Trump Tower penthouse sale may signal Chicago luxury condo market’s peak

War, inflation, interest rates, pandemic recovery will drive high-end market

From left (highlighted buildings): St. Regis Chicago, One Bennett Park, Chicago's Trump International Hotel & Tower (Alvesgaspar, CC BY-SA 4.0 - via Wikimedia Commons, St. Regis Chicago, LoopNet, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
From left (highlighted buildings): St. Regis Chicago, One Bennett Park, Chicago's Trump International Hotel & Tower (Alvesgaspar, CC BY-SA 4.0 - via Wikimedia Commons, St. Regis Chicago, LoopNet, iStock/Photo Illustration by Steven Dilakian for The Real Deal)

Some brokers are crowing about how the $20 million sale of a penthouse at Trump Tower in Chicago is a sign that buyers don’t care about rising rates, falling stocks, or the prospect of a widening war. The reality is a bit more complicated: Trump Tower is an anomaly.

The 14,260-square-foot full-floor, five-bedroom 89th-floor condo sold March 7, about six months after Sanjay Shay, CEO of Hoffman Estates-based software maker Vistex, listed the unit for $30 million. Still, the $20 million sale was the second-priciest ever in Chicago, after the 2017 purchase by Citadel Chief Executive Officer Ken Griffin of four condos for more than $58 million in the building at 9 West Walton Street on the Gold Coast in 2017.

The deal was taken as a sign by some that the city’s 2021 luxury condo boom – driven by a stock rally and the desire for more space in the work-from-home pandemic era – would continue and even accelerate. Then came inflation concerns, the prospect of higher rates, Russia’s invasion of Ukraine and sanctions, and a much more volatile stock market.

“I did get some buyers saying a decent amount of money they had went down because of what happened in the stock market,” said Giancarlo Chavez, an agent for Keller Williams ONE Chicago, who closed an $8.42 million deal for a four-bedroom 75th-floor condo at the St. Regis Chicago last year. “If the stocks keep going down, they [buyers] may look at their equity and reconsider their purchase.”

Five condos in the city of Chicago priced at $4 million and more changed hands as of March 9, compared with just two during the same period last year, according to the Multiple Listing Service. In all of 2021, 42 condos sold for more than $4 million, with an $11.25 million sale of an 8,800-square-foot 26th-floor penthouse unit at 840 North Lake Shore Drive setting the highest-priced condo sale last year.

“I think we’ll see also a lot of turnarounds in new buildings,’’ said Coldwell Banker’s Chezi Rafaeli, the broker on the Trump Tower penthouse, who sold 10 units priced between $4 million and $20 million in 2021. “People are trying to update to newer, larger units, newer buildings.”

For now, potential buyers are watching the economic fallout from the war. On March 7, the S&P 500 fell about 3 percent, its most dramatic daily decline since October 2020 as investors feared higher energy prices would slow the economy and spark higher inflation, leading the Federal Reserve to raise benchmark interest rates.

All of those factors apply to Trump Tower, with one addition: The name.

Built in 2009, the property includes retail, parking, a 339-room hotel, and condos. The building has a 20.6-foot tall “TRUMP” sign overlooking the Chicago River.

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The Trump brand, once considered by some a marker of high-end products and real estate, has been irrevocably tied with his divisive presidency. That brand is further complicated in Chicago, an overwhelmingly Democratic city that Trump regularly denounced as president.

“Obviously the building was impacted by the presidency,” said Gail Lissner, managing director at Integra Realty Resources. “It became a little bit more of a building where people definitely liked it or had some issue with the name. It probably had a smaller pool of potential buyers due to the controversy around him.”

Lissner said the property has tremendous upsides in its location, design, and views. The property was mirroring the market as it rose, then over the last five years, there was a weakening in prices at Trump Tower that was more significant than the rest of the market.

Lissner compiled the average sales price of condos within Chicago’s Trump Tower from MRED, the Chicago area’s multiple listing service. In the first and second quarters of 2021, the average sale price per square foot was $579. That jumped to $662 in the third and fourth quarters.

“It was more heavily impacted than other buildings, but condo prices, in general, have not been real robust in the Chicago Downtown market.”

The buyer of the $20 million condo wasn’t disclosed, so it remains unknown whether there was a political motivation to the purchase.

After the Trump Tower condo sale, the 7,500-square-foot full-floor penthouse unit on the 65th floor at One Bennett Park in Streeterville is now the highest-priced condo on the market at just over $15 million.

A 47-story condo tower, known as Cirrus Condominiums, in Lakeshore East is expected to deliver 350 units with prices ranging from $400,000 to $5 million in the first quarter. Luxury condo developments are set to expand to Fulton Market from the Streeterville and Lakeshore East neighborhoods, where One Bennett Park and St. Regis are located. Dubbed Momad, four units for the 10-story, 25-unit condo at 1010 West Madison Street, already went under contract at just under $6 million in November, even before breaking ground.