IRR-Chicago Mid-Year Viewpoint 2015 Local Market Report - Multifamily
Through mid-year 2015, multifamily remained the strongest overall asset class within the Chicagoland real estate sector. Historically strong rental rates and occupancy rates drove property fundamentals to all-time highs in both the city and the suburban markets. A lack of new single-family residential housing stock is expected to keep the suburban markets humming along into the near future, while many market participants feel that new multifamily supply concerns within the CBD are exaggerated. It is difficult to exaggerate the pace of growth in the West Loop submarket, where housing options are rushing to keep pace with the office construction and to take advantage of the abundance of retail and restaurant amenities.
The traditionally strong River North submarket is also adding supply, with many of the new buildings offering exceptionally strong amenities packages in an effort to attract renters and maintain leasing rates in excess of $3.00 psf/mo. and even approaching $3.25 psf/mo. in some cases. One interesting Multihousing market indicator is the new ultra-luxury residential tower proposed for No. 9 Walton. This newly proposed project represents the 2nd phase of the Walton on the Park project. After the first phase was originally designed and constructed as luxury condos and eventually partially converted to rental stock in the 2008-10 market downturn, the new tower is being designed with much larger floor plans and is reportedly asking $1,200+ per square foot, setting a new high bar for average sales price for a residential tower if they are successful. Already being counted as a success was Related's investment in 111 W. Wacker Drive, which Related sold upon completion to Heitman for a market-record price of $661,000 per unit in December of 2014. Thus, the Chicago Multihousing sector is experiencing overall strength in both the for sale as well as the rental markets, and strong market fundamentals are expected to continue at a moderate pace into the near future.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.