Alan Lev’s Condo Market Outlook
Unlike the booming rental market, it’s early innings in the condo cycle. Belgravia Group president and CEO Alan Lev, a for-sale veteran (snapped with Belgravia founder Buzz Ruttenberg), tells us he’s only seeing smaller projects being developed, with larger size units and higher end price points. Nothing’s targeting the first-time homebuyer just yet. And when it does in a few years, it will look markedly different given Millennials’ shift toward renting longer and marrying later. “I don’t know if we’ll see that one-bedroom buyer,” Alan says, rather folks in their late 20s or 30s looking for something a little bigger at a reasonable price point. You won’t find that in River North, more likely in the neighborhoods.
The days of 300- to 400-unit projects are also long gone, Alan (snapped at 600 Lake Shore Dr's "mortgage burning") tells us. The projects are too big, too expensive, take too long and present too much risk. With construction and land costs going up, a high-rise condo building would require pricing well over $500/SF, which isn’t feasible in most neighborhoods (not even the West Loop) given current demand. Even if pricing catches up, Alan thinks it’s no longer worth the uncertainty. “Big projects take four to five years. You’re more likely to hit a blip in the economy than with a project that’s 50 units, where you’re in and out in a couple years,” he says.
Belgravia recently sold out the third (40 units, above) and fourth (50 units) phases of its CA project in the West Loop as the buildings near completion. It’s also sold out a seven-unit, luxury project at 328 Wisconsin in Lincoln Park (units priced from $1.5M to $3.5M). Projects in the midst of rezoning and entitlements include 45 to 50 units (two- and three-bedrooms, moderately priced) at Sedgwick and Locust in River West and 39 to 52 upscale units planned at 403 N Wabash, next to Trump Tower (two- and three-bedrooms starting at $1M). Who are the typical tenants for such high-priced units? It’s often well-established people in their mid-30s to 60s, Alan says, either trading up or downsizing from their current home.
Belgravia’s always on the lookout for new opportunities, but it’s a competitive market with a new crop of developers and prices getting bid up, Alan says. He’s interested to see what happens with townhome developments after one of the only projects being developed, Ranquist Development's 47-unit Basecamp River North (above), sold out so fast. It’s just tricky to find a big enough parcel at the right price, since you can’t pay the same numbers as a high-rise, he says.