It’s not everyday that the seller of a two-bedroom condo works to court an all-cash buyer using outlandish lifestyle amenities such as membership at the East Bank Club and luxury car service. But something peculiar is underway at the vintage condo building 20 North State Street, the former inventory warehouse for Woolworth’s. A pair of 1,350-square-foot two-bed, two-bath units on the fourth floor have been gut renovated to designer showroom standards by out-of-town real estate designer-developers, and they’re hitting the market with prices more like what you’d find at new luxury towers.
“Most of what you see in downtown Chicago is bland builder-type condos,” says CF Turley III, president of Scottsdale, Arizona–based CF3 Design Group. “With all the units brought to market in the past ten or 15 years, it’s surprising there’s not a better range of product.” CF3 builds custom single-family homes in Arizona, California, and Hawaii, but pounced on an opportunity to invest in Chicago condos in the down market. Coincidentally, around the same time that CF3 was snatching up their condo at 20 North State, British Columbia–based Oceanelle Construction Design (O.C.D.) was doing the exact same thing right next door. The two firms had the same goal—to deliver a turnkey luxury designer condo to a buyer interested in convenience and status—and so partnered on the build-out and marketing.
Condo prices in Chicago’s Loop are low relative to the central business districts of the other top five cities, and yet more people live in ours than in any other. The shared belief of O.C.D. and CF3 is that the potential for innovative condo designs and higher prices hasn’t been realized because large developers are always looking to cut costs. They also stress a lack of local design teams with the funds to back their own projects.
Both developers saw a lot to like in 20 North State: a central location in the Loop with shopping, dining, and park space all around; a building with an industrial past that lends itself to a modern aesthetic; 12.5’ concrete ceilings; and, naturally, a low cost of entry in mid-2012. CF3 bought their unit in foreclosure for $165,000 and O.C.D. paid $250,000.
The new prices? $499,000 for O.C.D.’s white box with high-end kitchen and contemporary furnishings, and something close to that for CF3’s soon-to-list project—a highly social space drenched in earth tones and quirky modern finishes, described by Turley as “dark, modern Asian Zen.” An example: a series of wooden slats are suspended overhead as a sort of porous drop ceiling and creating a sense of enclosed warmth while not depriving the space of its true ceiling height.
O.C.D.’s vision was very different—white walls, a white ceiling, a white kitchen, and minimalist furniture (some of it downright transparent). The only color comes from hardwood floors, a bright red lounger, hanging art, and a cubby storage unit in the second bedroom. The kitchen is the star of this concept: long and clean and clad in ceramic tile with a built-in island. Want contrasts? Check out the before pictures.
Back to that luxury car service for a minute: both units are being sold with a pre-paid timeshare giving one month’s access to a Ferrari, Rolls Royce, Lamborghini, or other top automobile. As listing agent Saul Zenkevicius of Goodwill Realty Group explains, you elect a month’s worth of usage over the course of a year and the car is brought to you with an instructor to help you survive your first outing. The service costs around $20,000 and the annual renewal option falls on the buyer.
Price Points: Zenkevicius is not afraid to admit that traction with this sales strategy will drive prices up in the Loop and bring in flashy buyers with money to burn. At the moment, buyers are happy to spend these sums on two-bedroom condos in newer buildings downtown. The comps bear this out: two average-sized two-bed units sold for more than $450,000 in the last year at 8 East Randolph Street, and several more are listed near $500,000 here and at 130 North Garland Court, both within a half-mile of 20 North State.
Overall, within this radius, 66 properties priced between $125,000 and $500,000 have sold in the past 12 months, in an average of 69 days, according to Goodwill Realty Group’s market absorption analysis. Both numbers moved in the wrong direction compared with the previous 12 months, but that’s partly a function of dwindling inventory and fewer desirable condos listed for sale in the target area.
If this pilot goes according to plan, both sellers will gradually scale up in the Loop. “There are still opportunities here, even on Michigan Avenue, to get into units that are pretty blasé and turn them into something like this,” says Turley.