Trotter, seen a special on Trump's new place in Chicago, looks great and sales there have remained steady. Are you familiar with that project? The lobby is amazing, limestone walls, looks great.
I'm very familiar with it. Trump is very lucky the development has been "pre-sold"
(buyers signed contracts and put down 10-15% deposit over the past 1.5 years) and will
not be delivering the units for about another 18 months. By that time the real estate
market should be strong again.
I looked at possibly buying there when they first opened up but decided to pass for
5 main reasons:
1) Trump was asking $1000/sq. foot. Comparable units in the area (I'm talking
kick ass high rise buildings with BEAUTIFUL
units) were $375-$500/sq. foot.
As an example, Trump wanted 1,000,000 for a 1,000 sq. foot unit condo that would
be $500,000 in a comparable high rise in a better location 1 mile away and on the lake.
He tried to bring New York prices to Chicago and has sold it initially but I feel MANY of
his contracts will not close when the buyers attempt to get financing 1 year from now
due to appraised value issues, etc.
2) The actual location of this building is NOT
prime. It's not on the lake and not in the
"Gold Coast" area. Certainly it's a nice location but not the most desireable in the City
by any means. It's where the old "Chicago Sun-Times newspaper" building was.
3) Trump has a reputation for "killing" contracts after the development is underway
and he gets the construction financing in place. This is EXACTLY what he did--even
to his own business associates who signed contracts. He told them they were cancelled and they could still buy the units if they paid thousands more.
4) He was requiring a total of 15% earnest money 3 years prior to the units being
delivered. No developer in the City has ever done that
. Usually it's 5% and
more recently 10%. I'm not tying up $150,000 for 3 years in a development when
I could be buying horses
5) During the 1st year of delivery (late 2008, early 2009) 50% of the units in the building
will be for resale at the SAME time by investors who got in early and not need to "flip" the
units and get their money out. THAT is the time to buy since REALITY will set in for these
investors. I guarantee you that many will be delighted to break even and just get their
money back. With so many units on the market (resale) at the same time it will be a
buyers market for those who want into the building. I'm not one of them, however.
The original hoopla was similar (although on a MUCH bigger scale) to the anticipation
of the Apple I-phone. See what happened after it came out for a few months?
33% price cut and nobody hardly even talking about it anymore.
It will be a beautiful building in the City, Trump will cut the ribbon at a grand ceremony,
Bill Rancic (the 1st apprentice) will be there with Mayor Daley, etc. but it will just
be another nice looking building in the City--NO Way
is it worth 1000 per sq. foot.
Also, wait until the people who bought the "hotel/condominiums" to rent out find out about the
REAL $$ they will receive for a nights stay in their unit. After the 1st several months of the
"new" factor I would be shocked if the "hotel" room rates are more than $125-$150 per night.
The sale literature talks about them receiving $275-$300/night to rent out their rooms. That is
ridiculous. People are paying (supposedly) $650,000 for a "hotel/condominium" unit
of 600 sq. feet and these are a dime a dozen in Chicago in much better locations.