Chicago Apartment Search- Places Are Going Fast!

Did you catch the article in Sunday’s Chicago Tribune?  It was right, smack on the front page of the Real Estate section – Apartment Hunting in a Tight Market.

The article details how apartment vacancy rates are at some of the lowest levels in a decade nationally – around 94 percent in prime buildings in downtown Chicago.  The article also points out that if you are searching for an apartment, you’ll need to act quickly because apartments are going fast.

I’ve had several people ask me about the article, even my dental hygienist this morning asked me if it was true.  Are downtown Chicago apartments really renting that quickly?

My answer is absolutely.  In the past we’ve always advised our clients to take the time necessary to think about which apartment they’d like to rent, but not to wait too long because there was always a chance the apartment might get rented.

Now we strongly urge our clients to make careful, but quick decisions.  It’s not uncommon these days that the apartment you really like will get rented over night – and possibly over lunch.

It’s tough out there.

That’s why it’s more helpful than ever to work with a downtown Chicago apartment finder to help with your apartment search.  Our team at Luxury Living Chicago is up on the latest availability and pricing and will help you feel comfortable choosing the luxury apartment that is right for you.

 

Is a Downtown Chicago Apartment Bubble Looming?

In a recent article from Crain’s Chicago Business (Surge in Supply Could Hit Downtown Apartment Rents), Ron Devries of Appraisal Research Counselors, Crain’s oft-quoted multifamily housing source, discusses the increase in rents over the past 12 months and the outlook moving forward.

While Appraisal research has continuously informed landlords and developers that the downtown Chicago rental market is short of supply and strongly encouraged the new development occurring in River North, Streeterville and Lakeshore East, they now warn that there are too many luxury Class A apartment units coming online in the next couple of years.

Further, he describes the impending apartment bubble as “…heartache for developers because 3500 units is a lot of units and we don’t have that much demand.”

As someone who tracks the downtown Chicago Luxury apartment market daily, this comes as no surprise to me.   There are only so many people looking for this type of living environment and all the stainless steel, state of the art workout rooms and rooftop pools are not going to change that.  The luxury high-rise building is for a specific client.  It’s for someone who wants to be close to work, steps from Chicago’s most trendy restaurants and have all the conveniences at their fingertips.

So what does this building boom (bubble) mean for the renter?

The Market in 2012

In the short term, landlords and property management companies are in the driver’s seat.  While there were 3500 new luxury apartment units that came online in 2010 and 2011, there are virtually no new apartments this year.  Prices are going to remain high and will increase even more through the summer of 2012.

The Market in 2013

2013 will be a different story.  There are going to be about 2000 new units by summer of 2013.  While prices for these properties will still be quite high, they will offer amenities, service and level of finish not currently found on the apartment market.  Hardwood floors will be the standard and the locations are the best in the city.  These are true condo quality buildings.  These new ultra-lux properties will force the buildings built in 2010 and 2011 to lower prices or face mass vacancies.  There will be deals on those properties.

The Market in 2014

2014 will be even more interesting because that’s the point where supply will truly be greater than demand.  Will these buildings flip to condo instead of rental?  Will they continue to build more for 2015 and 2016?

Only time will tell but it’s a pretty safe bet that we are headed for a downtown Chicago apartment bubble.

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.

Luxury Chicago Apartment Prices Finally Coming Down—Too Bad Leasing Season is Over!

It took about a year but we are finally starting to see some price decreases and increased concessions again in the luxury Chicago apartment market.  Buildings like Flair Tower and Parc Huron, two of River North’s premier and newest luxury rental buildings have steadily been increasing their rental prices since they opened in Spring 2010.  Both properties reached almost 100% occupancy and were asking rents of $2200 for 1 BRs and $3200 for 2 BR…and people came in droves!

Now, the slow season has hit and prices are falling.  The same 1 BR at Flair that was leasing for $2105 is now $1895 and the 2 BR are under $3000 again.   If you are looking for the best value, late fall and winter is the time to move…if you can handle snow!

Start your Chicago apartment search with Luxury Living Chicago today by browsing through our inventory of apartments.  We have the most up to date pricing and availability.

Luxury Living Chicago Featured in Chicago Magazine – Downtown Chicago Apartment Pricing Continues to Hold Steady

Luxury Living Chicago’s Broker, Aaron Galvin, is featured in the September 2011 issue of Chicago Magazine. Aaron sat down with Deal Estate’s, Dennis Rodkin, to discuss the major increase in rental pricing for downtown Chicago apartments.

This past summer pricing for luxury apartments soared. After a few years of slow or no change, downtown rents jumped by about 15 percent from summer 2010 to summer 2011. Even as we head into September and October, typically a slower time for the downtown Chicago rental market, prices continue to hold steady.

Aaron attributes the high prices to a shortage of inventory in the Chicago market. The summer of 2010 saw 3,500 new apartments come online, but no new buildings are set to open until later 2012 at the earliest. The lack of new units, coupled with the down housing market where people are opting to rent versus buy, has created the perfect storm for high pricing.

It’s the law of supply and demand.

Luxury Living Chicago Featured On NBC Nightly News and Wall Street Journal

This week, Luxury Living Chicago was tapped by two major media outlets to provide insight into today’s luxury rental market. First, on NBC Nightly News, we were asked to discuss the notion that people who can afford to buy are opting to rent luxury apartments. While the media is just noticing this trend, we have been talking about this for some time now. Plunging home values and overall uncertainty over where the market is headed – and when – have created an environment where people are looking to put off any housing purchases for another year or two, making renting the perfect option.

We also discussed the same issue with the Wall Street Journal later in the week, arguing while some statistics indicating the tide is beginning to turn, consumer behavior has not quite caught on. “People are scared” as Aaron Galvin was quoted saying, and we still see more and more perfectly qualified potential home buyers choosing to rent, not seeing homeownership as the safe bet it once was.

All these factors have added up to create a perfect storm: not enough apartments and quickly rising prices. The downtown Chicago apartment market is going to remain tight for at least a little while longer and your best bet of navigating quickly changing pricing and availability it is with help from Luxury Living Chicago.

Spring ’11 Pricing Update—Sky High Pricing & Limited Availability

Spring is always the busiest time of year for downtown Chicago apartment rentals and this season has been no different.  Even though Chicago still feels like February, people are getting ready to move and excited about the upcoming thaw.   There is one big problem though:  apartments are scarce and prices are high….really high!

Day after day I get calls and emails asking for apartments with washer/dryer in unit, granite, stainless steel and the new luxury finishes everyone is seeking.  People are also telling me they would like to spend $1600 on a spacious 1 BR..  Unfortunately, that is simply not available.  True luxury apartments have gone up as much as 20% since last year and it’s tough to find a luxury one bedroom any less than $2000…and that doesn’t include parking!

Here are the top three questions I have been asked lately and my take on the market:

Why are prices so high?

The answer is quite simple:  supply and demand.  There is a shortage of luxury apartments available for two reasons.  First, all of the brand new, fancy places that came to market in 2009 and 2010 are occupied.  People received great specials last year and they love their apartments.  That leads to the second reason.  The people that rented these luxury Chicago apartments don’t have any newer options and don’t want to buy condos, so there is little incentive to make a change.  Owners and management companies are increasing rent just enough to maximize revenue and it doesn’t make financial sense to move.  Supply and demand, plain and simple.

When are prices going to come down?

It’s going to be a while.  There are no new downtown luxury properties set to deliver until 2013 and unless the Chicago condo sales picks up tremendously, people are just going to keep renting the nicest properties they can.  There will be a slight dip at the end of the year as the weather turns but the prices and lack of availability is here to stay?

If the prices are so high, what can you do for me?  Is there any negotiation?

As I mentioned, there is not a lot of availability so owners/management companies are not very likely to negotiate.  The value we bring in this type of market is our market knowledge.  We know the buildings that have vacancies and can find the best value such as lower floors to bring the price down and dog floor options that are even harder to find.  We stay on top of these luxury properties each and every day to get updated availability and once you become our client, you are the first to know.  The concept of client has become even more important in this environment.

There is no question prices are high and it’s not as easy to find apartments these days.  However, downtown Chicago has never been a better place to live for the nightlife, restaurants, and world class shopping.  Just be glad it’s not New York!

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.

2011: The Year to Rent it and Forget It

For the past couple of years, we have been inundated with conflicting articles, blog posts and news stories about the housing market.  Some argue we have hit rock bottom and others opinion we still have another 15-30% to drop.   Our potential clients are confused and no one can provide a straight answer.

In a recent interview with CBS’ 60 Minutes, Federal Reserve Chairman Ben Bernake said “…housing can’t get much weaker.”  But in that same interview Bernake defended the $600 billion dollar stimulus needed to help “…keep [mortgage] rates low and improve housing.”  If Bernake is confused, how are we expected to tell our clients it’s a great time to buy or sell?

The answer:  we are not.  It’s not a great time to buy or sell for some.  It’s a great time to rent.

For years there was a cache that came with owning a home.  It didn’t matter you paid exorbitant assessments and taxes or needed to repair something every week.  You were a homeowner and you had made it.  Now the tides have turned.  It has become not only socially acceptable to rent, but viewed as the smart alternative. And there are definitely some great rental options these days.

Specific to the downtown Chicago luxury market, there have been a dozen rental properties with 3000 brand new units that have come online during this “down time.”  These are buildings with state of the art amenities and truly modern finishes. These are not starter apartments.  These are homes that people are choosing to live in rather than losing sleep debating if buying is a good investment.  And more condos are being converted to rentals every month.  This trend promises to continue.

Additionally, other downtown neighborhoods and many surrounding suburbs have seen such declines it’s simply not worth selling.  This has created even more rentals and a very unique opportunity to rent condos and houses many cannot afford to buy in this ever-evolving economy.

When making housing decisions, people tend to compare the rent vs. buy ratio.  While in part a great tool, the one aspect this guide does not provide is peace of mind.  We don’t know if the price is going to go north or south right now.   It’s just too volatile.  We do know you can get a great rental property, love where you live and not worry about it for at least a year.  2011:  Rent It and Forget It.

Luxury Living Chicago Featured on CNBC.com – Renting vs. Buying

I am very excited to share that last week I was quoted in a CNBC.com article about the shift towards renting a luxury apartment in lieu of home ownership.

Joseph Pisani, the author of the story, sensed a trend in the housing market where people who can afford to buy property, are instead choosing to rent luxury apartments.  Pisani contacted me to see if this was indeed happening in the luxury apartment rental market in downtown Chicago and I told him yes.

Where owning a home used to come with a status symbol, the current housing market and all of its foreclosures and loss in value have now made renting the more responsible choice.

Those who had been saving for down payments are now hesitant to purchase a home and people who have seen the value of their property decrease are now selling when they can and renting until the market stabilizes.

The time is certainly right for renting a downtown Chicago apartment.  This past year, there have been 2,500 brand new rental units that have come online and another 1,300 slotted for the next 24 months.