Apartment boom sweeps Chicago area

Chicago Tribune, September 13, 2012

By Erik J. Martin, Special to the Tribune

Hear that noise? It’s the growing rumble of an apartment construction boom — and the sound of opportunity knocking for renters seeking to lease a new luxury unit in prime downtown and suburban locations.

After nearly a decade of limited construction activity in the rental sector, the Chicago area is in the midst of a mid- and high-rise development renaissance.

Consider the evidence downtown: 1,149 new apartment units opened for leasing in 2012 and 3,018 units are under construction and on pace for 2013-2014 deliveries, according to Gail Lissner, vice president of Appraisal Research Counselors, a Chicago-based appraisal and consulting firm. Lissner added that about 7,500 downtown apartment units are proposed. In the suburbs, an estimated 1,933 units are planned for delivery in 2013.

“We’ve not seen a tremendous amount of new rental product added to the market over the last 10 years. But (construction of new apartment towers) is the only kind of development taking place nowadays, as condo development has ceased for the time being,” Lissner said. “And after very little rental development in the suburban market since 2008, this is one of the peak years for new construction.”

A closer look at Lissner’s numbers provides insights into the current boom after an extended lull.

The number of downtown housing units, including homes owned and rented, grew from 50,000 to 110,000 over the last 20 years, but the actual number of rental units remained the same, at 30,000. Over this period, the rental supply was depleted through conversions of older apartments to condos, with very little new rental product added.

In the suburbs, more than 14,000 rental units were added from 1996 to 2007, after which time only 900 new rental units were added.

Robin Loewenberg Tebbe, chief marketing officer for Magellan Development Group in Chicago, said the multifamily market is red-hot for a variety of reasons beyond pent-up demand and previous low supply.

“Many working professionals don’t want to be tied down to a mortgage or the commitment of a condominium or home purchase, said Tebbe. “They’re attracted to a rental lifestyle that offers more freedom with the ability to move if necessary for jobs or other factors. As a result, occupancies have been surging at most Class A (luxury) buildings, and that has created a demand for more rental units.”

“Downtown and suburban occupancies are at their strongest levels since 2007,” said Lissner, who isn’t overly concerned that developers might struggle to fill their units, with so many apartment projects in the pipeline. “With challenges still facing developers in terms of actually getting new rentals developed, we do not see tremendous potential for overbuilding in the long term.”

The bottom line is that the flurry of new rental properties that have recently opened or are preparing to lease soon is good news for renters “as they provide more choices,” said Tony Rossi, president of RMK Management Corp., a Chicago-based apartment management firm.

“And with developers stepping it up a notch, today’s products are better than products built four or five years ago. Many of these are well-located properties offering amenities that are often far better than what’s available in new condo buildings,” he said.

Downtown Chicago apartments

New buildings available for rent in 2012

1225 Old Town 1225 N. Wells St.; developer: Hines/JDL; 250 units

Randolph Tower City Apartments 188 W. Randolph St.; developer: Village Green; 249 units

SoNo East 840 W. Blackhawk St.; developer: Smithfield; 324 units

The Lex 2138 S. Indiana Ave.; developer: ST Residential; 326 units

New buildings under construction

500 North Lake Shore Drive; developer: Related Midwest; 500 units; 2013 occupancy

AMLI River North 71 W. Hubbard St.; developer: AMLI; 409 units; 2013 occupancy

Coast 345 E. Wacker Drive; developer: Magellan; 499 units; 2013 occupancy

Hubbard Place 360 W. Hubbard St.; developer: Habitat; 450 units; 2013 occupancy

K2 365 N. Halsted St.; developer: Fifield; 496 units; 2013 occupancy

Optima Center Chicago 200 E. Illinois St.; developer: Optima; 332 units; 2013 occupancy

Summit on Lake 73 E. Lake St.; developer: M&R Development; 332 units; 2014 occupancy

New buildings in planning stages

Catalyst 630 W. Washington St.; developer: Marquette Properties; 223 possible units

City Hyde Park 1501 E. Hyde Park Blvd.; developer: Antheus Capital; 179 possible units

Lake View Station Montrose & Clarendon; developer: Sedgwick Properties; 620 possible units

Unnamed project 1 S. Halsted St.; developer: David Friedman; 514 possible units

Unnamed project 410 E. Grand Ave.; developer: Golub; 490 possible units

Suburban apartments

New buildings under construction

AMLI Evanston 737 Chicago Ave. in Evanston; developer: AMLI; 214 units; 2013 occupancy

Arboretum Landmark 450 Warrenville Road in Lisle; developer: The Opus Group; 310 units; 2013 occupancy

Arlington Downs 3400 Euclid Ave. in Arlington Heights; developer: Argent Group; 214 units; 2013 occupancy

Central Station Apartments 1720 Central St. in Evanston; developer: Dodge Capital/M&R Development; 80 units; 2013 occupancy

Ninety7Fifty on the Park 143rd St. and Main St. in Orland Park; developer: Village of Orland Park/Flaherty & Collins Properties; 295 units; 2013 occupancy

Seventeen17 1717 Ridge Ave. in Evanston; developer: Focus Development/Atlantic Realty Partners; 174 units; 2013 occupancy

The Springs at 127th 23823 W. 127th St., east of Route 59 in Plainfield; developer: Continental Properties; 340 units; 2013 occupancy

Wheaton 121 218 Wesley St. in Wheaton; developer: Morningside; 306 units; 2013 occupancy

New buildings in planning stages

Randall Highlands south of Orchard Road, west of Randall Road in North Aurora; developer: Next Generation; 146 possible units

Unnamed project Randall Road south of Algonquin Commons shopping center in Algonquin; developer: Marquette Companies/E.J. Plesko & Associates; 220 possible units