pre-leased ground floor retail) nearby on the 5400 block of Clark in Andersonville.
The third time's the charm ror the Edgewater site, above. It was first under contract as part of Tartan Realty’s failed Whole Foods project, then a second buyer’s deal was killed when it couldn't secure a tenant, Tim says. But he expects the market for similar infill neighborhood sites to only increase as multifamily’s downtown boom reverberates outward. “Not everybody wants to live in the Gold Coast or South Loop,” he says. (Sometimes two-word names is one too many.) “People want lower-density neighborhoods that still have access to public transit.” And there’s very little new supply on that front outside of downtown, in both the apartment and condo markets.
The problem: Where you build doesn't change the economics of construction, and the rents and sale prices in North Side neighborhoods are much lower than Millennial hot spots. (Think almost $3/SF in the West Loop, above, versus around $2/SF in Edgewater.) While the demand is there and those rents continue to creep up as well, it hasn’t tipped the scales enough to send big guns like AMLI or Fifield into the area with hundreds of new units, he says. Outside of the office, Tim’s helping his youngest daughter, Alana, prep for college. She’s headed to Mizzou in August after a camp counselor gig at JCC Apache.