New construction condos in Chicago are few and far between. Large scale new developments were mostly halted in 2008 and even though demand for new construction is high in Chicago banks are not willing to take the risk and offer developers construction loans on a 300 or 400 unit condo project. With the majority of new buildings in Chicago at least 5 years old the question is “What is next for Chicago condos?”
With no new construction condos in the downtown neighborhoods many are turning to older buildings and buying “dated” units with the plans of gutting and rehabbing the units with all of today’s modern finishes and conveniences. Newer construction buildings (built between 2003 and 2008) are still selling at a premium as the finishes are “nice” and still acceptable. However, over the past decade tastes in finishes have changed a great deal. Those wanting the most updated and modern look in the downtown neighborhoods are really left with only one option: Do It Yourself….well hire it out but still “rehab your unit.”
Many older buildings have also started modernizing their hallways, amenity floors, lobbies and elevators. These capital improvements along with a cheaper price point, which allows buyers to customize their own units, are allowing old buildings to give new ones a run for their money.
If I am thinking of buying in an older building and customizing a condo; what should I look for? What should I watch out for?
Buy in a building that is not afraid to spend money:
It is important to buy into a building that is constantly modernizing itself. Buildings that haven’t completed any capital improvements in over 20 or 30 years are not and will not be able to compete in the market place. Updated hallways, lobbies and amenities are key. While these updates do cost money and may mean higher assessments, you will see a greater return on your investment in such buildings. Buildings that choose not to update will eventually have to (at some point new elevators and new fitness equipment will be a must) and that cost may come as a special assessment anyway. In the meantime however those buildings start to develop a reputation of “old and tired.”
Structural obsolescence caused functional obsolescence!
Consult the building engineer, an architect and a great contractor on exactly what you are able to do with your unit before buying. Many older buildings may have large living spaces but small bathrooms and small kitchens. Current trends are open, expansive kitchen spaces, large closets and well sized bathrooms. Make sure plumbing, electrical and structural walls are able to be modified to allow the reconstruction you so desire. You can update a unit all you want, but if the floor plan is poor then you will not see a good return on your investment. Many times a small change in the floor plan will earn you your greatest return.
Take advantage of what old buildings have to offer!
Location, Location, Location. Many times older buildings have some of the absolute BEST locations and BEST views in the city. Take advantage of this! If you are interested in a building on Lake Shore Drive then make sure you have a great view of the lake. If you are interested in a building in the heart of the Gold Coast then get a south view so you can see the entire skyline and the lake. This may seem like a no-brainer but you’d be amazed at how many people look at only the price tag when they’re rehabbing a unit versus looking at the entire package of what a unit has to offer.
Wider is better!
One of the biggest downside to some of the newer construction buildings are the long and narrow floor plans. Many times this is done to maximize the number of units in a building. Many older buildings have wide floor plans. Wide floor plans are almost always preferred as they offer much more window space. In addition, newer buildings have taller ceilings (9 or 10ft) whereas many older buildings only have 8ft ceilings. A wider floor plan, which allows for much more light will make ceiling height feel taller versus a long narrow floor plan which will make a unit feel “closed in.”
Older buildings typically have higher assessments simply because they are less efficient and more costly to maintain. It is very important to see how an association is spending their money. High assessments are not necessarily bad so long as you are getting something in return such as a building that is constantly updating and modernizing itself. A building that has high assessments because they are always “fixing things” versus “improving things” is a building that you will likely want to stay away from.
Paul Blackburn is a licensed Illinois Realtor and Broker with @ Properties in Chicago. He can always be reached via phone or e-mail at Paul@PKBlackburn.com