July 21--A planned southwest suburban subdivision left bankrupt and undeveloped during the housing meltdown is yielding corn and soybeans but may begin sprouting homes next year.
Hummel Trails South, a 488-acre site in Oswego that was next up for development along the once-booming Interstate 88 corridor, was acquired in October for $11.1 million by Atlanta-based Turnstone Group, a firm that invests in distressed real estate, through a bankruptcy auction.
Now Turnstone is looking for homebuilders willing to again take their chances in Chicago's exurbs.
It's clearly a long-term play. In the 12 months that ended in June, 102 new homes were started in Oswego, compared with 129 in Bolingbrook, 180 in Shorewood and 311 in Pingree Grove, according to housing research firm Metrostudy. Still, what may draw builders is that Oswego has only about a four-month supply of homes for sale, at the current pace of demand, and home values are holding up, said Chris Huecksteadt, director of Metrostudy's Midwest region.
Located near the eastern edge of Oswego, Hummel Trails South has an approved conceptual plan that includes 649 single-family homes, 230 townhomes, a 99-unit assisted-living facility and more than 16 acres of commercial land.
Oliver-Hoffmann Corp., a Naperville-based developer, never broke ground on the development and defaulted on the loans. Lenders BMO Harris and PNC Bank began foreclosure proceedings in 2011 and 2013, respectively. Oliver-Hoffmann filed for Chapter 11 bankruptcy protection in February 2014.
"They completely mistimed the market," said Joel Kirstein, senior vice president of john greene Commercial, a Naperville-based firm that brokered the site's acquisition by Turnstone. "The market crashed, development stopped and the borrower was sitting on a 488-acre parcel."
Brian Linne, Turnstone's managing director, said Oswego is ripe for renewed development. "Back in the pre-recession time frame, Oswego was booming," Linne said. "I don't know if it's going to get back to that kind of activity, but this is a strong market."
Located in Kendall County, Oswego saw its population more than double in a decade, reaching 30,355 in the 2010 census. The sale to Turnstone breaks down to about $22,500 per acre. That represents about a fourth of the area's pre-bubble residential land values, according to Kirstein.
"Some farms were trading well over $100,000 an acre in that same submarket," Kirstein said.
Kirstein said Kendall County farmland currently sells for about $17,000 to $19,000 an acre for agricultural use.
rchannick@tribpub.com
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