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Vetro, 611 S. Wells St.
File/2009

Sales on new downtown condos crawled out of the gate in the first three months of 2009, according to a recent market study. But while the potential for closing a deal may appear dismal these days, some real estate agents are hoping the number forecast a buyer’s market in the coming months.

The report, conducted by Appraisal Research Counselors, a Chicago-based assessment firm, says that, of the more than 3,800 units under construction or complete in the Loop, only 55 were under contract from January to the beginning of April.

The report examines condo buildings with 25 or more units in the area bordered roughly by North Ave, Ashland Ave, Cermak Road and Lake Michigan.

Gail Lissner, vice president of Appraisal Research, said the numbers, although considerably below average, need to be taken with a grain of salt.

“We did see a record low in the first quarter, but there has been a real uptick in the last few months,” she said.

Lissner explained that the 55-unit figure is a net count, meaning that canceled agreements were deducted from the final tally, leaving only a handful of stable contracts outweighing the abandoned deals.

The first quarter report, in a healthier market, can sometimes record as many as 1000 new units under contract, she said.

Realtor Tom Feddor said the canceled deals can be sourced to loan-wary lenders.

“The banks just aren’t taking the risk,” said Feddor, who specializes in new and re-sale properties in the South Loop and Printers Row. “You’d have to put down 25 to 30 percent to get a loan these days. That’s why only 55 units sold.”

Feddor said the condo market is already showing signs of recovery, citing a jump in his own sales in April. He’s expecting the same this month. He thanked an ever-dropping federal interest rate and an $8,000 federal tax credit at the disposal of first-time home buyers for the upturn.

While buyers get their bearings, selling strategies are being rethought. And in a downtown market stacked with empty units ready for offers, it appears that concessions are the name of the game.

“It’s not just about offering a free parking spot and a flat screen TV anymore,” said Ted Argiris, a sales associate at Koenig & Strey GMAC. “Buyers are getting a big price reduction as well.”

Argiris, who works out of the firm’s Gold Coast office, said a slowdown in lending has caused a considerable re-pricing in most tiers.

According to the Appraisal report, prices for new units were cut back as much as 20 percent in some markets in the Loop.

A case in point was the auction for the 233-unit Vetro development at 611 S. Wells in the South Loop.

The auction, held in early March, saw 45 condos scooped up in two hours, with prices on some units slashed as much as 27 percent.

“That auction was a representation of what the prices should be,” said Millie Rosenbloom, head of Baird & Warner’s sales team for Vetro. “The developer was looking for velocity, and the units sold.”

Rosenbloom expects the building’s 20 remaining units to sell out, at rates closer to the original asking price, by the end of the summer.

Lissner said that, while sellers might recover value on their condos sometime in the near future, one thing is certain: the party is over for new development.

“This is the end of downtown expansion, at least for the next few years,” she said. “Demand has slowed up, and now it’s time for the inventory to be absorbed.”

Appraisal Research Counselors’ second quarter benchmark report is scheduled for release in August.

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