Even if you’re not a Game of Thrones fan, you are probably familiar with the saying “Winter is Coming.” While we are in the midst of summer in Chicago (much like King’s Landing), the Class-A downtown Chicago apartments should heed this warning, as indeed winter is coming.
Each contender, or Chicago developer, wants to be crowned king before the 2014 leasing season ends. What does it take to sit on the Iron Throne of the downtown Chicago luxury apartment market?
New Chicago Apartment Buildings in 2013
For those buildings that came online late 2013 – Coast, AMLI River North, Hubbard Place, Optima, K2 and 500 N Lake Shore – 500 clearly claimed the most successful lease up in 2013. By the end of the year, they reached 100% occupancy at the highest prices in the city. The other properties in the group are still reaching for stabilization by offering Chicago renters concessions to get there before fall. These include one month free or upfront rent credits, which we haven’t seen since last winter.
New Chicago Apartment Buildings in 2014
As we’ve previously discussed, the beginning of 2014 was exceptionally busy. In the spring, Crain’s Chicago Business reported new buildings had all experienced an elevated absorption rate. The established buildings, and the new construction properties that were ready for leasing took advantage of this pent-up demand for luxury Chicago apartments. The new arrivals – 73 East Lake, OneEleven, and Catalyst – all had strong starts to their lease-ups.
These three buildings are now close to 50% leased, in just a few short months. However, each felt the pain of last winter’s polar vortex, which delayed their deliveries, leaving less time to take advantage of leasing season. To catch up, these buildings are also offering concessions – some up to two months free – and trying to get ahead of the game before next year’s new Chicago apartments arrive.
New Chicago Apartment Buildings in 2015
While AMLI Lofts, Madison at Racine and The Scott Residences have all begun pre-leasing efforts for their fall 2014 deliveries, they will compete in the spring of 2015 with North Water, Jones Chicago, State & Chestnut and Eight O Five, who will enter the race to compete for residents.
The spring of 2015 is going to be a battle for apartments in downtown Chicago. Demand is still going to be strong for the latest and greatest Chicago apartments. However, as land and construction prices have increased, it has become difficult for developers to surpass each other like we’ve recently seen. Not to mention, the condo/sales market is starting to gain some momentum, which will add another variable, potentially turning some renters into buyers.
I predict that rents will not climb higher. We will continue to see concessions and the quality of apartments will not be as uber luxury, which will allow pricing to stay attainable.
I have been speaking in-depth with both the leasing managers of current properties and the developers of new properties, who are all keenly aware of the role Luxury Living Chicago will play in this game. As the top rental broker downtown, I am confident that everyone can win, developers and renters alike. But property managers, building leasing agents, and professional rental brokers must all work together to ensure everyone is king of their own castle.