Tuesday, November 5, 2019

Deconversion of Condo Buildings to Rental is a Trend in Chicago

We spilled a decent amount digital ink on the de-conversion of River City from condo building to rental.  The Chicago Tribune has a good read on the topic and cites River City as an example:
Chicago apartment buildings can have many lives. “It used to be you bought an apartment building and converted it into condominiums,” said Susan Tjarksen, a managing director in the Chicago office of Cushman & Wakefield, “and now we’re seeing the reverse of that.”
While that’s the simplest definition of the condo deconversion trend sweeping the city, turning condos into rental apartments is not a simple process for residents, the community or investors. Residents who buy a unit in a building seeking the stability of homeownership are often forced to move when an apartment investor buys the building. Investors often find themselves scrambling to find buildings that cater to the city’s hot rental market. And aldermen in neighborhoods that have seen rising deconversions are facing pressure from condo-owning constituents. 
Condominiums that have surpassed their 1980s and 1990s heyday are prime targets for offers from investors. “It’s been a good way of finding an alternative source of investments,” said David Goss, co-founder and managing principal at Interra Realty. His firm did its first deconversion transaction of a 101-unit building in Uptown in January 2017. Since then, he’s noticed an uptick in the number of condos being turned into apartments.

The piece on River City:
The onset of new amenity-filled apartments coming to the market has created competition with many of the vintage condos found in Chicago. People are shifting away from some of those dated high-rise buildings and going to the brand-new apartment buildings next door. “Today, condos have a hard time competing with apartments in terms of what they can offer for rent and amenities,” said Rocio. 
In the case of one deconverted downtown building, River City, the new building’s owners are creating a welcoming lobby, new fitness center, multiple co-working and gathering spaces including a dog run, outdoor grilling stations and shuffleboard courts.

The River City drama took place over a long period and was certainly not smooth.  This seems like a trend to us, but not a sustainable one...guess we will see.

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