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A Chicago City Council committee will vote Wednesday on whether to make it more difficult to complete the deconversion of condominium buildings into rental apartments, but in the meantime, such deconversion sales continue.
Kiser Group’s Rick Ofman and Andy Friedman just brokered the $12.5M sale of Dover Court Condominiums, at 4601 North Dover St. in Uptown, to Neriel Lagoon LLC, which plans to convert all 64 units to apartments.
“For over a year and a half we had been receiving unsolicited offers to purchase the property,” said Michael Wolff, a condo board member. “We decided to hire a broker that would represent not only all 64 unit owners' best interests but also find the right buyer that would be able to close the deal.”
The building was built in 1925 as apartments, but was converted to condos in 2007 when the housing boom led many to believe values would keep climbing, according to Friedman. Depressed resale values and looming special assessments soured many of the owners.
“This sale allowed those that purchased in the frenzied days of 2007 and 2008 to finally recoup their purchase price and was a welcome exit for owners that had been turned into accidental landlords,” he said.
Between 2016 and 2018, 20 deconversion sales were completed in the Chicago metro area, mostly clustered on Chicago’s North Side along the lakefront, according to an Avison Young study of Real Capital Analytics data. Several additional sales occurred since then.
According to state law, buyers need to secure approval from 75% of a building’s condo owners before completing a sale, and that led several North Side aldermen to worry some of their constituents were getting pushed out of their homes. 42nd Ward Alderman Brendan Reilly, 43rd Ward Alderman Michele Smith and 48th Ward Alderman Harry Osterman have sponsored legislation that would boost the required percentage in Chicago to 85%.
If approved Wednesday by the Committee on Housing and Real Estate, it will go before the full city council at its monthly meeting on Sept. 18.
The new requirement would be a disappointment to developers, who continue to see buying and converting condo buildings as opportunities to open new rental units in Chicago’s hot market without the costs of new construction.
“During the marketing phase, Dover Court had over 50 property tours and received numerous offers within 5% of the final sale price," Kiser’s Ofman said. “With all the new construction apartment buildings underway in Uptown, this transaction proves that the demand for vintage properties remains strong.”
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