CHICAGO, IL - A Missouri lender has filed a $9-million foreclosure suit against a slow-selling condominium project along Motor Row on Chicago's South Side. Developer Paul Zucker failed to pay back a construction loan for the Motor Row Lofts when it came due last October, according to a lawsuit filed last month by St. Louis-based First Bank of Missouri.
Mr. Zucker borrowed $13.1 million from the bank in 2006 to finance the conversion of three landmark buildings at 2301 S. Michigan Ave. into 51 condos.
Mr. Zucker, president of Chicago-based City Real Estate Inc., personally guaranteed up to $1.5 million of the loan, which currently has a balance due of almost $9.1 million, according to the complaint.
Located on a strip that was a car-sales hot spot in the early 20th century, the development was among 22 projects cited last September by the Commission on Chicago Landmarks for its improvement to the Motor Row Historic District, established as a landmark in 2000 by the Chicago City Council.
Despite that distinction, just 22 sales have closed since the condo project was completed last May, according to public records.
Mr. Zucker said he had not seen the foreclosure complaint, which was filed in Cook County Circuit Court. But he says he's not the only developer who is suffering in the area, which is plagued by a condo glut.
"Sales just haven't supported expectations," he says. "We've been attempting to work with the bank on a variety of suggested programs to keep this loan in good stead, but they rejected all of them."
To generate cash, Mr. Zucker has begun renting out the unsold units.
On the Near South Side, 23 new condo projects totaling 4,958 units have either been recently completed or are under construction, according to Chicago-based real estate consulting firm Appraisal Research Counselors. Those totals don't include two redevelopment projects, Mr. Zucker's development and the 93-unit Opera Lofts, 2545 S. Dearborn St.
Motor Row Lofts comprises three low-rise buildings designed by Chicago architecture firm Holabird & Roche, better known for downtown towers such as the Palmolive Building at 919 N. Michigan Ave. and the Chicago Board of Trade at 141 W. Jackson Blvd.
The residential conversion was designed by Chicago architecture firm Bauhs Dring Seglin Main.
The tallest of the three buildings is the 99-year-old Cadillac Building, a five-story structure at the corner of Michigan Avenue and 23rd Street. South of the Cadillac are the Cowles and Saxon buildings, both built in 1915.
All three structures were built for the Saxon Motor Car Co. of Michigan and feature oversized windows that were essential for displaying automobiles. In its heyday, as many as 116 makes of cars were sold along Motor Row.
Source: ChicagoBusiness.com