The auction includes a site in north suburban Zion seen at the center of this image. The two buildings on Liberty Lane contain ten never-occupied townhouses, and around them are lots for 189 more units.
A decade into a deep trough in suburban Chicago homebuilding, an Atlanta-based real estate investment firm is looking to shed hundreds of residential lots in outer-ring suburbs.
Turnstone Group is putting up for auction 619 lots in 10 subdivisions in nine mainly far-flung towns, including Woodstock, Matteson and Channahon, according to Rick Levin, principal of Chicago-based real estate auction firm Rick Levin & Associates.
Also in the auction are 23 undeveloped acres in Sandwich and 10 townhouses in Zion that, according to Levin, were completed about 10 years ago but have never been occupied.
“It’s the biggest chunk of suburban lots for sale in Chicago in years,” Levin said. “They’re all remnants of the recession.” He said his seller bought all the lots from foreclosing lenders or other financial institutions, though he could not say when.
Levin declined to comment on the seller’s reason for putting the huge portfolio up for sale, other than to say that previous brokerages’ efforts to sell the properties conventionally, without an auction, “haven’t succeeded.”
Turnstone executives declined to comment. The firm bought about 17,000 distressed subdivision lots around the country between 2011 and 2014, according to press reports on the firm’s site. Crain’s could not determine how many of those were in the Chicago area.
While new-construction home sales in the Chicago area totaled more than 25,000 a year in the six years leading up to the housing crash in 2006, for the past nine years they have rarely topped 4,000, according to Tracy Cross & Associates, a Schaumburg-based consultant to homebuilders.
The subdivisions are in Sandwich, Woodstock, Channahon, Matteson, Olympia Fields, Wauconda, Joliet, Wilmington and Zion.
The outer-ring locations “have a lot of opportunity for building affordable homes where people want them,” Levin said.
A planned Foxconn plant with the potential to bring as many as 13,000 new jobs to southeastern Wisconsin is less than half an hour’s drive from Zion, a few miles south of the Wisconsin border in northeastern Illinois. Turnstone has a total of 207 lots in Zion in two subdivisions, Shepherd’s Point and Cypress Park, as well as the 10 empty townhouses in Shepherd’s Point.
Yet prices on existing homes are growing slowly in most of the suburban area, dampening the need to drive farther out in search of cheaper new construction. In Joliet, where 93 lots in the Cedar Creek subdivision are up for auction, Kendall Jackson, the city’s community development director, said builders are now selling about 250 to 275 new homes a year in the city, compared to the boom-years tally of 1,400 to 1,500.
“I don’t think we’ll ever reach that pace again,” Jackson said. In the “villas” section of Cedar Creek, he said, the original developer’s plan, which the city approved in 2006, called for 176 units, only eight of which got built and sold.
The Turnstone auction includes 46 lots in the villas section. Crain’s could not determine the ownership of the section’s remaining 122 lots.
Bidding starts at $300,000 to buy the 46 villas lots, according to Levin’s promotional materials, and were previously valued at $1.4 million, according to Levin’s sales materials. (Crain’s could not determine from Will County records whether $1.4 million is what Turnstone paid for them.)
On the other sections of Cedar Creek and the lots offered in other subdivisions, suggested opening bids are as little as one-seventh the “previous value,” according to Levin’s materials.
Along with a suppressed homebuilding market, he said, Cedar Creek “has another burden.” In the 13 years since the subdivision launched, the area around it in southern Joliet has seen a growth spurt in warehousing, “and there’s a lot of truck traffic and noise associated with that.”
Like Joliet, Jackson said, “a lot of these communities have changed since the recession.”
by By Dennis Rodkin
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