A 35-story South Loop high-rise that stood completely vacant for 18 months will start renting out all its 333 units — units that were originally supposed to be sold as condos.

ST Residential, the property owner of the Lexington Park building at 2138 S. Indiana Ave., announced the decision last week. “We’ve been taking a look at the rental market, which has been improving,” said Peter Marino, a spokesman for ST. “[Renting] is a greater asset in the short term to selling.”

Marino added they would lease the units, and be able to provide rent estimates, once a property manager has been selected.

By leasing, ST may be making the best out of what remains a weak housing market and bringing needed occupants to a neighborhood curiosity.

“I think it was a good decision,” says Gail Lissner, vice-president of Appraisal Research Counselors. “We are seeing a much stronger demand for rental product currently. As the condo market has weakened, the rental market has strengthened.”

“Occupancy levels are strong throughout the area,” Lissner added. “And there is no reason this building will be any different.”

Lexington now joins a handful of high-rises like Astoria Tower at 8 E. Ninth St. and a 14-story building at 1555 S. Wabash Ave. in deciding to rent units that were initially to be sold.

No Chicago neighborhood was built up faster during the housing bubble than the South Loop. The bubble’s burst in 2007 has resulted in a wave of foreclosures as well as units in brand new buildings that were never occupied in the first place.

South Loop Ald. Bob Fioretti (2nd) said the largely vacant high-rises have “significantly impacted the ability of small businesses to survive around those properties” and have also had a harmful effect on safety and security.

The Lexington building sits on the corner of Cermak and Indiana avenues in a spread-out part of the South Loop. Across the street on Cermak is a vacant lot and kitty-corner is the western entrance to McCormick Place. Across the street on Indiana Avenue is a Lakeside Bank branch.

Construction on the building was completed in the fall of 2009, three years after Limerick, Ireland-based Chieftain Group Lt. borrowed $84 million from Corus Bank in Chicago. But in the start of the recession, Chieftain struggled to identify buyers and could not pay back the loan. Meanwhile, the Federal Deposit Insurance Corporation took over Corus in September 2009 and started a partnership with private investors that ST spearheads.

Besides the housing bust, ST has also had to contend with a flood in 2009 that damaged units.

Eve Kronen, a realtor at Coldwell Bankers, agreed with Lissner that ST made the right decision, and that with a reasonable rental scale Lexington should attract tenants.

What remains to be seen is if and when ST tries to make Lexington a condo complex. “We’ll keep the door open if the sales market improves,” Marino said.

Lissner predicted the Lexington units would be sold eventually. “We will see those units as part of the condo conversion pool,” she said. “This may happen in the next five years, but it’s not going to be in the next 12 months.”

Kronen also said she was “upbeat” about the market turning around.

However, other than the fact that new housing supply has mostly stopped being constructed, there are few tangible signs that the housing market is on the firm road to recovery. The National Association of Realtors announced Monday that home sales declined nationally 9.6 percent — and in Chicago 8.8 percent — from February 2009 to February 2010.

“A lot of the [high-rise buildings] have the impression that they will move from rentals to condos,” Fioretti said. “I don’t know if it’s a smart strategy, but I know it’s their strategy.”