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CHICAGO-Suburban multifamily property sales are on track to break the record set in 2005, says Appraisal Research Counselors. Vice presidents Ron De Vries and Gail L. Lissner report first-quarter sales totaled $386.7 million, more than 40% of last year's record $898.1 million.
A normal year, according to the Appraisal Research Counselors database, is about $450 million in sales volume. While 2003 volume cracked $500 million, nearly $800 million in deals closed in 2004.
Once again, the market is being moved by a multifamily REIT repositioning its portfolio. Archstone was a major seller in 2005, but it is Equity Residential's turn this year, with its $263 million in sales accounting for more than half of the first-quarter volume. Condominium converters bought two of the five properties, Appraisal Research Counselors reports, with pension funds buying the other three.
While the firm sees conversion activity evaporating Downtown, it is alive and well in the suburbs, Appraisal Research Counselors reports. "The typical profile has been a B or C quality building in need of some minor renovations with the Northwest Cook submarket dominating the activity," De Vries and Lissner say in their "Apartment and Condo Conversion Benchmark Report" for the suburbs. "Another 1,800 conversion units in Northwest Cook are likely to announce in May or June 2006."
Specifically, the sweet spot for converters appears to be the lower end of the market. "There appears to be an insatiable appetite for entry-level condos in the Northwest Cook submarket," De Vries and Lissner say. "Price points in the $120,000 or less range for one bedrooms, and $150,000 range for two bedrooms continue to sell out at an incredible pace."
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