Consumer

/

Home & Leisure

After apartments flood downtown Chicago, building boom reaches suburbs

Ryan Ori, Chicago Tribune on

Published in Home and Consumer News

CHICAGO -- Signs of an apartment boom are all over downtown Chicago, where construction cranes and the beginnings of towers dominate the skyline.

It's less visible and more spread out, but there's an apartment construction spree happening in Chicago's suburbs too.

Rental construction reached its highest level in more than a decade last year in the Chicago suburbs, and 2018 is shaping up as another busy year. More than 4,200 units were completed in 2017, and about 3,900 more units are projected for this year, according to data from Marcus & Millichap and MPF Research.

Both totals are higher than in any year since at least 2004, and there's no immediate sign of a letup.

"I think this has been an underserved niche for a long time, and it could be a while before supply catches up with demand, as it has in the city," said Marcus & Millichap broker Ryan Engle.

Suburban rents have been rising along with supply, according to the Marcus & Millichap data. Through the third quarter of 2017, average rents (after factoring in free rent offered to new tenants) per unit rose 5 percent over the year-earlier period, while overall suburban vacancy fell to 4.1 percent, from 5.1 percent.

--Sponsored Video--

The rental resurgence is the result of several factors, including a rising disparity between suburban and downtown rents, pent-up demand after little new construction over the past decade, and declining home ownership, industry experts say.

"It's still difficult to get a mortgage, and there's still a reluctance to take a bite of that apple since the '08-'09 financial collapse," said Greg Mutz, chairman and CEO of Chicago-based developer AMLI Residential, which owns residential buildings throughout the country, including in downtown Chicago and in Deerfield, Evanston, Vernon Hills and Woodridge. "Owning a home is no longer seen as the end-all be-all."

The ramp-up in construction continues a yearslong recovery in the suburban rental market, where fewer than 1,000 units were completed annually from 2006 through 2011.

Amid a frothy downtown market, some developers -- and renters -- are looking to the suburbs for a better deal.

...continued

swipe to next page
 

Comments

blog comments powered by Disqus