Compass Chicago founding broker Jeff Lowe has been the top-selling residential broker in the city for close to a decade.
Lowe, who launched his real estate career 20 years ago, now specializes in new construction development, single-family homes and condominium resales. He said a recent trend in the market has been the rise of small condo building construction. That comes amid the wild success of ultra-luxury No. 9 Walton condo tower in the Gold Coast, which may have given developers unrealistic expectations about what the market can absorb, he said.
On the rental side, Lowe said there could be a potential oversupply in the downtown market, where developers are building towers at a “staggering” pace. Those same developers may be leaving open the possibility of converting those rental towers into condos, he said. That would signal a shift in the Chicago market, which has in recent years seen a jump in condo deconversions.
Lowe focuses on Lincoln Park, Lakeview and Bucktown neighborhoods as head of Lowe Group. He spoke to The Real Deal as Compass Chicago enters its third year in the local market. In its first year, Compass handled over $1.4 billion in total sales, making it the sixth biggest brokerage in Cook County by sales volume, according to a TRD analysis. The interview has been edited and condensed for clarity.
What’s happening in Chicago’s residential market?
We’re actually busier than we were in September, which is usually a busier time of year, so it’s kind of unusual that things are picking up later in the season. It’s been a sellers’ market for a really long time and I think that it’s kind of evening out now. In some parts of the market, it’s actually turning more to a buyers’ market. It’s a very interesting dynamic as markets start to shift that way. We sell enough homes fortunately that we see those trends. If somebody really wants to sell their house, we kind of have to adapt to where the trends are right now.
Why is November expect to be busier than September?
It’s not expected to be, it just surprisingly is. I don’t necessarily judge based upon the number of homes we’re selling, although that’s a good indicator. I just judge it based upon the number of showings we have on our homes, and we have more traffic on our listings with showings than we did 45 or 60 days ago.
Do you think anything in particular is driving that activity?
I think a lot of people in August and September just kind of sat on the sidelines when it’s usually a little bit of a busier time. We typically do about 60 percent of our business from February to June, so that’s always our busiest time of year. The biggest leasing turnover date in Chicago is always May 1, so if somebody’s renting and they want to buy their first home, then they typically start looking in January or February so they can find a house and close on it in April before their lease is up.
What trends are you seeing in new construction developments?
I think from a new development perspective, we tend to sell a lot of single-family and smaller boutique buildings. We specialize in new condo developments, anywhere from three to say 30 units. That market continues to be strong. But we do tend to focus on neighborhoods that don’t have a lot of swings in them.
Is there enough demand for another No. 9 Walton condo tower?
I think within reason, from a pricing perspective, there is a demand for No. 9 Walton. Although I will also say that I think No. 9 Walton kind of hurt other parts of the market when it went up because a whole bunch of really expensive homes sold there, and it kind of pulled people from some of the other markets. The co-op market, for instance, has been very challenging in the last couple of years. Huge, oversized single-family homes in the Gold Coast have been very challenging. I think a lot of that is No. 9 Walton was able to capture some of those buyers and move them into that building instead. It’s going to be interesting to see what happens in that super high-end luxury market. You referenced No. 9 Walton previously and between that developer’s next project, the Tribune development, the Vista, One Bennett Place, there are a lot of really high-end luxury buildings coming over the next two years. So it’ll be interesting to see if that market can absorb all of that inventory.
What’s happening in the condo market right now?
We’re in the fall market and right now it feels like buyers are most interested in value. Because we’re kind of entering the off-season, people want to feel like they’re buying at a fair price. I also think buyers want things turnkey, too. I don’t think that they want to do a lot of work.
How is the rental market doing?
I think the big oversupply you might see is in the rental buildings being built because the number of towers being built downtown as rental is pretty staggering. But I also think some of the buildings that are being built to be rental right now I think some of those developers are also setting them up so that they could condo them instead if they chose to, should that market soften up. I think at some point you’re going to see an oversupply of all of these big high-end apartment buildings being built and some of those developers instead of renting them will just sell them as individual condos.
Are tax reassessments good for the luxury market?
No, they’re bad. I mean, when you see reassessments, none of the taxes right now are going down. That’s one of the biggest negative drags on the high-end luxury market right now. Not only the fact that taxes are going up, but the concern of how much they’re going to go up over the next couple years as the city and the state try to plug holes in their budgets. I think that going after people in the luxury market is where they’re really going to go and where you’ll really see a lot of it.
How has Chicago’s residential market changed since you started in 1998?
Lots has changed. We used to run back to the office at all hours of the day to fax offers. Gosh, I think I had a Palm Pilot when I first started in the business.The world has gotten much, much, much easier to do business from a broker perspective. We use drone footage for some of our more interesting listings now. A lot more video and not just photography. I think the pace of the real estate business and the pace of selling homes has changed a great deal.