Notes from July 19th meeting
John Thompson’s real estate survey of Chicago neighborhoods “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.” A little literary perspective on all things in life. This is an interesting time for real estate transactions. There hasn‟t been an opportunity in real estate in many years to equal the opportunity today. In the great depression properties were lost in astounding numbers. However, somebody bought them at bankruptcy prices. The point is that this market is not a “bad” market. It just is what it is. Choices for realizing this plan 1. Buy into new construction that matches what you want as a group. 2. Buy up existing acceptable units and take the building over or aggregate several properties into one. 3. Buy a building and convert. 4. Buy vacant land and create exactly what you want. 5. Buy building, demolish and rebuild. I‟m partial to doing it all myself from the conception through move-in. However, sellers are in a tight situation. Now, especially when there are several units to be bought, is the time to negotiate a good deal on what a seller desperately needs to move. My determining factors 1. Although Chicago is known as a city where a carefully placed “inducement” can get you a zoning change or variance, that is not really true any more. Properties that are not zoned appropriately will have to be very attractive to consider the efforts of getting a rezoning. Success is NOT what it was historically in this city. The city has actually developed a comprehensive zoning policy; the greatest impact to us is the creation of PMD‟s. Planned manufacturing districts that are SPECIFICALLY designed to prevent the gentrification of the kinds of spaces some of us want. These corridors cover thousands of great properties – Kinzie corridor from Halsted to Western. The Elston corridor, the Ogden corridor, Goose Isand. It goes on and effectively keeps us out. (Yes, there are buildings that are residential. They were pre-zoning change for the most part or (less likely) can be shown to fit the residential neighborhood. Slide 3 shows a property just down the street from our loft. It has been sitting there over a year. It will likely be there in that condition for a while. The developer did get a zoning change. Somebody noticed and complained. Almost impossibly, the city responded and the building permit was revoked. The city people in the zoning department who were involved (and bribed) are all gone and facing jail time after their criminal cases work their way through the court. And so…more than 50 properties were removed from consideration. 2. Neighborhood safety as well as I could determine by reputation, cop comments, observation, location, history. 3. Direction of change in tone/composition of neighborhood 4. Transportation~this has become for me the critical determinant. Housing stock across the country is down about 12% in the last year. However, close-in, public transportation areas in metro areas are up 8%. That isn‟t going to change unless they make more oil (not pump it, make it). Real estate is incredibly local in terms of value; being in close is key. 5. Your list of must haves from the last meeting. 6. Loft, industrial, vacant with “potential”. 7. Cost and the economy of scale a. 2-3 units I can find all day b. 36 or more units we can find all day
c. we are in a bad place wanting 4-8 units; builldings that would house us are rare or cost prohibitive. d. If nobody else wants it, we might -> like property families won‟t want but we will (backing the el or xway). A note about places I looked. I checked out every single stop on every single el that might be what we wanted. For example, I checked out the pink line through Pilsen to “heart of chicago” at 22 nd and western. Gang activity per beat cops is one of the highest in the city. I‟m not going there. The el, major bus lines, Metra stops all determined where I looked. Photos by slide number (see the images in the file labeled “Properties”) 1. 169 N May (example of what we want to renovate-it sat there and is now being renovated). 2. Problem of conversion today; Kinzie corridor showing the zoning. 3. This is down the street from our loft on Morgan towards Grand. It will NEVER be built as planned. 4. Types of places we can‟t get. Would have been interesting…but for the zoning. It is big enough, has parking, has been industrially renovated. Near Western “close” to the Metra and the Lake street el. 5. Kinzie corridor at western zoning 6. Right on Western ½ block from the Metra…tons of conversion possibilities but for zoning. 7. Elston avenue corridor has the same zoning problem; this shows a for sale property that could have worked. 8. 2446 W Ohio is for sale. It‟s a SFR for $459,000. It‟s a PERFECT location but would be a tear down that could yield 4 units. You can walk to the Metra stop and it‟s only a block from Western and Grand. 9. This is an example of a possibility that would require rezoning. Notice what is across the street on aerial view back on 8. There is a huge residential development, and the block to the east has one side of the street that is all houses. This is on Grand only 1 block from the Metra and 1 block from Western. 10. The south loop is full; all that‟s left is this… 6 units at $900,000 to $1,600,000. Used to belong to Marshall Field. I even stretched south loop to the 22-24th street section between State and Indiana. Lots of great buildings. The city has other plans for that area. 11. So we go to the Orange line/Archer bus choices. Start with a vacant lot on Archer at Loomis. The Archer bus is right there. Bridgeport is to the south. It has I-55 behind it. This is the kind of in-building that might work for a group of like minded people. 12. Proximity isn‟t always really proximity. #1 on this aerial is the orange line stop at Archer and Ashland and #2 is now all built or in the process of being built with 3 unit condos and apts. But you can‟t get to the Orange line. You have to go all the way to the corner where the vacant property is you just saw on the last slide. 13. Back to the Orange line/Archer route. This is most interesting. It is a section of the city that everybody forgot. Just at the bottom of the zoning map is a hole…a quarry where all those city trucks were dumping for private groups. Just to the north is the embankment for I-55. Notice the little section of the property zoned RT3. Chinatown ran out of space and it pushed south, north, west and then jumped west past Bridgeport proper. The result was this little neighborhood. The rest of the two block area is zoned for manufacturing but MUST be changed to fit the new section and the future city park where the quarry will be. There are a half dozen old frame wreck houses scattered. The rest could be a development… 14. This is what it looks like from the air. There aren‟t many areas on the rest of the Orange Line or Archer that fit what you want. So we go south. The most interesting cutting edge choice is wonderfully close to the el. Bronzeville southwest corner. A note about Bronzeville. .. It is properly mostly north and east…away from the now-gone projects and the expressway. However, this is the corner of it. It you‟re African-American, have money and are cognizant of who you are and your “responsibilities” as such, you live in Bronzeville. It is gentrified along color lines. However, the IIT campus has always had an influence, so along Michigan and Prairie white people are tolerated. The extreme corner where I‟m considering has long been a complete inner city experience. That‟s why the police department came there to build their new headquarters on the southwest corner of 35 th and Michigan. (DeLaSalle has GREAT influence and needed “protection”). The Robert Taylor homes were the dominant presence here. 35 th and Indiana is 100% unsafe (There were hookers, and hustlers, they filled the room…know that song?) This is an “edge” area.
15. This property is on 36th and Michigan. It has two vacant lots for sale adjoining it. $149,000 each. Came down from $249,000 so they might be gone. However it‟s an incredible spot. 16. Here‟s the neighborhood. Notice what is and isn‟t there. The el has a major stop at 35 th and State #1 on slide. IIT is right there along with Lewis University and DeLaSalle HS #6. The Robert Taylor homes WERE there #3 and #4. The new Chicago PD headquarter is there #2. De La Salle and Lewis University campus is right there. This is the place…maybe. Politics is all, since #3 is all built up and #4 is vacant waiting for somebody to get rich. The zoning on the east side of State abutting the el tracks is amenable to our needs. There are boarded up properties on State and several for sale properties on Indiana and Michigan. 17. This is how the zoning looks. Note the possibilities on State. 18. There are several properties for sale at 35th and Prairie. One of them is this good possibility. Used to be the Chicago Defender office I believe. 19. Duplicate slide. 20. This used to be the highrise projects of great infamy. 21. Here‟s what may be a problem…politically not racially. 22. One last view of some possibilities at 37th and State. Now we move farther south. There has been a resurgence and a racially homogenous gentrification along 47 th street. There is a Metra stop right there; goes almost to SAIC‟s door. So. Here is an interesting situation. 23 through 27 are a SFR and a set of row houses with the middle two vacant. Maybe we buy all 4. Farther south is the 63rd street stop of the Metra. It is Kenwood and it is „sort of” up and coming. It is JUST far enough south to be out of UC‟s influence and Hyde Parkism. 28. This is what is going up near there. 29. And more. 30. This looks like is it was in distress. Money works here. Pilsen. Land of artists and the future/past. At first glance, no transportation except the Halsted bus…or Metra. Now for my favorite property and the most ambitious. It would require converting this unit and then building behind it with 12 more units to be financially feasible. It would give you the opportunity to build it as you want it but still have the location and conversion look we want. 31. These are various shots of the possible…through 34. Slide 34 shows the area bounded by the Ryan on the west (left), Canal on the right, 16th on the north and 18th on the south. The little slice of land between 16 th and the Metra tracks at the place you can‟t see at the top of the slide is full of new condos for $400,000 and up. 35. So much for the south side. Let‟s go to Milwaukee Avenue. Open your checkbooks. Here‟s the general area on the zoning map. Anything except for the PD and the M sections are available for all residential or (as in B and C, residential above the first floor). There are a few properties for sale – from 3-6 units. 36. This is a build up or tear down. $249,000 and owned by members of the mafia. Note there is a 4 story unit adjacent. To the north are all residential; 80% renovation or tear down and rebuild. 37. This is how it looks across the street. Other neighborhoods. Whatever you‟re thinking, I‟ve looked there. Really. I‟m including in a separate document the tabulation of your desires. Note that some “must haves” are mutually exclusive. I‟d be happy to discuss my research with you in detail. Just call or email. I‟d also be happy to look into any particular property you have seen that you think may be workable.
John Thompson has lived in Chicago his whole life. He is an attorney who specializes in real estate and contract law. He can be reached 708-860-8833 or by email at jthompsonlegal@gmail.com.