Neighborhood Update – South Loop

South Loop has seen vast amounts of development over the past couple years.  That coupled with the slowing of condo sales as a whole has resulted in the South Loop functioning as a paradigm of over development and unsold inventory.

This does not denote problems with the developments themselves, but simply that the base of buyers has not been strong enough or consistent enough to keep pace with the quickly accumulating inventory.  Quite to the contrary, the South Loop is home to some of the most innovative developments in the entire city and moreover, the most affordable in the downtown area.  I’ll get into more detail there in a moment.  But for now, we’ll get to the numbers.

 Absorption rate indicates how long it would take for the current inventory in an area to be purchased if the rate of consumption continued at a steady pace.  In order to determine that pace I’ll use the number of closed units in the last thirty days.

Hence, there were 3 closings of  condos in the South Loop over the last 30 days. (ranging from $165,000 – $997,500)

There are 357 units currently on the market (ranging from $149,500- $4,250,000)

Therefore, it would take just under ten years to absorb the current inventory.   While that appears to be a dire circumstance, I think here it is crucial to discuss a couple other figures in order to place things in perspective.

Tracking sales in the South Loop over the last three months the following is true.

68 units closed over the last three months 

25 units closed over the last two months

3 units closed over the last month

These figures are indicative of the slow market as well as the general trend of slowing sales for this time of year.  If absorption rate is calculated based on the last three months instead of just the past month it drops drastically to 1.31 years of inventory.

 I prefer to use solely the month by month absorption rate so that readers can track the market in a given area over time, however, when a single month becomes this skewed I feel it is important to offer a longer range perspective as well.

Meaning for Sellers:

If you can wait to sell, do so.  There is just too much competition and much of it is new, priced well, and further bolstered by developer incentives.  If you must sell be sure your Realtor is familiar with the area and that you are willing to price appropriately.  The longer your home sits on the market the tougher it becomes to get showings as it slips into the abundance of current and coming inventory.

Meaning for Buyers:

As evidenced by the figures above you have a wealth of options available to you at every price point.  Perfect time to look for a first purchase, a second home for city sabbaticals, or an investment for a child attending college in or near the city.

As for buildings that stood out during my previewing this week, I chose to highlight two.

1. Library Tower 511 S. Plymouth – Expected delivery in summer 2008.  Units are priced at about $340 per sq ft making it one of the most affordable in the downtown area.  Loft style building with much larger units than generally found in larger developments.  You can find more details at www.librarytower.com.

2. The Lofts at Roosevelt Collection – Expected delivery in 2009.  One of the most innovative concepts I have seen for a development.  The goal is in essence to create a secondary city center for the south loop including 1.2 million sq ft of retail space figure-headed by a 16 screen movie theater.  Additionally, there will be two 170 unit residential buildings.  Each unit has outdoor space and the buildings will be separated by green space and a boulevard contained by, but stretching the length of the development.  You can find more details at www.loftsRC.com

Lastly, if 2008 and 2009 delivery is too long to wait there are a couple other developments available for immediate delivery and certainly worth a look.

1. 1720 S. Michigan – www.1720michigan.com

2. Vision on State – www.visiononstate.com

If you have further questions about any of the properties mentioned here or would like to schedule a showing please feel free to contact me.  If you would like to see a neighborhood update for another area leave a comment mentioning that neighborhood.  If I receive enough requests I’ll do the research and post an update for that area.

Best,

JLC