Condotel…A Property By Many Names

February 4, 2010

Residential

Trump Tower in Chicago

Trump Tower in Chicago

Condo? Hotel? Timeshare? The uncertain economy and downturn in the real estate market have driven developers to create unique projects. Chicago has seen several “condotel,” developments, where units are sold fully furnished and come with daily maid service. Building amenities resemble those of hotels, and owners can use the units themselves or rent them through building management.

Both California and New York have seen variations of this concept, driven by a developer’s desire to put condo units in a location strapped with varying restrictions. In southwest Los Angeles, Lowe Enterprises built 50 condos on a strip of oceanfront property that the California Coastal Commission wanted to protect for public access to the shoreline. The resulting development allows owners to use their property for only 60 days a year, and no more than 29 days in a row. For the remainder of the time the condo units are available for rent to the public.

Potential owners at Trump SoHo, which is scheduled to open this spring, are limited to 120 days of residency per year, and only 29 straight days in any 36-day period. The structure was built in an area not zoned for permanent residences. Hotels, however, are within the legal zoning restrictions. There are several additional developments across the country with creative occupancy and ownership structures.

Owners purchase these units with the expectation of generating income from the rental nights. However, while the economy has slumped, hotel vacancy rates across the country have risen, putting unit owners in a position to make little or no money on their investments. Additionally, some potential buyers who have contracted for these units are having difficulty securing financing, putting future sales at risk and developers in even tighter financial positions.

Industry experts believe that this concept may have been very successful when these developments started, when the real estate market was very healthy. However, most non-traditional residency developments, including those in downtown Chicago, have proved disappointing to both owners and developers.

We’d like to thank 20 Letters for kindly sharing today’s photo via the Creative Commons License.
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About Stacy Braack

Stacy is a seasoned real estate professional with a broad range of hands-on experience including first time buyers, investors, luxury homes, and distressed properties. While this may appear to be a scattered set of expertise, she believes the experience provides maximum effectiveness in today’s chaotic market, which requires extensive knowledge of all aspects of the industry. Stacy’s educational background includes a BS in Industrial Engineering from Stanford University and an MBA in Marketing and Finance from the Kellogg Graduate School of Management. Professionally, Stacy has done everything from operations consulting to city government before she found her passion in real estate almost eleven years ago. It is this passion that drives the most benefit to her buyers and sellers. She is fully committed to your goals – both financial and personal. Her clients describe her as extremely direct, honest, and responsive, and they repeatedly trust her to handle one of the biggest events in their lives. For buyers she works non-stop to find you both a home you will love to live in and one that is a smart investment. Many of her 2008 buyers have realized instant equity in their new homes through ‘pit bull’ negotiation skills. While the market has been tough for sellers, her listings have sold at a rate above that of the market. Extensive, constant, and extremely high-quality marketing, including both print and internet mediums, support every listing, from investment studios to luxury penthouses. She believes that your goals are her priority and her full-time job. She has built her business on referrals from satisfied clients, and she would love to add you to that list. You can contact her at 773-405-4431 or stacy.braack@sothebysrealty.com

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