One of the big stories of 2012 has turned out to be the sheer number of highrise apartment buildings that are being built and/or are under consideration for construction in the GreenZone, specifically the downtown neighborhoods.
Every few months there are new announcements of yet a couple of more highrises that have gone on the drawing board.
Crain’s recently reported on the latest developer to jump into the apartment fray.
Vancouver, B.C.-based Onni Group of Cos. recently paid a combined $17.8 million for a 30,000-square-foot commercial building at 353 W. Grand Ave., the former site of the Clark & Barlow hardware store, and a 40,900-square-foot parcel at 750 N. Hudson, the former Rezko property, property records show.
Onni, which bought the 30-story office tower at 200 N. LaSalle St. in April, intends to build a mixed-use development on each site that would include 200 or more apartments and retail or office space, said Onni acquisitions executive Dan Bell.
“Obviously we haven’t built anything (in Chicago) yet so it’s a bit of a learning curve for us,” Mr. Bell said, adding that the city’s “diverse economy” and “young and affluent profile” make it attractive from a development standpoint. “I think it’s (a market) that’s not going anywhere and one that, in the long term, you’re not going to go wrong in investing in as long as you’re buying the right locations for the right price.”
Onni is joining the herd of developers that have stampeded into the downtown apartment market in recent years, lured by rising occupancies and rents. Developers are expected to add more than 7,000 units to the downtown market by the end of 2014, raising concerns about a potential glut.
In River North, that includes Amli Residential’s 409-unit development at 71 W. Hubbard St. and Habitat Co.’s 450-unit project at 360 W. Hubbard St., according to Appraisal Research Counselors, a Chicago-based consulting firm.
But are the developers worried about the sheer number of units being built?
Not in the least.
While developers are building more apartments today than ever, fueling concerns about overbuilding, Mr. Evans said he is not concerned about supply getting ahead of demand because most condominium developers have been sidelined since the recession, leaving more room in the market for rentals.
“We didn’t buy these things to hold as land, so our intention is to proceed as quickly as we can, but we also need to educate ourselves on certain aspects of the process,” Mr. Bell said.
Any guesses on how this apartment boom is going to play out over the next five years?
- Answer A: It’s perfectly fine Sabrina. Demand and supply are in sync. Nothing to look at.
- Answer B: The apartment glut will be solved when they are converted to condos during the next condo boom which Clio believes will start about 2016.
- Answer C: Developers will get into financial trouble…again.
- Answer D: None of the above- I’ll supply my own expert analysis in the comments.
Canadian firm plans 2 River North apartment projects [Crain’s Chicago Business, Abraham Tekippe, October 17, 2012]