It’s an unusual reversal: investors in Chicago are “deconverting” condominiums into rental units. Several high-profile condominium buildings downtown are marketing their buildings to developers.
Why now? There’s a preference to rent rather than buy among many millennials flooding into hip urban areas. Empty nesters who do not want the hassle of home ownership are eager to live close to Chicago’s many cultural and civic attractions after shedding suburban homes that previously tied them down.
Why not? Developers have crunched the numbers, and they know that condo prices remain below the peak of 2007, even though there has been recovery… yet rental prices have risen over the past seven years.
Deconversions are rare in most places, but Chicago real estate laws make it easier, requiring three-quarters of unit owners to vote in favor. Most of these deconversion processes are led by a group of owners’ negotiating with an investor who wants to buy the building as a rental property. The owners then vote and if approved, the owners divide up the proceeds based on a number of factors; including the size of their unit, and other factors.