LAKE SHORE EAST CONDOS FOR SALE – The Regatta & The Chandler

Condos for Sale in Lake Shore East remain hard to come by as inventory continues to remain low, at least in the newer construction buildings. There have been a great deal of units to sell this summer. While a couple were bank owned and a few were short sales the majority were regular sales. Pricing in this area never took a huge hit like other areas of Chicago, but it definitely did see a dip in 2009 and 2010. Pricing has definitely increased from 2009 and 2010 levels but still remains below the peak sales prices of 2007 depending on the floor plan. So lets talk about what is currently available as of the middle of September, 2013.

420 E. Waterside – The Regatta

The Regatta currently has several 1 Bedroom units under contract. There is a small junior 1 Bedroom available for $200,000 that just hit the market. I assume this will be under contract very quickly. The only other 1 Bedroom unit on the market is a 14′ tier unit which is 825sf and is priced at $340,000.

There are a few Two Bedroom units available, specifically there are three 01′ tier units available priced at $585,000, $619,000 and $649,900. These units are 1530sf but some of the square footage is eaten up in a long hallway and in the master bedroom so the living space feels smaller than 1530sf. Just under a year ago one of these units sold as a foreclosure for $495,000. How the market has changed!

Lastly in this building there is a 2500+sf penthouse for sale that is a 3 Bedroom / 2.5 Bathroom listed at $2,195,000.

450 E. Waterside – The Chandler

Well if you want large One Bedrooms you are in luck there are actually a few available which is rare to see. These three large 1 Bedroom units are priced at $405,000, $430,000 and $455,000. The one priced at $430,000 is an approved short sale and the 430k price is the approved short sale price. These units are 1136, 1040, and 1136sf respectively. If you can make do with a small 1 Bedroom there is a 904sf unit priced at $355,000….it is on a low floor though!

Currently there are not any 2 Bedroom units for sale in The Chandler. There are however two Three Bedroom condos available priced just over $1.2mil and offer amazing North East views.

What are the prime views in The Regatta and The Chandler?

In Chicago many people prefer south views as you will have a much brighter unit than a unit facing north. However, in the Regatta and the Chandler the preferred view is facing North! The north view allows you to capture the Chicago River, an amazing north skyline as well as Navy Pier!

Paul Blackburn is an Illinois Licensed Broker and Realtor with @ Properties in Chicago. He can always be reached via e-mail at Paul@PKBlackburn.com

Lake Shore East Condos – The New East Side Update!

Lake Shore East Condos, particularly new construction, have been selling quickly. The Chandler at 450 E. Waterside, The Regatta at 420 E. Waterside, The Lancaster at 201 N. Westshore, 340 On the Park at 340 E. Randolph and The Aqua at 225 N. Columbus have low inventory; at least low “Prime” inventory. What has sold in Lake Shore East recently?

The Lancaster: 1203 recently went under contract in just three days! It is a 1 Bed / 1 Bathroom but faces West. The west views in the Lancaster are the prime views as those who face east will eventually have their view obstructed with a new development. 1203 went under contract when the list price was $349,000 + 40k for parking.

340 On the Park:  Another great deal in the area was at 340 E. Randolph when 2406 sold (after 2 weeks on the market) for $530,000. 2406 is a north facing, corner 1 Bedroom unit with 1244sf. It appears to have sold without parking for this price.

The Regatta: A combo unit recently sold, unit 1011 having just over 1500sf. The unit had great views facing north and also slightly east. The unit sold after 45 days on the market and closed for $692,000.

A penthouse unit also recently sold. Unit 4301 sold for $1,340,000 and took just around 4 months to sell. This unit had an oversized terrace as well as a balcony off the master bedroom.

The Chandler: A foreclosure in the Chandler, 450 E. waterside, sold for $801,101. It was unit 402 which is a 3 Bedroom / 2.1 Bath facing North which gives you views of the River, skyline, Navy Pier, Lake Shore Drive, etc. This unit did sell with parking and actually sold for over list price. The original list price was $789,000. The unit had an offer within a week.

 

Paul Blackburn is an Illinois licensed Broker & Realtor with @ Properties in Chicago. He can always be reached via e-mail at Paul@PKBlackburn.com

THE CHANDLER 450 E. WATERSIDE – LAKE SHORE EAST

450 E. WATERSIDE  – LAKE SHORE EAST

450 E. Waterside, also known as “The Chandler” is located in Chicago’s Lake Shore East neighborhood. For those of you not familiar with this area, Lake Shore East is located on the south side of the River where the river meets Lake Shore drive. The Chandler is one of the newest buildings in the Lake Shore East neighborhood.

The Chandler in Lake Shore East - 450 E. Waterside

The Chandler in Lake Shore East – 450 E. Waterside

What I like about The Chandler 450 E. Waterside

The Chandler, located at 450 E. Waterside, was one of the last buildings completed by Magellan as condos in the Lake Shore East neighborhood. It is slightly more expensive than its sister building, the Regatta built one year prior. The majority of the units in the Chandler are upgraded with Snaidero Cabinetry and most have great views, at least for the time being. The building is situated on the far North East corner of Lake Shore East. This allows it to have prime views of the River, Navy Pier and both the North and South skyline of the city.

The building boasts a phenomenal indoor rooftop pool and sundecks on either side of the pool complete with an outdoor whirlpool. The sundeck makes for amazing Air & Water Show watching. The building has a fitness center and media room on the second floor as well as a party room off the lobby which opens out onto an outdoor deck with River and Navy Pier views.

Most of the floor plans in the building are very functional and make a good use of the space. There is very little wasted space in condos at the Chandler so 1000 square feet is a true 1000 square feet versus some buildings that have obnoxiously long hallways and “nooks” which eat up space. All units will have Hardwood Floors, Granite and SS Appliances. Most will have updated cabinetry and all units with the exception of a few will have a balcony.

What I don’t like about The Chandler

I love the building and the build quality. Some of the South Facing  units, specifically the 04 tier will eventually have their view blocked when new buildings are built on the vacant lot directly to the South of The Chandler. There is some talk about a building going just East of the Chandler but I’m not sure if any of those claims can be substantiated at this time.

The building has a new rental cap. The specifics are a bit vague but it appears that new owners will not be allowed to rent their units until the rental percentage drops to around 30%?? Currently the building has roughly 44% tenant occupied units.

What do condos sell for in The Chandler?

One Bedrooms start around $310,000 in The Chandler and move up from there depending on floor height and view. Units facing North sell for a premium since these units have the protected and much preferred River view. These units tend to be larger. However, be warned that a couple tiers on lower floors facing North do not have balconies.

Two Bedrooms in The Chandler start in the $500’s but they are the smaller square footage Two Beds around 1100 to 1250square feet. Larger Two Bedrooms will start in the high $600’s and can exceed well over $750,000. The Chandler does have three bedroom units but expect to pay over a million for any 3 Bedroom with some going well over 2 million and others competing with some of the most expensive condos in the area.

Rentals in Lake Shore East – Chandler, Regatta, Lancaster, Aqua!

As summer is drawing to a close the rental market should start heating up as September and October are hot rental months. Rentals in the Lake Shore East neighborhood are abundant if you’re looking for a two bedroom especially in 420 E. Waterside (The Regatta) or 450 E. Waterside (The Chandler). Below is a list of pricing for the newest condo buildings in Lake Shore East. Keep in mind that each condo is individually owned so prices will vary depending on unit owner and of course the size and view of the unit.

The Regatta  420 E. Waterside

One Bedrooms in The Regatta for Rent: Currently there are only two 1 Bedroom units on the market priced at $2,100 and $2,500. The more expensive unit is a 1 bed + den

Two Bedrooms in The Regatta for Rent: There are a handful of 2 Bedroom units on the market priced between $2,950 and $4,950. Big price range! What makes them different? The cheapest unit is the smallest 2 Bed in the building at only 1182 square feet and is on a lower floor. The most expensive two bedroom is just under 1500sf but is fully furnished. For those of you wanting something in the middle there are plenty in the mid to high $3,000’s available.
The Chandler  450 E. Waterside

One Bedrooms in The Chandler for Rent: Only one available at $1,950 and it is already under application! One Beds however typically run from $2,000/mo to $2,600 in the building depending on size and view.

Two Bedrooms in The Chandler for Rent: There are two currently on the market at $3,000 and $3,800/mo and then a penthouse 2 Bedroom, fully furnished available for $6,000/mo.

The Lancaster   201 N. Westshore

One Bedrooms in The Lancaster for Rent: None currently available. Pricing will range from $1,800/mo for the smallest 1 beds up to $2,400 or so for the larger units.

Two Bedrooms in The Lancaster for Rent: None currently available. Pricing will range from right around $2,800/$3,000mo on up depending on size and view. Keep in mind there is a 1 Bedroom w/ den floorplan that many times agents will call a “2 Bedroom.” These will typically be priced around $2,500.

Three Bedrooms in The Lancaster for Rent: There is currently one available at $4,500/mo. This unit has a view of the park and has a very functional floorplan.

The Aqua  225 N. Columbus

One Bedrooms in The Aqua for Rent: There are a total of four 1 Bedrooms available in the condo portion of the Aqua. Two of them are priced low in the $2,500 to $3,000 range. The other two are more expensive as they are larger. The cheaper ones are 740 to 881sf respectively while the more expensive units are just over 1200sf. The larger one beds are priced for rent at $4,200 to $4,400 range with the more expensive unit coming fully furnished.

Two Bedrooms in The Aqua for Rent: There is only one 2 Bedroom on the market at the current time. This two bedroom is quite small in my opinion as it is a 2 Bed / 2 Bath and is only 1200sf (at least small for the price). It is listed at $4,200/mo.

 

Items of Note: All of the above buildings have basic cable, internet, gas, heat, and a/c included in the assessment that the owner pays which means it is included in the rent. You just pay electricity. All the buildings have pools, fitness centers, 24hr doorstaff, etc with the exception of the Lancaster which has all these things but no pool.

 

Paul Blackburn is a licensed Illinois Realtor & Associate Broker with @ Properties in Chicago. He can always be reached via e-mail at Paul@PKBlackburn.com with any questions or to learn more about rental availability in Lake Shore East or other parts of the city.

WHAT BUILDINGS ARE IN LAKE SHORE EAST?

Lake Shore East, also known as the New East Side is located on the south side of the River at Lake Shore Drive. This neighborhood used to be home to a 9 hole golf course / driving range many years ago. Now the neighborhood has been completely transformed but I’ve noticed many of my clients who are interested in the area and not overly familiar with the new buildings that exist in the neighborhood. Here is an explanation of the newer buildings recently completed in the area along with detailed descriptions of each so you can figure out which building may be right for you.

THE REGATTA      420 E. WATERSIDE

420 E. Waterside

The Regatta, located at 420 E. Waterside was completed in 2007. It is located on East Waterside which is the street that appears to be one with Wacker Drive…the street seems to drop off before Lake Shore Drive. It is south of Wacker and runs parallel with Wacker. The Regatta is a full amenity building with the following amenities: 24hr Door Person, Fitness Center, Sundeck, Party Room, Lounge and Media Room. 

Just like the other new buildings in Lake Shore East your assessments covers everything including Internet and Basic Cable. All you pay is electric. The most prized view in the building is facing North which gives you a view of the River, Navy Pier and the City (looking West, viewing Trump Tower, Wrigley Building, etc.).

I would consider this the most economical of the new buildings as it has a variety of floor plans. In the building are studios, convertibles, smaller 1 Bedrooms as well as smaller 2 Bedrooms. If you’re in the area on a budget and want newer construction this is the best building to focus on.

The Regatta also has a more intimate feel than others in the area, despite the fact it has a whopping 321 units. The intimate feel comes from standard ceiling height in the lobby and a square design for the building itself which allow the hallways to feel more intimate.

THE CHANDLER      450 E. WATERSIDE

450 E. Waterside

The Chandler is directly to the east of The Regatta, located at 450 E. Waterside this building is the furthest east building of the newer buildings in Lake Shore East. Its glass windows that curve the corner of Lake Shore Drive and the River definitely help the building stand out as a premier building. The chandler was finished in 2008 and is slightly newer and more expensive than the Regatta.

The Chandler is also a full amenity building and features: 24hr Door Person, Party Room / Lounge, Sun Deck (Roof), Pool, Fitness Center and Media Room. Just like its sister buildings the Chandler has all inclusive assessments which the exception of electricity.

The Chandler has a more modern feeling than the Regatta with soaring ceilings in the lobby and a long elevator bank (all elevators on one side versus a square design where 2 elevators are across from 2 elevators in the Regatta). Therefore in the Chandler you have a less intimate feel and a feeling of modern grand. Overall, the Chandler is more expensive than the Regatta mainly because it does not have as many of the smaller square footage units as the Regatta does. We also saw higher upgrades throughout in the Chandler (think Snaidero Cabinetry) whereas only a limited number of owners upgraded to Snaidero in the Regatta.

THE LANCASTER      201 N. WESTSHORE

201 N. Westshore

The Lancaster is located at 201 N. Westshore which is a small street at the base of Lake Shore East Park. This building literally sits 6 stories lower than Waterside street. The Lancaster is the first of the newer construction buildings being built in 2004. It is also the smallest at only 207 total units (Regatta has 321 and Chandler has 304). The building, however, does not feature a pool but does have an expansive fitness center, party room and amazing sundeck as well as 24hr door staff. The largest attraction of the building is the fact that it sits on the park itself. Many people like being able to walk right out their front door into green space.

The most prized views in this building are actually the west views. Some might think the East views would garnish a higher selling price, however, the east views are not protected. The Lancaster does not sit on Lake Shore Drive and the developer, Magellan, owns the land between 201 N. Westshore and Lake Shore Drive. Originally 4 buildings were planned for that land, however, the crash in the market has halted these plans for the time being. The land, however, will most definitely be built on in their future. While the east facing units will not face complete view obstruction it will definitely be hindered and the “dead on” lake view that they currently have will be no longer.

The Lancaster has very functional floor plans. When you walk into a unit in the Lancaster you are doing just that, walking into the unit, versus walking into a hallway area that eats up square footage.

340 ON THE PARK – 340 E. RANDOLPH

340 E. Randolph

340 On the Park, located at 340 E. Randolph is the premier building in Lake Shore East, at least in my opinion. The quality and the ambiance blows The Aqua out of the water. The location in the area is prime offering spectacular south views (you’re catching not only Millennium Park, but the lake and the city as well). The north views catch Lake Shore East park in their line of site as well as the lake if you are on a high enough floor.

The size of the units in 340 are large. One bedrooms are in excess of 1100sf and 2 bedrooms are in excess of 1400/1500sf. The finishes are high end (think wolf, subzero, snaidero, etc) and the building is LEED certified. The building features all the amenities you would expect including: 24hr door staff, indoor pool, party room, lounge, fitness center, and winter garden. I find most of the floorplans to be extremely functional in the building. Have you caught on yet that this is my favorite? It is not only my favorite, but the favorite of a lot of people hence the higher pricing. One Bedrooms are starting on the low end in the $500’s and two bedrooms will garnish a sales price of at least $700/750+.

One of the nice things about the location of 340 E. Randolph, outside of the views, is its location directly on Randolph which cuts down in your walking time for a couple of minutes. Now a couple of minutes doesn’t seem like much but when you’re walking home from work in 10 degree weather with 30mph winds off the lake, a couple minutes means a great deal.

THE AQUA     225 N. COLUMBUS

225 N. Columbus

The Aqua, located at 225 N. Columbus cannot be missed. The exterior styling of the building is incredible and each unit is a little different whether it is the floor plan or the balcony. The building is comprised of three parts: Hotel, Apartments and Condos. The condos make up the upper floors of the building and therefore take advantage of the best views. The building features both indoor and outdoor pools, along with running tracks, fitness center, game room, lounge…the list goes on. Basically you name it, it has it!

The other benefit of living in a building with a hotel is the ability to walk down to the hotel bar or restaurant without leaving the complex. Also in the building is a new CVS.

The wavy balconies in the building are cool, I will give it that, but the size of some of them are too narrow to use. The other aspect of the balconies I do not like is the fact that you can view other peoples’ living rooms from your balcony (your neighbors) and vice versa. The finishes in the building are higher end (snaidero cabinetry, upgraded wood flooring, quartz countertops, etc). however they are not as luxurious as 340 E. Randolph.

Some people may be concerned about living in a building with a rental portion and a hotel portion. The hotel does have its own entrance and the rental portion does have its own bank of elevators on the other side of the lobby. Condo owners will enjoy the privacy of their own elevator bank and secured access.

The Aqua has a wide range of floorplans from studios to junior one bedrooms to large 3 bedroom units. This allows for multiple price points in the building starting as low as $300,000 for a studio.

Paul Blackburn is a licensed Illinois Realtor and Associate Broker with @ Properties in Chicago. He can be reached via e-mail at Paul@PKBlackburn.com   To learn more about buying condos in Chicago please visit www.BuyingInChicago.com

BUYING A CONDO IN LAKE SHORE EAST “NEW EAST SIDE”

Condos in Lake Shore East can be broken down into two categories: The new and the old. The new buildings are easy to spot in person; they are The Lancaster (201 N. Westshore), The Regatta (420 E. Waterside), The Chandler (450 E. Waterside), 340 On the Park (340 E Randolph) and of course The Aqua (225 N Columbus). The first building and the only condo building actually located directly on Lake Shore East Park is the Lancaster. It also, however, the only building NOT to have an indoor pool.

The other buildings of Lake Shore East are the older buildings such as: Harbor Point (155 N. Harbor), Park Shore (195 N. Harbor), 400 E. Randolph and The Buckingham (360 E. Randolph). My favorite of the older buildings is The Buckingham due to its views, updated yet intimate lobby and updated common area space.

So if you are looking in Lake Shore East what should you know when you first start looking?

Special Tax: For starters you should know that the newer buildings have an additional tax similar to an SSA. This is a special tax which came about to pay for the initial improvement of the land. This tax is minimal and will vary depending on the unit but it is something to keep in mind when shopping in the newer buildings.

Understand your view: Understanding your view is very important, but most important for those looking at East Facing units in the Lancaster. If you are in an East Facing unit in the Lancaster and you look down you will see a vacant piece of land. Originally this was going to house roughly 4 buildings. Since the real estate crash however these plans have been scrapped and no new plans have come to fruition. It is highly doubtful that any development will start on this land for at least 5 years, but you should know that it eventually will.

Also note that there are two very prized views in Lake Shore East. The MOST expensive is the view of Millennium Park which can be had from 340 E. Randolph, 360 E. Randolph, 400 E. Randolph, and 155 N. Harbor. The views of the park are not only of the park but also capture the lake as well as the city view along Michigan avenue.

The next award winning view are the views of the River which, while they can be had from The Aqua are most popular in The Chandler and The Regatta.

Possible Rental Restrictions: Due to the timing of the new buildings in Lake Shore East some buildings have rental restrictions in place such as The Regatta and 340 On the Park. The Chandler is also in the process of implementing limitations on rentals which will require you to live in your unit for a couple of years before renting out. These are not necessarily negatives but are simply things to keep in mind when looking at the units.

WHAT ABOUT PRICING?

Newer Buildings: In your newer buildings One Bedrooms will typically start in the low $300’s with the exception of The Aqua and 340 On the Park which will be higher. Two Bedrooms will typically start in the high $400’s and Three Bedrooms from the mid to high $600’s. Of course prices will always vary depending on availability, building, view and square footage as well as upgrades.

Older Buildings: One Bedrooms can start as low $200k with Two Bedrooms in the high $300’s to low $400’s and Three Bedrooms, while much more rare in the older buildings, can be found in the 700 to 800 price range.

Paul Blackburn is an Illinois Licensed Realtor and Broker with @ Properties. He can always be reached via e-mail at Paul@PKBlackburn.com For more information about buying condos in Chicago and what you should know about the Chicago market visit www.BuyingInChicago.com

Lake Shore East – What has recently Sold in the Chandler, Regatta, Lancaster & 340 On the Park

Amidst all the rentals hitting the market and quickly getting snapped up in Lake Shore East are some great sales that have happened over the past couple of months. For those of you who are not familiar with Lake Shore East or the “New East Side” as some call it; it is the area on the south side of the river where the river meets Lake Shore Drive. The new buildings are comprised of 225 N Columbus, The Aqua; 340 E. Randolph, 340 On the Park; 420 E. Waterside, The Regatta; 450 E. Waterside, The Chandler; and 201 N. Westshore, The Lancaster.

In the past 2 months 14 condos have sold in these buildings. Here are some of the most notable:

The Chandler: Unit 2101 sold in the Chandler for $405,000. This included the parking space. The 01′ tier at this level in the building faces North which is the preferred view from this building as you see Navy Pier, the River and the city. 2101 is a 1 Bed / 1.1 Bath and is considered a “Jumbo” One Bedroom for the building at 961 square feet. According to my research the previous owner paid $497,000 in 2007.

The Lancaster: Unit 2102 sold for $546,000 including a parking space. It is a 3 Bedroom / 2 Bathroom unit however the 3rd bedroom is more “den like” given its location off the living room and its size. The unit faces South East which gives it great lake views at the current time. However, there is currently an empty lot between the Lancaster and LSD which will eventually be built on. Some have asked if it will be built on soon given the building craze of rental buildings. I don’t believe so. This is prime Lake Shore Drive property and the developer would rather use it for condos than a rental building. At least that is my opinion.

340 On the Park: 340 saw a couple notable sales the other month. Unit 2101 sold for $1,600,000 including parking of course. The unit is 2368sf and the 01′ tier at this level has both North East and South East views.

Another notable in 340 On the Park is penthouse unit 5702 which sold for $2,600,000 which appears to have included 3 parking spaces. Total square footage on this unit is 2748 and it is a Three Bed, Three and a Half bath. This unit faces South East and has extra tall ceilings because it is on a “penthouse” floor.

Paul Blackburn is a Licensed Illinois Realtor and Broker with @ Properties in Chicago. He can always be reached via e-mail at Paul@PKBlackburn.com

LAKE SHORE EAST RENTALS – The Chandler, The Regatta, The Lancaster, 340 On the Park

Lake Shore East Rentals are always in high demand but as the rental season is heating up units are being rented just as quickly as they’re coming on the market. Here is a full list of Rental Prices and Rental Inventory available in the following buildings in Lake Shore East: The Regatta, The Chandler, The Lancaster, 340 On the Park, The Aqua, The Buckingham

420 E. Waterside, The Regatta – Condos For Rent

JR. ONE BEDROOMS

#612 – $1,850

TWO BEDROOMS

#1103 – $2,800

#801 – $3,400

#3110 – $3,500

#3812 – $4,000

THREE BEDROOMS

#3910 – $12,500 (Furnished)

450 E. Water – The Chandler – Condos for Rent

ONE BEDROOMS

#1504 – $2,100

#2506 – $2,100

ONE BEDROOM + DEN

#910 – $2,500

#806 – $2,600

TWO BEDROOMS

#401 – $3,100

#2211 – $3,850

THREE BEDROOMS

#3009 – $6,250

201 N. Westshore – The Lancaster – Condos for Rent

ONE BEDROOMS

#2603 – $2,000

TWO BEDROOMS

#1007 – $3,300

THREE BEDROOMS

#2602 – $3,600

225 N. Columbus – The Aqua – Condos For Rent

STUDIO

#5604 – $2,075

340 E. Randolph – 340 On the Park – Condos for Rent

THREE BEDROOMS

#4601 – $7,450

360 E. Randolph – The Buckingham – Condos for Rent

ONE BEDROOMS

#3105 – $2,150

#3506 – $2,200

TWO BEDROOMS

#305 – $3,800
PAUL BLACKBURN IS A LICENSED ILLINOIS REALTOR AND ASSOCIATE BROKER WITH @ PROPERTIES. HE CAN ALWAYS BE REACHED VIA E-MAIL: PAUL@PKBLACKBURN.COM 

THE CHANDLER – 450 E. WATERSIDE TRYING TO CAP RENTALS

The condo board at The Chandler at 450 E. Waterside in Lake Shore East is attempting to pass a “Leasing Restrictions Amendment” also known as a rental cap. Over the weekend I was in the building on showings and ran into an owner who gave me the flyer below. Here are the sum of the details followed by my thoughts on the matter.

According to the letter I have, 135 units are leased at the Chandler which represents 44% of the units. The letter states that if this measure passes then unit owners would have less than a 50% chance to get a “leasing license” for the first 3 years and less than a 20% chance thereafter. The letter goes on to state that the writers are NOT in support of a rental cap and it is their belief that prices will decline in the building as those who cannot rent out their units will be forced to sell. Why then is the board trying to pass such a measure? The letter states that less rentals in the building (likely a cap around 20 to 25%) will ease financing for buyers and refinancing for current owners. For a quick explanation of the proposal which I have read please see the bold print below.

To keep this blog 100% fair below are the benefits as said by the Board of Directors of the Chandler Condominium Association in a letter sent to owners dated February 16 of 2012.

– The implementing of the amendment will allow current owners, as well as new owners, to easier refinance their mortgages or obtain premium lending rates with a lower rental percentage.

– Implementation of the amendment will help maintain property values, which is important whether you are a live in owner or use the unit as a 2nd home or currently rent.

– Implementation of the amendment will reduce the amount of move ins and outs causing less wear and tear on the building, elevators and staff (We average about 64 moves a year).

– Implementation of this amendment will also lead to our building being more secure. Less turnover means more owners living and staying in their units.

Here are my thoughts: It is true that rental rates at or less than 20% make it easier to obtain financing in the building. Furthermore, it does open up refinancing options for current owners who want to refi to a lower rate. However, there is a large problem here being overlook by the board trying to pass this regulation: Many people NEED to rent their units. The building currently has 44% of the units leased. If this number is decreased, to lets say a conservative 25%, this means that 19% of the building, which equates to 58 units will NOT be able to lease their units. What will these people then do? Use it as a weekend place? Or will they simply just list it for sale and cut their losses? Even if only 30% of those who could not lease their units listed them for sale it would still add 16 units to the market. Currently there are 6 units on the market in the Chandler that are not under contract or temporarily off market. This means this measure could easily triple the supply in the building. If every single unit that could not rent was placed on the market supply would increase by almost 1000% or more if the building limited the number of rentals to only 20%. Now as we know the 20% limitation will not be fully enforced until 2015, but in 2014 those owners who will not be able to rent their units will have a decision to make as their leases expire. Furthermore, what about the current owners who rent their units who will not be lucky and obtain a leasing license?

The Board also mentions that there is wear and tear on the building due to increased moves. This can easily be solved by increasing the move in fee for a tenant. If this is truly a major concern, increase the move in fee to pay for the wear a tear. A deposit is also held for the elevator as well as any hallway damage. Perhaps the association just starts to get much tougher on checking the hallways for damage after a move in/out.

On the surface limiting rentals may seem like a good idea. In some buildings this concept can work to sustain a healthy building. However in the case of The Chandler we see there is a need for unit owners to be able to rent their units out. Many owners would be negatively affected by the passing of such a measure. When almost 50% of the building depends on leasing their units such a measure WILL create a great OVER supply in the market place. What this will do is push the weak owners to the bottom. Those owners who cannot afford to hang on and wait for a buyer will need to lower their price in order to be the cheapest unit of their kind. Imagine if you have several owners in that position who all have similar units? They’ll compete against each other in price and drive the market down.

The fact of the matter is, this is not speculation! This is not just a hunch that I have. This is plain and simple economics. The numbers don’t lie. Why is it then that sometime rental caps work in buildings?

Rental caps work in buildings where there are only a few units going over the limit and messing it up for everyone else. Lets say that you have a building where just over 20%, lets say 21% of the units are rented. Because of this many people cannot refinance and some  buyers cannot obtain financing. Passing a rental cap in this instance may make sense since only a couple units would be affected and the majority of the units renting their units will still be able to. In this instance you would also have a great net benefit to the majority of the building. You would in this case keep “fire sales” to a minimum and can probably build in exceptions into the ruling in order to accommodate extremely distressed owners. However, in the case of the Chandler we are talking about 44% of the building, 135 owners who have leased out their units. This shows a clear NEED of owners having the ability to rent out their units.

As an agent who has represented buyers and renters in the Chandler I oppose any rental cap that would greatly discourage buyers from buying and put owners in a position in which they would feel they need to sell their unit. I do not believe there will be a net benefit to the owners if the “Leasing Restrictions Amendment” is passed. Instead, I believe there will be grave negative consequences to the price sustainability of the Chandler for years.

Lastly, at the end of the day the market is just that, the market. The values of a unit are not dragged down because of renters in a building. They are dragged down because the market has dictated that unit owners have 1 or 2 choices: Sell their units or Rent. If the market place is such that unit owners choose to rent instead of sell then the renters are simply a symptom of the market. Implementing any kind of amendment which attempts to force the hand of the market will never work.

UPDATE: Since posting this blog additional information has come to my attention regarding the rental cap proposal for The Chandler. According to additional information I have received 135 Leasing Licenses will be distributed and will be good for 3 years.  If there is any additional information you believe I should know about this proposal please feel free to share below. Given some of the responses I have received on this blog and via e-mail here are my additional thoughts and questions. Keep in mind I am not an attorney so my interpretation of the amendment is only that and is not meant to be taken as any legal advice.

1 – 135 Leasing Licenses will be given to owners on a lottery drawing basis. This will be a 3 year license.
Currently there are 135 units leased in the building. The obvious intention is to give everyone who is currently leasing their unit a leasing license. However, how will these licenses be distributed? Will other owner occupied units sit idly by and give up their right to lease their unit? If I owned in The Chandler and lived in my unit I would still want the right to lease mine out so I would want a license which brings me to my next question….

2 – Does the license need to be used right away? For instance if I am granted a 3 year leasing license must I rent my unit out for 3 years (in order to insure that only those who truly need it will get one) or can I keep it in my back pocket in case I have the need to move? This is a concern I’m sure many landlords may have in the building. It appears from what I have read that unit owners must apply for the leasing license lottery in writing. If they are chosen they will be granted the 3 year license but it does not appear they will be forced to lease their unit out.

3 – I’ve received several e-mails that have mentioned a 3 year license. This brings to light my next question: Can owners who have the lease license enter into 3 consecutive 1 year leases to different tenants? From what I have read the answer is Yes. The 3 Year Lease license allows the landlord to rent his or her unit out for normal duration during this 3 year period. 

4 – It appears that a new round of lease licenses will be granted in coming years. This new round of licenses (drawn in 2014) for 2015 will apparently be less than the 135 currently proposed to be granted. If so, What will the new percentage be? It appears 20% will be the new percentage.

5 – What if, over the course of the next couple years, several owners need to move. If they cannot sell their unit and are in some sort of financial distress because they cannot rent their unit, will any exceptions to the rule be made? Can a temporary leasing license be granted? Those who have not received a leasing license may appeal and present their hardship situation which will be reviewed by the Board of Directors on a “Case by Case Basis.” The problem is there needs to be some guidelines put into place WITH the amendment which defines true “hardship.”

6 – 49% That is the magic number for tenant occupied units. When any building moves above that options such as FHA may go away and other serious buyer financing and re-fi issues may arise. Has this at all been discussed? I’m not sure if this has been discussed or not, but I would recommend it be brought up.

Many have said that it is wrong of me to assume the market conditions in 3 years when the number of leasing licenses will be granted. I do not know what the market will be like in 3 years; I have not a clue. But neither does anyone else. I always tell my clients to plan for the worst and hope for the best. Given that I have now read all the facts of the amendment I still do not agree with it. While I do not live in the building I must say, if I did live in the building I would vote against this proposal.

What I do know is that when I first started in the business clients would ask “What do you think I can sell this for in a few years if I get transferred or if we have a baby and need more space?” I haven’t heard that question in a while. The question I hear so many times now, is “What can I rent this for if I have to move?”

I understand that this is a hot button issue. This is an issue dealing with a very personal asset, the home where many of you live. For many others this is an issue because it threatens something that they thought would always be there no matter how bad the resale market would get; their ability to rent their home. If there is any information that I do not have or was mislead by please present it to me. My e-mail is below or you can comment directly on this blog. All facts for such an issue must be presented with complete transparency. Any guarantees made should always be in writing and in any proposal. There are many buildings going through this very same issue, including my very own. Each building is different but in most instances the basic economics of such a decision are the same.

Paul Blackburn is a licensed Illinois Realtor and Associate Broker with @ Properties. He can be reached anytime via e-mail at Paul@PKBlackburn.com

LAKE SHORE EAST RENTAL UPDATE – Chandler, Regatta, Lancaster, Aqua, 340

Here is your monthly update for rentals available in Lake Shore East “New East Side!”

THE LANCASTER – 201 N. WESTSHORE

TWO BEDROOMS:

Unit 1807:  $3,000

THREE BEDROOMS:

Unit 2301:  $3,950

THE AQUA – 225 N. COLUMBUS

STUDIOS:

Unit 5402: $1,850

THREE BEDROOMS

Unit 7901: $5,600

Unit 7005: $7,500

Unit 6505:  $7,500

340 ON THE PARK – 340 E. RANDOLPH

THREE BEDROOMS:

Unit 4601:  $7,450

Unit 4603:  $9,500

THE REGATTA – 420 E. WATERSIDE

ONE BEDROOMS:

Unit 1202:  $2,000

Unit 411:   $2,200

TWO BEDROOMS:

Unit 703:   $2,500

Unit 2703:  $2,500

Unit 903:   $2,550

THREE BEDROOMS:

Unit 2714:  $4,200

Unit 2414:  $4,500

Unit 3614:  $4,800

Unit 3501: $5,500

Unit 3201:  $6,500

Unit 3910:  $10,000

THE CHANDLER 450 E. WATERSIDE

STUDIOS:

Unit 807:  $1,400

For additional information about condos for lease or for sale in Lake Shore East please e-mail me at Paul@PKBlackburn.com

Paul Blackburn is a licensed Illinois Realtor and Broker with @ Properties Chicago.