When South Side developers Jon and Julian Mickelson purchased the majority of a fractured Bronzeville condominium complex this winter, their intention was to get in on the local deconversion craze and turn the units into upscale rentals.
But after learning who lived in the complex’s remaining condo units, the brothers decided to forgo the deconversion play and changed up their plans.
“They’re primarily senior citizens,” Julian said of the 40 owners who remain in the Woodland Park by the Lake condos at 606 East Woodland Park Avenue. “We prefer to take the long-term approach and not force anything.”
In February, the Mickelson brothers paid $23.5 million for 168 units in the three-building Woodland Park complex, a 240-unit condo development that was turned over to Bank of America after most of the units failed to sell.
Since then, the brothers have been acquiring additional Woodland Park units, including paying $115,000 for unit 502 in late June, property records show. They now own 174 units in the building, or just under 74 percent of the total complex.
State law allows for a bulk sale of a condo building if 75 percent of owners agree, a threshold the Mickelson’s nearly meet. Forcing a sale of the remaining units would allow for the entire complex to be renovated and deconverted into rentals.
But after talking to a number of condo owners at Woodland Park, many of whom are elderly and expressed a desire not to move, Julian Mickelson decided against moving forward with a bulk sale.
“We could definitely force the sale,” he said. “I just want to be able to sleep at night.”
The brothers are instead moving forward with piecemeal renovations of the units they already control, swapping out flooring, doors and finishes in the apartments and repositioning them as luxury rentals. The Mickelsons will renovate Woodland Park’s lobbies, and are turning a tennis court into a fenced-in dog park.
A $27 million construction loan the brothers took out from Heartland Bank upon closing on the property appears to have been recently amended, allowing for total borrowing of $45 million, according to property records. Available units in the building include a two-bedroom unit renting at $1,745 to $2,595 for a three-bedroom.
Deconverting the entire Woodland Park complex could result in a financial windfall for the Mickelsons. The Chicago market is experiencing unprecedented condo deconversions, thanks to a strong rental market and a weak market for condo re-sales.
Just north of Woodland Park, Marc Realty and the Wolcott Group paid $95 million in December to turn the River City condo complex into rentals.
“I do think it’s a smart play, and that was our intention,” said Julian Mickelson when asked about Woodland Park. “Sometimes decisions just aren’t based on financial gain.”
The Bronzeville rental and for-sale market has been heating up in recent years, with developers and homeowners increasingly turning to the historic Near South Side neighborhood.
About 475 units in the area, only a few of which are available for rent, are controlled by the Mickelsons. Julian Mickelson noted that Bronzeville’s rental market is only beginning to heat up.
“Most of the investors who bought condos to rent out are now selling to homeowners,” he said. “The supply is shrinking and the demand is going up.”Recommend0 recommendationsPublished in