Troy Steele slashed his daily commute to four minutes from two hours when he bought a downtown Chicago condominium last month blocks from his job trading soybean futures. He says his new home may turn out to be his best trade.
Steele reckons the two-bedroom unit he bought for $300,000 in a rehabilitated warehouse on South Michigan Avenue will soar in value, given demand for residential space.
“We bought it for the upside potential — and the convenience,” says Steele, 28, a LaSalle Futures Group Inc. broker who formerly lived in Naperville.
Traders, attorneys and other professionals boosted downtown Chicago’s home-ownership rate to 41 percent, the highest of major U.S. downtowns, a study released last month by the Washington-based Brookings Institution shows.
Chicago gained its advantage in the 1800s as stockyards moved from downtown and were replaced with warehouses suitable for future rehabbing — instead of the factories that filled city centers like Detroit.
Surging demand for high-rise condominiums, townhouses and renovated industrial structures in Chicago in the last few years has triggered a frenzy of building by developers such as Cleveland-based Forest City Enterprises Inc., the largest publicly traded U.S. commercial real estate company, says Constance Buscemi, a spokeswoman for the city’s Department of Planning and Development.
“Downtown 20 years ago was a place you went to go to the doctor and then you went home,” Buscemi says. “Now downtown is a much more vibrant place with museums, eateries, a thriving theater district.”
Chicago’s downtown home ownership is rising faster in this decade than in the 1990s, and the area’s population will more than double to 165,000 by 2010 from 73,000 in 2000, estimates Ron DeVries, vice president of Appraisal Research Counselors, a Chicago-based real estate appraiser. He says the estimate takes into account any slowing in housing demand in coming years.
In Chicago, 18,181 of the downtown’s 44,638 housing units were owned rather than rented as of 2000, according to the Brookings Institution study, which analyzed the most recent Census Bureau data from 45 cities.
Other cities with high downtown home ownership rates include Denver; Austin, Texas; and Miami.
Cincinnati had the lowest rate, with just 15 of its 1,512 downtown housing units owner-occupied, or 1 percent.
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In the five years since the 2000 census, Chicago and U.S. homeowners have been relocating to downtown areas, says the study’s author, Eugenie Birch, who teaches city planning at the University of Pennsylvania’s Penn Institute for Urban Research in Philadelphia.
“The impetus for residential living has continued and is broadening,” Birch says.
Most of the increase in downtown living results from buyers eliminating long commutes, she says.
Downtown home ownership across the U.S. doubled to 22 percent between 1970 and 2000, according to the Brookings Institution study. Chicago’s downtown population grew 39 percent in the 1990s, the fastest in the U.S., even as the overall population of the city declined 13 percent, the analysis shows.
Not everyone is thrilled with the surge in Chicago’s downtown home ownership. Landlords have been converting properties to condos because sale prices have risen faster than rents, forcing low-income renters to pull up stakes, says Rob Breymaier, president of the Chicago Area Fair Housing Alliance, a group of 30 fair-housing associations.
Most of those priced out of their neighborhoods have been black or Hispanic, he says.
“The condo boom has had the effect of gentrifying areas that traditionally were places where lower-income families could afford the rent,” Breymaier says. “There’s been a displacement effect and we find that the displacement has a racial component.”
Even so, new buyers abound.
Bill Adams, a colleague of Steele’s who buys and sells coal, fertilizer and crude oil for manufacturers in China, India and the U.S., visited three downtown condos the weekend after the Thanksgiving holiday.
Adams and his wife want to sell their two-story brownstone in the Bucktown neighborhood and move closer to work.
“I want to be in the thick of it,” says Adams, 34. “The other consideration is that I can get another hour of sleep if I’m living downtown that I’d otherwise spend in my car.”