It doesn’t take so much do-re-mi to buy into Chicago’s Trump International Hotel & Tower as it once did, and that’s striking sour notes for owners in the building.
Prices have fallen so hard that, if you have a mind to, you can get a unit on the cheap, relatively speaking. Some condos that are hotel rooms in the 98-story building can be had for less than $200,000.
But buyer beware. Gail Lissner, managing director at Integra Realty Resources, said the hotel rooms are cheap because they’ve historically been bad investments, something made worse by the pandemic.
After the hotel’s management fees, which public listings report can run more than $2,000 a month, taxes and the interest on your loan, there isn’t much left of your share of rental income.
That’s just the start of problems afflicting the tower that our current president wrought in Chicago, completing the construction in 2009. Chortle if you must, but remember that not all of the woes land on Donald Trump and his Trump Organization.
They are felt by the individual owners at 401 N. Wabash Ave. who put a chunk of their assets into this venture, probably for reasons apart from politics.
In aligning themselves with Trump, they chose a faithless business partner. At any given time, some will be looking to sell their units, and they must wince every time he assails Chicago, comparing its violence to Afghanistan. You’d think the president would soft-pedal those criticisms in deference to his — er, his family’s — business.
Apart from all that is the building itself, a generally well-regarded citizen of the skyline designed by Chicago’s Adrian Smith that Trump later marred by affixing his name to it. The property contains a highly rated hotel and residential condos boasting premium views and features.
“It’s a very nice property, and they operate it well,” Lissner said. “The staff is extremely solicitous and well-trained. The negative is the name. It’s like a lightning rod.” A longtime resident said the building handles the coronavirus well, with serious cleaning, limits of four people on an elevator and masks a must-have. “They haven’t cut back on service,” he said.
Yet the property’s Trump handicap has grown during the man’s presidency. Lissner crunched Midwest Real Estate Data and found sales of the residences for the first half of this year averaged $566 a square foot, down 42% from the same months two years ago and 25% from 2019.
The prices are their lowest since the Great Recession of 2008 and its attendant housing bust. The building in the best of times has cleared its benchmark of $800 a square foot but has seldom reached its aspirations of $1,000.
But other towers have views and great finishes without a name odious or alarming to most buyers. Protests in front of the Trump building almost every other day can’t be good for the prices therein.
Lissner said along with the distinctive Trump factors, the building must contend with a general softening in downtown condo prices that has worsened with the pandemic, plus competition from newer high-rises that don’t invite vulgar attention.
The hotel-condo units have the added burden of a crushed travel market. Listings of these units on Realtor.com indicate many have been marketed for months, with prices that have fallen more than 30% in the last couple of years. We don’t know exactly how badly the Trump hotel is doing, but the travel research firm STR reports that among all Chicago luxury hotels, room occupancies were just 3% in April and 4.5% in May. Last year at this time, those hotels were more than 80% full.
Lastly, there’s the tower’s retail space, which Trump has never been able to lease. He sought Michigan Avenue prices for space unlikely to draw Michigan Avenue traffic.
Real estate agents, normally a loquacious group when it comes to buildings that can pull in big commissions, don’t want to say much about Trump tower. Three who have listings there didn’t return calls or declined to discuss the property. A prominent agent working in River North told me she shuns the building because of her political beliefs.
I wanted the perspective of the Trump Organization and the tower’s condo association, but they did not return messages. More’s the pity — I’d love to know if the condo owners have the gumption or the power to yank those 20-foot-tall Trump letters off the building. While the nation’s in a fit of pulling down monuments, it seems odd to leave alone one man’s garish celebration of himself.