A new ordinance pumps the brakes on a recent flurry of condo-to-rental deconversion deals in Chicago.
The legislation, which increased the percentage of owners required to approve a sale of a condo building to developers, was approved by City Council on Wednesday, September 18.
The threshold was raised to 85 percent because of the ordinance originally introduced by 42nd Ward Alderman Brendan Reilly and 48th Ward Alderman Harry Osterman. The Illinois Condominium Property Act previously required 75 percent of a condo association to say yes to a deal to sell every unit in bulk.
Last year, the River City Condo Association agreed to sell all 449 residential units at the Bertrand Goldberg-designed building 800 S. Wells Street, making it the largest condominium deconversion in Chicago history. Only 78 percent of River City’s ownership voted in favor of the $90.5 million deal.
43rd Ward Alderman Michelle Smith, a co-sponsor of the ordinance, says it’s designed in fairness to homeowners who want to stay put. “Condo deconversions can sometimes lead to displacement of long term homeowners,” she told Curbed. “It is fair and equitable that investors should have to meet a higher standard when potential displacement is an issue.”
The bill comes at a time when Chicago’s hot rental market combined with a lukewarm home buying market has triggered a recent wave of deconversion deals. An analysis by commercial real estate company Avison Young found that 20 condo deconversion deals were made in a 24-month period between 2016 and 2018.