Flatter Prices Don't Stop All Land Sales

CHICAGO-A 13,414-sf parcel at 1611 S. Wabash Ave. in the hot South Loop area traded at $78.28 per sf recently, according to tax records. The $1.05-million transaction actually involved two separate land deals – originally an 8,700-sf site and then a second site when it was determined more land was needed to make a 60-plus-unit condominium project feasible, says Millennium Properties Inc. president Daniel J. Hyman, who brokered the deal.

While that deal involved a parcel surrounded by new development, Hyman also is marketing a larger site at the corner of Madison and Morgan streets on the Near West Side, which has seen rapid redevelopment. That 20,000-sf site is being offered at $2.5 million — $125 per sf.

Hyman cautions that in this market, the yardstick is not price per sf, but rather price per unit – specifically the number of multifamily units a developer can build. In the city, that depends on the underlying zoning, which dictate floor area ratios that drive the amount of units that can be built. For example, the 1611 S. Wabash Ave. site had a FAR of 5.0, meaning a 67,000-sf structure could be built, or 67 1,000-sf units.

Land prices are down somewhat, Hyman says. “There’s a lot of product,” he adds. “Some projects have been scuttled.”

However, the picture can vary across the market. “For every bad story out there, there’s also a good story,” he says. Other good news here is lenders are loaning money for land acquisition; underwriting gets a bit tougher when a proposed projects construction costs enter the picture, Hyman suggests.