Trump’s development company finished selling the final units at Trump Hotel & Tower in Chicago years ago, but his name sits prominently on the building and therefore, given the current…political climate…the question I am asked often, and I mean truly often, is “how are sales at Trump Tower?”
Currently there is a little over 2 years, roughly 26 months to be exact of inventory on the market. Currently, there are 43 residential condos available for sale and only 20 have sold in the past 12 months with 17 selling in all of 2019 so far. Before we get into anything farther, the real question is how does this compare to the market in general and other luxury buildings?
Currently in Chicago there is roughly 4.6 months of inventory available according to current statistics. So we can make the quick argument that Trump Tower has more than 5 times the amount of inventory than it should. But that really would not be fair, instead we should compare it to some other luxury buildings in Chicago. Now there are few luxury buildings that can compare to Trump. I’m not saying this because the building itself has better services or views, but given the number of units, date built, and location it is difficult to compare it to others. But lets do our best shall we?
Ritz Carlton Residences at 118 E Erie has only sold 5 units in the past year…yes only 5. Now the building is much smaller, at 89 units total. However it currently has 18 units available. So using some quick reverse math Trump is looking pretty good compared to the Ritz since the Ritz is sitting on almost 4 years of inventory!
Now lets downgrade a bit in building and switch neighborhoods to The Aqua building in Lake Shore East. I’ll use this building because it is connected to a hotel just like Trump and has very nice amenities, though from a luxury standpoint I don’t believe it compares at all. The Aqua has 8 units sell in the past 12 months with currently 11 units available meaning there is a little over 16 months of inventory available. That definitely beats out Trump.
Lets look at 55 E Erie This is a luxury high rise in River North and while some of the finishes are dated, its location, upper floor views, and overall quality of construction does compete (even though it is more…traditional in nature). 55 E Erie is blowing Trump out of the water with 18 condos sold in the past 12 months and only 10 currently available meaning there is a roughly 6.5 months of inventory on the market in the building.
Park Tower, located at 800 N Michigan it is connected to the Park Hyatt Hotel and is considered a premier building in Chicago. Park Tower has seen 5 sales in the past year with 8 currently on the market meaning there is a little more than a year and half worth of inventory on the market.
Alright, lets look at one more and that is the Pinnacle at 21 E Huron. The Pinnacle has seen a whopping 17 units sold in the past year with only 9 currently available units meaning there is just a little over 6 months of inventory on the market.
Now there are a lot of variables at work here and things are not just black and white. For instance Trump Tower has a great deal of investors in the building. This was due to multiple reasons in part of its location to the loop, its high number of 1 bedrooms, the Trump name that appealed to investors, etc. Investors love to “test” the market and have no problem leaving their units on the market for a months on end while they use the property as an in-town. Some other buildings mentioned have more stable residents. Less investors, more full-time residents or residents using the home as an in-town with the plan to use it full time down the road.
The other issue is pricing. Is pricing down in Trump? Compared to other luxury buildings yes. Both on the sales and rental side. A separate blog I will write this week will go into specific detail comparing Trump to other buildings in Chicago. The one thing that has kept Trump prices from falling further is the fact that the residents are in a good place. They don’t NEED to sell. There have been no major “fire” sales in the building like the fire sales we were seeing in 2009/2010. Now, if we are talking about the hotel-condos in the building then that is a totally different story for another day.
But if we cut to the chase we can discuss the question “Does Trump’s name affect sales in the building?” The answer is a resounding yes. There are residents in the building that would love to see his name removed if they could have it done (no thats not a possibility). There are some residents that say they live at “401 N Wabash” and refuse to call it Trump Tower. Those who rent their units out in the building have probably been hit the hardest. Pricing is down across the board since Trump entered the political arena and very much so in the couple of years. This is not meant to be a political blog by any means, it is just meant to discuss the elephant in the room. If you’re looking to make a purchase and you’re contemplating Trump tower or you’re using Trump tower as a comparable building to understand pricing of another building then you should know what is affecting its value. It is the name. The building is as clean as can be. The building is operated very well, with excellent security and spotless common areas. Most of the views are phenomenal. If Trump sold off his naming and hotel rights to say the St. Regis or Shangri-La you’d likely see values increase 15 to 20% overnight. It’s just that simple.
Paul Blackburn is an Illinois licensed real estate broker and Realtor with @properties in Chicago. He can be reached anytime via e-mail at Paul@PKBlackburn.com