Market Conditions: Is It Now “Cool” to Rent Instead of Buying?
The Chicago Tribune had an article on Sunday about the new luxury downtown rental buildings and how hot they are with prospective tenants, despite an unemployment rate over 10% in the city of Chicago and sky high rental prices including studios for $1500 and 1-bedrooms for $2000 a month.
Unlike the suffering condo market, the rental market downtown is hot, and observers say the newest projects — which carry eye-popping rents that top out at $5,000 a month — should be more than 90 percent leased in the next 12 to 15 months.
“We were building right through the recession which wasn’t so great but we opened up at the beginning of a fundamental economic recovery in Chicago,” said longtime developer Steven Fifield. “Is there a huge recovery, no. But there are fewer people buying condos and more people renting.”
Leasing agents currently offer the typical one to two months of free rent associated with new buildings, but those concessions are fading as certain floors or units rent. While they sell the sizzle of condo-quality kitchens and baths, eco-friendly design, party rooms and personal trainers, building developers and managers also are looking ahead to rent increases. Without construction in the pipeline, the market expects significant market-rate increases by spring 2012.
“I think the landlords are starting to regain control,” said Lauren Dolan, manager of Flair Tower, 222 W. Erie St. “A year ago, some properties were waiving three months’ rent or throwing in all utilities. We’re pulling away from that now.”
Prospective renters also appear to have once been prospective condo buyers but the downturn in the condo market is actually making renting appear more attractive as its easy to move in and easy to move out at a moment’s notice.
When he decided to make a move this spring from Schaumburg to Chicago, Andrew Connell never considered buying a condo. Instead, he signed a two-year lease for a two-bedroom, two-bathroom unit at 215 W. Washington St., where he pays more than $2,000 monthly.
One downside is the outdoor swimming pool doesn’t get much direct sunlight. But that pales in comparison to what some of his friends are enduring. “I’ve got a few friends who’ve bought places and now they’re stuck because they can’t sell,” he said.
It also appears that River North and the Loop amenities are pulling people away from the popular near North Side neighborhoods.
Remember when it was big news that people were moving into the loop? Now, an apartment building opens, and no one even notices.
When she was transferred by her company from southern Florida to Chicago in March, Kentucky native Lindsay Larsen had two days to find an apartment. She eschewed neighborhoods like Lincoln Park and Lakeview, and toured a dozen buildings in the Gold Coast and River North before settling on a $1,480, 550-square-foot convertible on Flair Tower’s eighth floor.
“I wanted to be downtown by the young professionals and all around the action,” Larsen said. “There’s monthly events, wine nights. In the winter, everyone hibernates. It’s nice to know you’ve got a party room, flat-screen TVs, a pool table. That was a huge selling point for me.”
Will this housing downturn make renters out of a whole generation of possible condo buyers who will then bypass condos to go directly into buying their first house?
Downtown Chicago rental market soaring [Chicago Tribune,
