Joe Smazal of commercial brokerage Interra Realty has closed six deconversion deals around the city valued at just under $80 million. He has two more under contract for about $13 million: a 34-unit building in Buena Park and another 34-unit building in north suburban Evanston.
“There remains more buyers than sellers for buildings of scale in areas where these things are happening,” he said.
In many cases, deconversions simply bring the building back to its original state, a reversal of the “condomania” craze of the 1970s and early ‘80s when apartment owners converted their buildings into condos to profit from the growing desire for homeownership.
Those familiar with deconversions said properties that are good candidates for them tend to have things in common. Most are older, often with deferred maintenance. That’s a motivator for condo owners looking down the barrel of a looming special assessment to pay for it.
“There’s a lot of old buildings built before 1980 and they’re in very good neighborhoods,” said Steven Ginsburg, an attorney who has worked on deconversions on behalf of lenders, investors and condo associations.
“People who are buying condos now, especially in nicer areas, they’re looking for a better product type than what’s available in these buildings,” he said. And when multiple owners in a building decide to sell around the same time, they begin competing against each other for buyers. “That’s going to devalue those units. You’re lowering those values by creating a glut,” he said.