Trump;International;Hotel;&;Tower
No other residential building in recent history has captured the attention of the media, the real es- tate community, and the home buying public to
the same degree as Chicago’s new Trump International
Hotel & Tower. Our team started 2009 with an in-depth
look at Trump Tower on our blog, and to this day it is
among our most frequently visited posts. So what is all
the buzz about?
The first reason the building is capturing so much
attention is probably because of the celebrity developer,
the Donald himself. Trump made a number of bold decisions and statements with this project that were, frankly,
controversial. Simply put, he did not personally endear
himself to the community.
The second reason for the level of interest in the
Tower may simply be its scale. This 92-story building has
changed the city’s skyline.
With the addition of its
communications spire,
the Trump Tower is just
90 feet shorter than the
Willis Tower, making it
the second tallest building in the United States.
The Tower is comprised of
286 hotel condos on floors
18 through 27, and 486
residential condos with
83 different floor plans on
floors 29 through 89. According to Trump’s website, the 14,260-foot penthouse on the 89th floor is
still for sale.
The most likely reason for the Tower’s high profile, however, is the economic
impact of delivering the building immediately following a significant correction in home values. Trump first
launched residential pre-sales for the building in 2003 at
very attractive prices, allowing him to secure a number of
contracts up front. Prices then started to climb, eventually reaching well over $1,000 per square foot. (The developer’s most expensive residential units in the MLS today
are priced at more than $1,400 per square foot.) Buyers
continued to sign up to purchase units as prices rose, putting down hefty earnest money deposits.
When the market started to correct in 2008, consumers became increasingly reluctant to pay peak-market
prices, and sales stalled. Then, when Trump finally started delivering finished condominium units, buyers who
bought into the project at pre-sale prices began flipping
their condos for significantly below current developer
pricing and also below the contract prices of other buyers
who had yet to close. According to the MLS, one-, two-and three-bedroom resales have closed as low as in the
low to mid $500-per-square-foot range. The MLS does not
offer a complete picture of the market, however, as a number of sales have not been published.
The result of the rise and subsequent fall in prices
is that a number of people are now stuck in a painful po-
sition. For example, we received a call from a buyer who
is under contract to purchase a 938-square-foot one-bedroom unit for approximately $795,000. The very same
unit on a higher floor recently closed as a resale for only
$475,000 – 40 percent below the other buyer’s contract
price. Even if he were willing to pay a huge premium
over today’s market value, his bank could not get an appraisal for anywhere near his purchase price so he would
need to put down substantially more cash to close.
Moreover, the changing economy affected other areas
of the buyer’s finances, and he can no longer qualify for
the mortgage, even if the developer renegotiates the contract and sells him the unit at current market pricing.
His only option is to forfeit more than $100,000 in earnest money and learn a hard lesson about speculating in
the residential market.
So what’s our take on the building? Skidmore, Owings & Merrill did a brilliant job of designing the building.
The shape and curvilinear glass curtain wall is positioned
in such a way that nearly every floor plan offers exceptional views from a vantage point not available in other
buildings. The spa, health club, and swimming pool are
also among the finest in the city. The building’s signature
restaurant, Sixteen, is convenient, and the option for room
service is definitely appealing. The interior finishes within
