Sue Fox, @Properties. Direct 773.816.1788
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The bursting of the real estate bubble sounds more like a balloon slowly deflating in the South Loop. Condo developers badly overbuilt this area, and in the last three years we’ve seen many projects — once hyped with glossy promises of sophisticated urban living — fade into half-occupied shells as prices fell so sharply that many units were converted into rentals.
After failing to find buyers through the usual channels, some developers are now hauling their leftover condos to the auction block. This week, two auctions involving condo developments in the South Loop and Near South Side produced dramatic discounts for buyers, according to Crain’s Chicago Business.
In a 269-unit condo tower at 1400 S. Michigan Ave., known as Michigan Avenue II, 43 units were auctioned off at prices 27% off the previous list price. And at Motor Row, a 51-unit loft conversion project at 2301 S. Michigan Ave., 19 units were sold at a 45% price reduction.
The fire sale comes after a similar auction in March at the Vetro condo project, 31-story tower at 611 S. Wells St. that was built two years ago.
And now, with Chicago’s Olympic bid crushed and Illinois foreclosures and unemployment on the rise, I think it could be many years before the South Loop becomes the trendy destination its backers are hoping for. Lenders on other stalled downtown condo projects may also force developers to hold auctions, clearing out the overbuilt inventory by taking an axe to condo prices.
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