Our team attended the 10th Annual Chicagoland Multifamily & Affordable Housing Real Estate Summit on March 12th, 2019 at the University Club Chicago in the South Loop.
Our own CEO and Founder Aaron Glavin was among the speakers on the State of the Market panel at the event. From 2012-2017, Aaron Galvin has received the Chicago Association of Realtors Top Producer Platinum Rentals Award as the No.1 Rental Broker in Chicago. He is a leading expert on Chicago’s apartment market.
Here are our takeaways from Aaron’s panel:
“Where Are We In The Apartment Development Cycle?”
We are officially in uncharted territory and in the second longest expansion period of real estate development in the history of Chicago. Consumer demand for apartments is strong, but there are outside factors that may attribute to slowing down development. For example, construction costs, the Affordable Requirements Ordinance, or even the political climate in Chicago can cause a slow down in the delivery of new buildings.
However, Aaron believes the rise of the mega-development such as Lincoln Common, Lincoln Yards, and The 78 will continue to move Chicago development forward in a meaningful way. These are all long term projects that will continue development during different real estate cycles in the city.
The Rise of Price Per Square Foot in Chicago
The Chicago market continues to climb past historic price per square foot averages. The average is currently sitting around $3.75 in some areas of downtown, but rising to $4.00. Aaron believes there are two ways developers can continue to achieve record high pricing:
As unit sizes trend smaller, price per square foot continues to increase. While units will be smaller, they should be finished with beautiful, high-quality materials. Amenity spaces will remain to serve as extensions of a renter’s apartment. These co-working spaces, lounges, and patios are important to the renter especially if their unit size is smaller. Another factor is building for the Gen Z renters. Although they do not want to own anything, they do favor conveniences and to be located in the center of it all.
Not every renter wants a smaller unit. Larger units with extremely high-end finishes and coveted locations will also drive a higher price per square foot. For example, our 2018 lease-up project, 8 East Huron features two-bedrooms with 1,200-1,300 sq ft. in the heart of River North. This boutique, amenity-driven, luxury apartment building features just 102 units. During this lease-up, our team secured $4.00 a square foot, even with larger unit types in the mix.
The Rise of Smart Living: Technology as an Amenity + Trends
The new normal for apartments is hardwood floors, washer/dryer in unit, and stainless steel appliances. The newest trend on top of those features is technology as an amenity. With the advancements of IT, it was only a matter of time until technology was put into the living space.
Here are a few technology amenity trends Aaron says to look out for:
- Renters want to apply for an apartment and pay their rent online. Instead of sending a check in the mail each month, renters are looking at technology to change the rental process and eliminate the back and forth.
- Today’s renters are savvy and want to interact with building management on an app for simplicity and ease. For example, Rise allows tenants to pre-authorize visitors, pay rent in real-time, submit service requests, receive package notifications, and request amenity reservations. This technology allows property management to engage and manage their tenant’s requests. It also allows for the operations budget of a building to be lowered as technology process flows can streamline a property management team’s workload.
- Keyless entry is a must. Renters want the convenience of sharing access to their apartment with dog walkers and other services providers remotely through their mobile phone. The days of leaving a key with the doorman are coming to an end.
- Renters want to control their interior amenities remotely. Simple tasks such as setting the thermostat, lowering the window shades, or even playing music are available at the touch of a button.
If renters lived with a washer dryer in the unit, they will now stay with that living style. Aaron now predicts this trend with technology, too. Once a renter lives with accelerated apartment technology, it will be hard to live without.
Overall, the Luxury Living Chicago Realty team looks forward to the future of apartment amenities and listings. Our team is here to partner with Chicago developers to help them achieve their real estate goals.