Downtown Chicago Apartment Hunting During the Winter

Photo Courtesy of Chicago Tribune

The early winter months are filled with holiday shopping, family vacations and accepting the fact that you can’t wear shorts anymore.  If you have to move in the middle of the Chicago winter, you know it’s a difficult time to find a great apartment to live.   You would think there are exceptional deals but the winter of 2011-2012 is proving a bit more difficult.  Here are a few reasons why the Chicago apartment search in November and December this year is a tough task:

1.     Apartment prices are still high.  If less people are looking, why are prices so high?  Landlords and property management companies still think they can command summer prices because summer wasn’t that long ago.  Their buildings are still very occupied and with few people moving at this time of year, they remain full throughout the beginning of the winter.   It’s after January that you’ll start to see some good move-in incentives.  This is because people start to move after the first of the year, causing occupancy to rise and the specials to kick in.

2.     Anybody looking in the dead of winter, has to move.  Most people that move in the winter months are coming to downtown Chicago for a new job or school.  They are being relocated and must find housing quick.  This is another reason larger management companies can keep prices high.  They have a captive audience.  Note that if this section applies to you and you do have to move, Luxury Living Chicago is very much in tune with the best options available and can assist in helping you find a great apartment at the best value for this season.

3.     Availability is low.  There just aren’t a lot of apartments available this time of year.  Most of the good ones went at the end of the fall leasing season and current tenants are less likely to move if they don’t have to.  Larger luxury Chicago apartment buildings are willing to do shorter term lease renewals that allow tenants to extend their lease into the busy Spring/Summer leasing season.

4.     Many of the newest downtown luxury Chicago apartment buildings are for sale.  This is a unique situation also contributing to high prices this year.  Many of the newest buildings are for sale or under contract and they have promised investors a certain rent per unit.  If they started to give mass concessions and lowering rents, investors may back out and the buildings won’t sell.

While I don’t expect the newest luxury buildings will be giving away the house come late winter/early spring, I can pretty much guarantee it will be better pricing than what you see right now.  Hang in there.  Make it through winter and look forward to renting that brand new luxury apartment this spring.

Chicagoland Apartment Association Preview Breakfast—Optimism Abounds in the Luxury Apartment Market

Panel of Speakers at the Chicagoland Apartment Association 2012 Preview Breakfast

There are few real estate headlines these days with the word “optimism,” but bring together some of the biggest names in the downtown Chicago luxury apartment business and it’s all smiles.  With rents at historic highs and demand increasing daily, developers who struck it rich with their last offerings are breaking ground again.  More than six thousand new units are set to deliver in downtown Chicago in the next three years, all in prime downtown locations.

The Chicagoland Apartment Association preview breakfast was a showcase for those developers, who are very positive about the downtown Chicago apartment market.  Here is what the panel of developers and industry experts had to say…

Curt Bailey, President Related Midwest 

Proposed Projects:

Property                         # of Units                    Status
500 N Lake Shore        500                               Ready to break ground
111 W Waker                450                               Ready to continue building

His thoughts on the market:

• We did “years of research and due diligence” to make sure these locations are going to be successful.
• We are building as 100% rental buildings with floor plans that work for renters (read: lots of studios, convertibles and one bedrooms).
• Chicago used to be rent until you were ready to buy. Now it’s rent and continue renting for awhile.
• These properties will be some of the nicest in Chicago.

Greg Mutz, Chairman and CEO AMLI Residential

Proposed Projects:

Property                         # of Units                    Status
AMLI River North          427                             Just broke ground

His thoughts on the market:

• AMLI has over one billion dollars in the pipeline nationwide.
• Apartments are selling for much more per square foot in downtown Chicago than condos.
• Cost to building downtown is not much more than suburbs; a large reason for continued building.
• Chicago is a relatively easy market to find subcontractors and labor compared to Texas or any southern states.
• When reselling apartment buildings now, you only need to show single digit rate of return (6-7%) versus the 12%+ before the recession.

Steven Fifield, President and CEO , FRC Realty Inc.

Proposed Projects:

Property                         # of Units                    Status
365 N Halsted               500                              Ready to break ground

His thoughts on the market:

• Lending has become much tougher in this environment.
• The major reason luxury apartment buildings are selling is because of the internal rate of return (IRR).  Because these buildings are all 95% or more leased, there is a high IRR.  It is one of the safest investments large institutions can make right now.
• None of the new developments are using land that requires affordable housing.
• Prices to build properties right now are the lowest in thirty years.  It’s a great time to build if you can get the financing.

Nick Ryan, Managing Director Marquette Companies

His thoughts on the market:

• Acquiring lots of properties all over the country; Class A, B and C buildings.
• Had tremendous success with Trio in the West Loop.
• Also recognized apartment buildings as one of the safest investments available to large institutions.
• Construction quality is better than ever because architects and contractors have time to do it right.
• On retention, 60% of people used to jump buildings each year and now 60% of people are staying.

Mark Stern, Senior Vice President Acquisitions Waterton Residential

His thoughts on the market:

• Having great success with Mondial in River West.
• People are getting rent increases, looking around and realizing they should stay.  There are no bargains to be had right now.
• Cautiously optimistic about the market; there may be too much coming on at the same time.

Stay tuned.  As these buildings continue to break ground, we’ll be following them every step of the way and posting an in-depth analysis of the progress and plans for each property.

More Luxury Chicago Apartments Coming – But Not Soon Enough

This week Luxury Living Chicago’s Broker, Aaron Galvin, was quoted in a story on MultiFamilyHousingNews.com about the start of construction of 500 Lakeshore Drive – a new luxury apartment building set to be delivered May 2013.

That’s not soon enough, believes Aaron. We are currently experiencing a lack in availability of apartments and condos for rent in downtown Chicago. We need more luxury Chicago apartments and soon. Occupancy has hovered around 95% for class A buildings all summer long.

Unfortunately, we’ll just have to wait, as no new buildings are set to open until late 2012/early 2013.

However, there are plenty of buildings in the works. Aaron believes it’s a great time for developers to get into the multifamily housing game, as this is the one sector of real estate thriving in the down economy. Aaron cautions developers that they need to build with longevity in mind. This means creating floor plans, amenities and other building features and conveniences that appeal to both renters and ultimately to buyers.

Lots of New Luxury Chicago Apartments on the Way..

In a recent article published in the online (subscriber only section) of Crain’s Chicago Business, writer Alby Gallum reports that there are nine new residential high rises either under construction, set to break ground or seeking financing in downtown Chicago.  This equates to an additional 3400 units set to hit River North, Streeteville, the Loop and Old Town by the end of 2012.   That is a lot of fancy new apartments!

Just to put it in perspective, we saw about 3000 new apartments come online in the past 18 months.  Most of those properties are doing well and are approaching stabilization, even amidst this depressed economy.  In fact, Class-A apartments (the new and nice ones that everybody wants) are expected to increase in price by about 10% over the next 12 months.   Rentals are hot right now and prices are going up.

But I have to stop and ask the question?  Is this too much?  Are we headed down a path where we build too many apartments and still have a glut of unsold condos to boot?  How many people are really moving to Chicago?

Ultimately, this aggressive building spree is going to help renters in the long run.  Prices are going to go up over the next couple of years but when these new buildings open, incentives will be there and the level of finish, amenities and variety of floor plans will provide a great value for luxury downtown apartments.  All of these new buildings are going to compete with each other and that always helps the renter.  Brand new is great and the wait doesn’t seem too far off.

Rumor – Peshtigo Condo Tower Going Rental

Rendering of The Peshtigo

Rumor has it that The Peshtigo, which was originally slated to be a 57 story condo development, will now turn rental.  The Peshtigo condo project was scrapped as sales slumped.  Agent X for Chicago Agent Magazine is reporting that Related Midwest will now develop the building as 500 rental units in the Streeterville area.  The company also has plans to change the building’s name.

This is a truly exciting development, as this will be the first luxury rental building in the Streeterville neighborhood since Streeter Place opened in 2009.  The demand for downtown Chicago apartments in the Streeterville area is high and as the current buildings in the neighborhood usually remain at 95% occupancy or higher, rental apartments are lacking.

Furthermore, if Related Midwest outfits this building right with condo quality finishes and plentiful amenities, they will have a homerun on their hands.

We will stay on top of this story as it develops.

One West Superior – Still Living in the Good Old Days of Real Estate

It has recently been announced that the River North high rise One Superior Place (1 W. Superior) is for sale.

The owners, Brookfield Asset Management Inc., have not set an asking price, but Crain’s is reporting that Brookfield is hoping to put a $260 million price tag on the property.

In the current real estate market, where investors are snatching up empty properties for forty to seventy five cents on the dollar, a $260 million asking price seems high. But this 809 unit building is 98.8% occupied (according to Appraisal Research), which is probably what is putting those dollar signs in Brookfield’s eyes.

One Superior Place has always maintained notoriety. It’s the building everyone interested in living in River North always asks about, but lately has been passing on. This is because there is a plethora of new, condo-quality properties in River North with competitive pricing.

Lately our clients have been willing to give up the prime central location and tremendous amenities that One Superior Place offers, in favor of more modern and updated finishes, which One Superior Place’s units lack.

It will be interesting to see what will happen with this sale and if the new owners will invest the needed capital to ensure that One Superior Place remains a Class-A building for the long haul.

A Whole Foods in the building is nice, but granite, stainless steel and hardwood floors in unit seem to be trumping that these days.

How Do Locators Get Paid? And What Makes a Good Locator?

A lot of people ask how locators get paid. There is a misconception that if you work with a locator or apartment finder, you wont get a good deal because the property or landlord needs to pay out a commission.

This is not the case. And if you find a good locator, you even have a chance of paying a little less in upfront fees. A good locator will have positive relationships with properties and landlords and might be able to work a better deal.

Typically a locator will earn a one month’s rent commission for their services. This is paid by the property or landlord.

A Chicago apartment finder should never charge a client for their services. It is 100% free to the consumer.

How can you tell if a locator is worth the commission they make? It’s all about your initial conversation.

Do they ask you any questions about your search outside of your move date? Or do they simply schedule a showing and figure they will get the information when they meet you.

The types of questions a locator asks are very indicative of the service they will offer. A locator that asks extensively about your search criteria, price range and motivation for moving will probably have several properties lined up to show you that match exactly what you are looking for.

A locator that asks nothing except the time you are available to tour will end up showing you what they want you to see, not what you want to rent.

Don’t be hesitant to work with an apartment locator, but be selective about the type of locator you are touring with.

A Morning In the Commercial Real Estate World

This week I attended BisNow Chicago Real Estate Summit, an exclusive look at the commercial real estate market at the Mid-America Club.

Now why would someone who primarily plays in the Chicago residential rental world attend a commercial real estate function?

I asked myself that very same question as I sat listening to people discuss “asset depreciation,”"churn rate” and other commercial terms.

It’s always important to learn about the different areas of real estate.

But I was really there to see the big guy – Albert Friedman of Friedman Properties. He is practically the king of River North.

Friedman is always a dynamic speaker and the story of how he has transformed River North from warehouses and empty lots to the vibrant epicenter of Chicago is pretty inspiring.

Plus Friedman is entering some new territory. This past July Friedman announced that he will be partnering with AMLI Residential on a new rental building at the corner of Clark and Hubbard. It’s Mr. Friedman’s first foray into the Multi Family Housing arena and I can’t tell you how excited I am about the new building.

Chicago Spring Apartment Rental Pricing

Spring has arrived in Chicago. With the change in season comes a change in apartment pricing.

The downtown Chicago luxury rental properties are moving the last of their winter inventory, offering just a few deals on a few units in an effort to ramp up for the Spring/Summer rental season.

What this means for the person currently searching for an apartment for an April thru May move date – jump on it! What you see now won’t be there in a week (or even in a few days).

If you see your dream apartment now – rent it!

For example, one of the newest properties in River North has been offering convertible apartments for $1475. This week, prices for those same units have jumped up to $1660.

Another popular property in Lakeshore East has been offering all one bedrooms for a flat rate price of $1495. Those will be going up to $1600 by the end of the month.

At Luxury Living Chicago we strive to make our clients feel confident in selecting an apartment.

Search our inventory of luxury apartments today and take advantage of the last opportunity to rent that amazing convertible apartment for $1295 instead of $1450.

What Sets Us Apart From Other Chicago Apartment Finder Services

Luxury Living Chicago works hard to set our service apart from other locating companies in Chicago.

With six years of experience, exclusively in the downtown high rise arena, no one has more knowledge or insight about this niche market.

Whether you are coming from out of town, live in a Chicago-land neighborhood or currently rent downtown, Luxury Living Chicago offers a personalized service that will help you feel confident in selecting your next home.

If you’ve been on Craigslist lately to search for an apartment, you know how cluttered and confusing it can be. The pricing is wrong, the pictures are inaccurate and your requests for showings go unanswered.

We only provide the most up-to-date pricing and never “bait and switch” our clients with false advertising.

We pride ourselves on our quick response time. While other companies promise 24-7 service, we deliver.

Plus, our leasing consultants live the downtown life. They are not fresh-out of college. This is their career and they understand the needs of the upscale, professional client looking to live in a downtown Chicago high rise.

Our service is especially valuable for those who are relocating and are unfamiliar with downtown Chicago. We make the large world of internet searching much smaller and easier to decipher.

Feel free to call or email us with any questions. You’ll hear back from us right away!