Condo owners at Trump International Chicago Tower & Hotel have long known that luxury downtown apartments in a tower with any other name sell at higher prices. Now, with the building’s namesake developer out of office, they’re seeing signs that pricing may finally have hit bottom.
Average resale prices at the Trump tower have increased about 2 percent this year, to $579 per square foot, said Gail Lissner, managing director at Integra Realty, an appraisal firm. Since the tower opened in 2009, prices are down about 30 percent, while prices in 18 other downtown Chicago high-rise condo buildings have slid an average of about 6 percent in the same period, she said.
But the small recovery is kindling hope among some owners that the ex-president’s exit from the White House will mean better prices if they hang on. As of the end of July, there were 52 active properties at the Trump tower, some of which are pending, according to the multiple listing service. That represents roughly 11 percent of the tower’s 486 units. None is owned by the Trump Organization.
Consider 68B, a 923-square-foot one-bedroom, 1.5-bath unit that went on the market in April 2018 for $740,000. Since then, the price has dropped twice and the owner has removed and replaced the listing twice. It listed in mid-May at $595,000, a 21 percent discount compared to the 2018 listing. Now the owner is looking to exchange it for another, bigger condo in the same building, according to his broker, Jeanne Keating at @properties.
“Investors are looking for a steal — and we’re just not in the position that we need to sell,’’ Keating said. “Some people are and will sell at a rock-bottom price. We’re negotiable, but we’re not going to give it away.”
Scarlet letters
“I know people who will not buy in that building because his name is on it,” Keating said. “People are out there who are saying, ’I wouldn’t walk into that building.’ People’s feelings are what’s driving investments at Trump International. Trump Tower is one of the best-built buildings downtown and one of the best to buy in if you can get past your feelings.”
When the tower opened, Chicago’s luxury condo market was picking up steam with new building openings and others under construction.
“Things started to teeter in 2015 when he became a legitimate candidate” for president, said Phil Skowron, a broker at @properties. “In the years leading up to that, the market was hotter than ever.” Then, as the rest of the Chicago condo market continued to rise, prices at the Trump property declined steadily. Controversy over the Trump name peaked — in Chicago and elsewhere — after Trump supporters stormed the U.S. Capitol on Jan. 6.
Cushman & Wakefield, which handled retail leasing at Trump International, said in January that “it would no longer do business with the Trump Organization.”
JLL, whose listing agreement to sell the Trump hotel in Washington, D.C., expired, also said it would stop doing business with the firm.
The 70,000-square-foot retail piece, once touted as an extension of Michigan Avenue’s Magnificent Mile, has been deemed Chicago’s biggest retail failure.
Chicago Alderman Brendan Reilly has tried for years, most recently with Alderman Gilbert Villegas, to have the 3,000-square- foot Trump sign facing the Chicago River removed from the building.
“No one likes that sign,” Reilly said. “And the folks that made it possible are no longer in office,” he said, referring to former Mayor Richard M. Daley and former Alderman Burton Natarus.
And the controversies continue. Cook County is suing to block a $1.03 million tax refund that the Illinois Property Tax Appeal Board said the former president is owed for overpaying on a 2011 tax bill, according to the Chicago Sun-Times.
Some Chicago brokers see a sale as the best solution for the condo tower and hotel. The St. Regis Chicago, star architect Jeanne Gang’s undulated trio of gleaming blocks that rises 101 stories at the banks of the river, saw an uptick in condo sales after Magellan Development announced the high-end hotel as its partner. The hotel opened in June, and tenants are just beginning to move in.
“Chicago has always been about the new kid on the block,” said Chezi Rafaeli, a Coldwell Banker broker who has been selling units at the Trump property since 2004, long before construction was completed and it became habitable in 2009. “It’s hard to compare a 10-year-old building to a brand-new building. Some people are optimistic he’ll sell the building and new blood will come in. The main question is, ‘Is Trump willing to sell?’”
No, said Eric Trump, executive vice president of the Trump Organization.
“We have no interest in selling the building,” Trump said. “It’s by far the best building and hotel in the city.” He declined to comment further.
Setting aside the name, Trump International is a high-quality building in a desirable location, equidistant from Michigan Avenue’s shopping and entertainment, the riverwalk and Lake Michigan. It includes restaurants, a spa and fitness center and a bar that commands a view of the river.
On a recent evening, it was relatively quiet at Terrace 16, the rooftop lounge and adjacent bar that has some of the best views of the Wrigley tower clock, the Chicago River and Lake Michigan. The roped-off area reserved for condo owners was empty except for an occasional drifter.
‘Humongous value’
“People who are buying in this building are mostly excited about buying a place in a great urban city with gorgeous views of the river, Lake Michigan and Millennium Park at a humongous value,” said Rafaeli.
For now, the freefall in condo prices may be ending, but it’s not clear yet when a turnaround will take place or how big it will be.
“I think we’ve hit rock bottom,” Skowron said, looking less at the handful of transactions at the tower — seven — so far this year than at the growing requests for showings, up 200 percent. “The decision-making that was happening with clientele there over the last five years seems to have changed.”
One two-bedroom, 2.5-bathroom unit with “breathtaking views of the lake and river,” according to the listing, closed in March with a 19 percent haircut. Another similar but larger unit, though without the same views, also closed in March at a 10 percent price cut from the original list price.
Time heals
“Their numbers aren’t going up yet, but we will start to see that as time goes on,” Skowron said. “Time heals all wounds.”
The hotel units are a different story. They’re sold separately from the condos, and their values rise and fall in tandem with the hotel industry overall. When the hotel business is humming along with strong business and leisure travel, so too should the fortunes of the hotel units.
“Owning a hotel unit is like owning a business,” said Coldwell Banker’s Rafaeli. “If the hotel does not make money, you, as a hotel owner, don’t make money. Why would anyone pay you top dollar for a hotel room unit that basically gives you no income?”
The Trump Organization owns 56 percent of the hotel rooms, accounting for more than 60 percent of the total square footage of the 339 guest rooms.
As of the end of June, the hotel occupancy rate in the city’s core business district stood at an anemic 42 percent, according to STR, the hotel tracking service, far below the 2019 benchmark of 88 percent.
“The real wild card with upper-end and luxury is groups — that drives the demand,” said Brian Tkac, Chicago-based hospitality analyst for CoStar Group, STR’s parent company. “Upper luxury is lagging this year.”
Although the hotel will likely continue to struggle, the property may be at a turning point, said Lissner, the Integra appraiser.
“The horizon looks very good for Trump,” she said. “They got through the hardest part, the presidency.’’