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Co-op residences among the swankiest in major urban markets – but at a cost

Da LINSEY STONCHUS

Before the development of condominiums in the 1970s, buying into a co-op was the only way to secure ownership in city high-rises across the United States, most prominently including Chicago and New York.

Like a standard corporation, co-op owners essentially purchase stake in the building itself, specifically the proprietary rights to a specific unit within the building.

“There are three ways in which you can move into a vintage building,” said Suzanne Gignilliat, a real estate agent from @properties specializing in luxury properties on the North Side of Chicago. “You can purchase a co-op, buy a condo or you can rent.”

Of course, this form of ownership does present its challenges.

Decisions about any units bought or sold are run through the building’s board and potential owners must be transparent with their assets and prepared to put money down. Also, some co-op boards do not allow ownership to automatically pass down to heirs.

Despite these hurdles, co-ops grant access to some of the most exclusive residences within urban markets, often containing the character of historic high-rises and proximity to the best parts of town.

“Co-ops are in the category of being the most beautiful buildings in Chicago,” Ms. Gignilliat added.

High stakes

Decades after the first skyscrapers cropped up in Chicago and long before the rise of the condo, co-ops were popularized in the early 1900s as an alternative to renting.

“There were no condos,” Ms. Gignilliat said. “Condos did not come into being until the late 1970s and were actually developed here in Chicago.”

219 E Lake Shore Drive was once a co-opt but was eventually converted to a condominium, a rare find on Chicago’s most exclusive strip,

The most premier co-ops were built on the iconic Lake Shore Drive or within the Gold Coast neighborhood.

“Many went bankrupt in the roaring 1920s and early 1930s and then were converted to rental apartments, some of which were then converted to condos when the condominium craze happened later in the century,” Ms. Gignilliat said. “Some, however, managed to stay solvent and as co-ops.”

One unit listed by Ms. Gignilliat on 219 E Lake Shore Drive is the perfect example of this. The building, having gone bankrupt long ago, was converted to a rental building and then eventually to a condominium.

“It is unique on that strip because most of that part of Lake Shore Drive consists of co-ops,” Ms. Gignilliat said.

Neighborly advice

The most significant challenge of co-op ownership is the fact that decisions made regarding a unit are not the owner’s alone to make. Everything from buying to selling to renovation must be decided by the building’s board.

“You are in bed with your neighbors in a very different way in a co-op,” Ms. Gignilliat said. “The co-op board process can be very exhausting.”

Co-ops are often the most stunning residences within major cities, such as Chicago or New York. Purchasing one, however, is more complicated than the standard real estate transaction.

This is evident from the initial transaction of purchasing a unit.

“Many co-ops require a significant down payment or require you to purchase in cash,” Ms. Gignilliat said. “The reason is that you are not really buying real estate. You are buying stock.”

In the U.S., most are unable to purchase stock on margin, with the exception of large brokerage trading firms or those with substantial accounts.

As a result, financing co-ops has not been possible until very recently. Even in these cases, potential buyers typically can only finance 50 percent.

It is important to note, too, that the co-op building’s board is far more thorough in reviewing the finances of its buyers.

“It requires a special kind of credit report, a deep dive into finances,” Ms. Gignilliat said. “If you own a company, you may have to open the books.”

“It is a more intrusive process because they want to make sure that you are financially qualified,” she said.

Rare gem

Those consumers hesitant in purchasing a co-op, yet still desiring to live along a premier street by the lake may want to look twice at a property such as the previously mentioned apartment at 219 E Lake Shore Drive.

Not only is the home in a vintage building in an idyllic location, it is generously sized at 4,400 square feet with bright and airy ceilings and easy flow throughout.

Renovated during the last five years and accessible directly from two separate elevator entrances, the apartment was initially two units that were later combined seamlessly.

“The attention to detail in the apartment is exquisite,” Ms. Gignilliat said. “They made a modern floor plan out of a very traditional vintage space.”

The masterful combination of two units within 219 E Lake Shore Drive provides ample space paired with vintage flair.

“It feels like it was always the current configuration,” she said.

The unit features an oversized, eat-in kitchen, formal living and dining rooms, library and a primary suite with a marble bathroom and massive walk-in closet with a dressing area that overlooks impressive views of Lake Michigan, Oak Street Beach and North Lake Shore Drive.

“I love the mid-floor level for the views,” Ms. Gignilliat said. “It is an incredible level to see beach, life and Lake Shore Drive. If you get too high on the lake, it is beautiful during the day, but it can be depressing at night.”

CO-OP OR NOT, the Gold Coast remains one of the most sought-after neighborhoods in Chicago. It is easy to see why.

“You are close to everything,” Ms. Gignilliat said. “All of the beautiful designer boutiques are there on Oak Street and Michigan Avenue.”

Also nearby are top-rated restaurants and museums, along with short commutes to any downtown offices.

“I love the bike path and the lake along there,” Ms. Gignilliat said. “It is a beautiful place to walk and be by water.

“The neighborhood is simply teeming with life,” she said. “It is an exquisite area to take in all that Chicago has to offer.” 

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