Court Ordered Auction: Rare Opportunity to Purchase A Vacant Parcel On Chicago’s Renowned Michigan Avenue

(Crain’s, Chicago) — A South Michigan Avenue development site that would have been a hot commodity during the condominium boom is being sold in a court-ordered auction more than two years after a lender filed to foreclose on the property.

Rick Levin & Associates Inc. has scheduled a July 27 auction of the parcel at 1000 S. Michigan Avenue in Chicago’s South Loop, where local developer Warren Barr wanted to build a 40-story tower with 346 condos. But the condo crash foiled that plan and Elk Grove Village-based First American Bank sued in May 2008 to collect a past-due $18.7-million loan secured by the site.

In another era, a property along Grant Park offering unobstructed views of Lake Michigan would command a premium, fueled largely by demand from condo developers. But the South Loop remains swamped with unsold condos, and most lenders aren’t financing development of any kind, limiting the pool of potential buyers.

The site could attract interest from a company or non-profit group hunting for a headquarters site or a nearby college that needs more space, says Rick Levin, president of the Chicago-based auction firm. Bidders may also include deep-pocketed investors looking to buy and hold property until the residential market rebounds.

1000 South Michigan Ave. in red

“When it does come back, land along Grant Park should be the first to benefit,” he says. “There aren’t a lot of vacant parcels on this stretch that could offer this large of a development opportunity.”

It’s difficult to estimate what the property is worth given the lack of comparable sales over the past two years, one reason an auction makes sense, Mr. Levin says. The most recent comp is another development site at 830 S. Michigan that Mr. Barr sold in November 2008, after a mezzanine lender filed to foreclose on the property.

In that transaction, a venture linked to Matthew Pritzker paid $17.6 million for the estimated 36,000-square-foot property, where Mr. Barr had planned 376 condos. Mr. Pritzker, who received a roughly $500-million settlement in 2005 in a dispute over the family fortune, was unavailable for comment. An executive at his investment firm, Matthew Pritzker Co., did not return phone calls.

That sale equates to a price of about $488 a square foot, or $47,000 a unit. At that level, 1000 S. Michigan would be worth about $16.4 million, though the economy and financial markets have improved over the past 18 months.

“There is interest for land,” says John Jaeger, first vice-president in the Chicago office of CB Richard Ellis Inc. “There wasn’t last year, but there is now.”

It’s unlikely, however, that an auction would generate enough money to pay off the $25.3 million in principal and accrued interest owed to First American. The suggested opening bid is $9 million.

First American won a judgment of foreclosure in January 2009 and held a sheriff’s sale two months later. But Mr. Barr’s partners challenged the sale, preventing the bank from taking control of the property. On May 17, Cook County Judge Robert Quinn ordered a new auction conducted by Rick Levin.

A bank executive did not return a phone call late Tuesday.

Though Mr. Barr, president and CEO of Oak Brook-based Renaissant Development Group LLC, and his partners have lost control of the site, they have a big stake in the auction: They guaranteed the First American loan, meaning they could be on the hook for any shortfall.

Like a lot of condo developers, Mr. Barr is lying low these days.

“I’m just trying to wade my way through a very difficult market,” he says. “The condo market will come back eventually. There’s just a lot of uncertainty.”

Alby Gallun, Crain’s

http://www.chicagobusiness.com/cgi-bin/news.pl?id=38370

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Auction Date: July 27, 2010

Location: 1000 South Michigan Avenue, Chicago, IL

Parcel: 33,700 sq. ft.   (251′ x 134.28′)

Property Highlights:

• Located on the West side of South Michigan Avenue
• Near Chicago’s Loop, public transportation, Lakeshore Drive and the expressway
• Property is currently operated as a surface parking lot
• Near hotels and newly developed condominium buildings
• Access to Grant Park, steps from Chicago’s Lakefront
• Positioned in a fast developing Downtown University Campus area
• Entitlements for up to 40 stories and 350 condominiums, and potential for numerous development alternatives

Previously Priced up to: $33,000,000
Suggested Opening Bid: $9,000,000

Street View - Looking North from 1000 South Michigan Avenue

View a Video Message from Rick Levin Regarding the July 27 Auction of 1000 South Michigan Avenue

For more information, please contact Rick Levin & Associates, Inc. directly:

Phone: (773) 252-4500

Email: rick@ricklevin.com