Chicago—This summer, workers will finish nearly 1,000 loft condos on this city’s South Side more than three years ahead of schedule.
Work started at South Water Market, once the largest wholesale produce market in the city, in the summer of 2003. At first, the Enterprise Cos., a local developer, planned to renovate each of the market’s six buildings one at a time. This plan would finish the complex, renamed University Commons because of its proximity to the campus of the University of Illinois at Chicago, by 2010.
Instead, when Enterprise sold the 140 lofts in the first building in just 60 days, the developer decided to begin selling the second building immediately, while demand was strong, instead of waiting to finish work on phase one.
“It was more important to continue the momentum,” remembered Ron Shipka, founder of Enterprise. The strategy saved marketing dollars because Enterprise didn’t have to restart the sales process. But extra construction expenses offset these savings: Eventually the developer doubled its force of construction workers to keep construction going on as many as three of the landmark, low-rise buildings at once.
The rehabilitation should be done this summer, and that’s just in time, according to local apartment market experts at Appraisal Research, Inc. A flood of new condominiums is about to hit the softening for-sale housing market here. To move the last 60 unsold condos at University Commons faster, Enterprise offers free parking spaces worth $30,000 apiece to hesitant buyers, along with discounted closing costs of up to $4,000.
These giveaways should help sell the last of the 930 new lofts at the old Chicago landmark, which once distributed all of the produce that came into Chicago, Shipka said.
Enterprise bought the complex in 2003 for roughly $35 million, beating out bidders that planned to tear the building down. The old structures take up more of their 16-acre site than the current zoning rules would allow. Rehabbing these buildings allowed Enterprise to squeeze nearly 60 units per acre into buildings with only four floors of residential space.
Enterprise spent a total of roughly $200 million to develop the 900,000-square-foot complex, or about $222 per square foot. That allowed the developer to charge prices ranging between $265 and $310 per square foot, nearly half the price of the most expensive new condos in this city. The city also gave the historic rehab a property tax abatement that Enterprise passed on to property buyers.
One-bedroom lofts sell for $240,000 on average, up from $190,000 when sales began three years ago. A two-bedroom loft with a roof deck now sells for $400,000, up from $375,000.
Enterprise financed the deal with a package of seven loans of roughly $30 million apiece provided by Ohio Savings Bank, based in Cleveland, including an acquisition loan and six separate construction loans. At the project’s busiest point, with multiple phases under construction at once, Enterprise owed the bank about $100 million.