Monday, January 26, 2009

OBAMA EFFECT AND SHOT AT THE OLYMPICS BOOSTS CHICAGO REAL ESTATE

Like a zephyr of hope, the “Obama Effect,” is embracing the future of the Windy City.

The inauguration of President Barak Obama happened only a week ago, but a strong wave of positive karma already is lifting the spirits of Chicago’s real estate developers and lenders, experts say.

“A new direction for the future growth of the Windy City is about to take shape as a result of Barrack Obama, a Chicago resident, ascending to the Presidency of the United States,” predicts developer Nicholas S. Gouletas, CEO and chairman of American Invsco.

“President Obama, with the support of Mayor Richard M. Daley, chose to start his political career in Chicago and live here by choice because he realized what a great city of opportunity and change Chicago represents,” said Gouletas, a condo-conversion specialist who has developed, marketed and managed over 45,000 units valued at $4.5 billion since 1969.

Now, many experts believe the Obama Effect will have an uplifting impact on Chicago’s chances to host the Olympic Games in 2016. And, this scenario creates promise for new international recognition for Chicago, already viewed as a world-class city.

“The $22 billion in business growth the Olympics will bring also will have an immediate positive affect on the future of real estate investment in Chicago and Illinois,” Gouletas said.

“Chicago is a can-do place—the Olympics Committee knows Chicago will get the job done. It’s all about old fashioned Windy City stability,” said Edward J. Kane, senior vice president/chief lending officer for Lincoln Park Savings Bank.

Seeing the odds for Chicago hosting the 2016 Olympic Games on the rise, more than a dozen top residential real estate developers already have responded to the city’s requests for qualifications (RFQ) from prospective bidders for the proposed 3,500-unit Olympic Village on the 37-acre Michael Reese Hospital site near 31st Street and Cottage Grove Avenue on the Near South Side.

Initial plans call for the city to raze the shuttered hospital and pump millions of dollars of infrastructure improvements into the site. Then, developers would build the Olympic Village in stages over a six-year period between 2010 and 2016.

The housing units in this brand new high-rise and mid-rise neighborhood, similar to Central Station development, could be sold to investors, and rented during and after the games, experts say. The Olympic buzz also would attract thousands of permanent residents to the village.

“It’s a natural. We are very excited about the prospects for the tremendous positive effect the Olympics will have on Chicago,” said Jerry Karlik, partner with Keith Giles in Kargil Development, LLC, one of the development firms who submitted an RFQ for the Olympic Village.

Other major developers who have submitted RFQs for the $1.1-billion Olympic Village include: The Enterprise Companies, Joseph Freed & Associates, LLC, Magellan Development Group, LLC, and Related Midwest.

“Of course, we won’t know if the Games are going to happen in Chicago until October of 2009,” Karlik said. “However, a Tax Increment Financing District already is in place, and we think construction financing for residential projects will loosen up by then.”

With President Obama traveling to Europe this year to lobby the Olympic Committee for a Chicago bid, “Chicago could pull it off,” said Karlik, noting that the event would bring as much prestige to the Windy City as the Columbian Exposition of 1893.

While some gloomy Washington economists are predicting a recession economy for the next four years because of the Wall Street financial crisis, Chicago real estate experts see the market here bouncing back sooner.

Appraisal Research Counselors Ltd., Chicago’s top condominium appraisal firm, is predicting the downtown condo market will rebound within the next 18 months.

“When the consumer regains confidence and market activity increases, buyers will be regretting that they had not purchased during the weaker market when the new construction options were numerous and the pricing was attractive,” said Gail Lissner, vice president of Appraisal Research, co-author of the “Downtown Chicago Residential Benchmark Report.”