More 2015 Apartment Data Presented by Appraisal Research Counselors
On Tuesday, February 9th, Appraisal Research Counselors held a luncheon to present their data from 2015, reflect on the meaning behind the numbers, and provide projections for the future. The event was held at The Standard Club, with hundreds of attendees, including the biggest players in Chicago’s multifamily industry.
Managing Broker/Owner, Aaron Galvin, attended the luncheon and has summarized the key findings, along with offering some additional insights drawn from Luxury Living Chicago Realty’s 2015 Data Report.
Effective rents at Class A downtown buildings at $2.81 per square foot
Appraisal Research Counselors’ price per square foot of $2.81 does factor in concessions, such as one or two months free. However, the data collected only includes buildings that are stabilized. Of these properties, 21 luxury buildings are achieving over three dollars per square foot. Luxury Living Chicago Realty works primarily with downtown Chicago’s luxury properties, especially those in the lease-up stages, and our comprehensive average for the year was $2.99 per square foot.
Absorption rose to 2,495 units
This increase in the number of occupied apartments in downtown Chicago is not vastly different from 2014, when absorption was 2,247 units. Appraisal Research Counselors offered cautious optimism that the market would be able to handle 4,000 new units this year and forecasted that absorption will rise to 2,800 in 2016. Many headquarters are moving their offices downtown, which will bring hundreds of new renters to the city. In 2015, almost half of Luxury Living Chicago Realty’s clients were relocating to Chicago, at 46.4%.
Nearly 5,000 units coming in 2017
So much development is currently underway that we already know 2017 will be Chicago’s biggest year to date. Appraisal Research Counselors projected that absorption will increase to 3,000 in 2017, which may finally slow down Chicago’s constantly-rising rental prices. Additionally, much of the development is concentrated in River North, which has carried a premium over other downtown neighborhoods in previous years. The rental prices in River North are now on par with Streeterville, West Loop, and even The Loop. The majority of Luxury Living Chicago Realty’s 2015 clients did rent in River North, but the West Loop was another top choice with so much new inventory.
Average rent at stabilized buildings
The market rental increase was 3.3% in 2015, but Appraisal Research Counselors noted that the increase in “same store sales” (buildings that have been in their study for more than one year) was only 1.42%. Of those properties, half of the buildings had negative rent growth. Moreover, Class B buildings are lagging behind Class A buildings by 16%, which averages out to around $300 per unit.
Luxury developments in the neighborhoods
2015 was the first year that Appraisal Research Counselors did a comprehensive data analysis for neighborhood luxury rentals. There are an astounding 8,300 units proposed or under construction from Rogers Park to Hyde Park. The neighborhood development is becoming bifurcated by two different types of properties. First, there are boutique buildings up to 120 units, which are focused on in-unit finishes and thoughtful, community cultivating amenities. Many of these properties will deliver along the “Hipster Highway”, concentrated in Wicker Park, Logan Square, and Bucktown. Rent prices are expected between $2.50-$2.75 per square foot, which is more in-line with Class B buildings downtown.
The other subset of neighborhood luxury developments are larger, full-amenity buildings that will be very similar in all aspects, including price, to the downtown market. These will be concentrated in Lincoln Park and other popular north-side locations. Luxury Living Chicago is at the forefront of luxury neighborhood development and will be the exclusive leasing partner for many properties, including Logan Square’s L (2211 N. Milwaukee), Luxe on Chicago (1838 W Chicago), and Elevate Lincoln Park (the 2500 block of N. Lincoln Avenue.)
To download Luxury Living Chicago Realty’s comprehensive report, follow the link below. Drawn from 500+ rentals in Chicago’s luxury apartment market, our 2015 data includes: average rent and square footage, renter background details, average days from tour to move-in, pets and parking data, and more.
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