Handle Chicago's nuanced luxury scene by picking properties that will hedge your bets.
A view from The Legacy’s 71st floor.
An impressive housing report from the Chicago Association of Realtors shows the metropolitan region’s home sales rose 8.5 percent in the first half of 2015 over the same period last year. Luxury sales have risen even more, up 10.5 percent, says Baird & Warner Vice President of Luxury Home Sales James Kinney (312-981-2081). While the stats show the luxury market is strong, they don’t reflect its true nature, which is “very different than in the past,” he says. Kinney and @properties broker D. Waveland Kendt (312-330-3321) elaborate on what that means for buyers today.
What do you mean by “different”? James Kinney: Even though the numbers show an increase in luxury sales, it’s spotty. Some things are hot and others are not, and for very specific reasons. Trophy properties are holding their own, but co-ops are a hard sell because most are older and lack the amenities luxury buyers want today. D. Waveland Kendt: There are certain luxury buildings and houses that buyers will gravitate to—all are new construction. Trump International Hotel & Tower and the Waldorf Astoria are perfect examples of what people want and are good investments. People love the hotel amenities and expansive square footage of the apartments, and the values of the units have increased 20 to 30 percent since the lows in 2010–2011. That’s why 4 East Elm, which just broke ground and only has two units per floor, is already 65 percent sold.
These properties exceed the usual threshold for high-end properties. What are you defining as luxury? JK: Prices have crept up. Today’s luxury properties, for the most part, are over $2 million. Otherwise you’re getting a really nice home in a good neighborhood, but not all the bells and whistles, such as truly top-of-the-line appliances, multiple en-suite bedrooms, and generous outside space. DWK: That’s why new is preferable to old. Floor plans have really changed. People want open, airy layouts that capture light, large master bathrooms and closets, and high-quality fixtures and finishes that reflect the aesthetic of the moment, such as light floors and cabinets, porcelain tiles, and quartz countertops instead of dark woods and granite.
So old is out, period? DWK: By the time someone buys a new home and rehabs it, the cost of carrying both properties can be significant. So if they’re buying a $3 million house, they don’t need the hassle and it’s easier to buy new. JK: But I am seeing an interesting phenomenon: High-end buyers are always looking for the best of class and will pay top price, then still go ahead and redo it. They feel that if they’re starting with something in superb condition, it can only get better.
So how do you hedge your bets? JK: It pays to pay attention to what’s going up and buy in the pre-construction stage. But the buildings that are in favor right now are the Waldorf Astoria, Trump Tower, the Palmolive Building, The Park Hyatt, and 65 East Goethe, where I am closing on one of the four maisonettes in the building. Its asking price was $5.75 million. DWK: I’m also seeing lots of action at The Legacy (60 E. Monroe St.), where there are five remaining three-bed, 3.5-bath 2,400-square-foot units out of the original 350 selling for just over $2 million each. As for single-family homes, extra-wide lots and great public schools are the big attractions right now. People would rather splurge on their homes and send their kids to local public schools.