The Third Biggest Story of 2013: New Construction Apartments Everywhere
We’ve chattered extensively about the new construction high rises going up in downtown Chicago.
Some might have deja-vu with 2002-2006 except these are being marketed as apartments and not condos.
As of September 2012, 3018 units were under construction with delivery expected in 2013 or 2014. (I couldn’t find more recent data about 2013- but I’m sure Crain’s probably has updated numbers.)
Another 7500 units are “proposed”. It’s unclear how many of them will find the funding to get built.
See the Tribune’s September article on the downtown apartment boom here.
Every week seems to bring an announcement about a new apartment high rise or in the case of Old Town, a mid-rise.
These are mainly luxury units, with hardwood floors in the main living spaces and granite counter tops and stainless steel appliances in the kitchen.
Strong demand and low supply has pushed rents up about 20% in the luxury market downtown.
Will rising rents push more renters into buying condos in 2013?
Or will the apartment boom end up in a bust -and declining rents?
I just saw the Case Shiller spokesman on tv and he said the reason that Chicago is one of only 2 cities to see negative prices in October was because Chicago didn’t see the boom (so why would it participate in the rebound?)
Wow.
I think it’s builders/banks once again overestimating the amount of people, willing or able to pay such prices. I sense a bust coming due to surplus in Supply. IMO, alot of people still don’t want the L-T commitment of home ownership unless they see themselves in that unit a good 5-8 years but at the same time forking over 3k to live in a Palms Las Vegas type building is unreasonable to them. And it seems like these buildings are being marketed to generation Y-ers, which is really bad timing.
There was just an article in LinkedIn about the financial hit the generation Y has taken because of low salaries and huge school debt so this post ties great into that conversation. If salaries are down, bonuses are dying and Aunt Sallie Mae wants her payment in full (no more extended or I-O payments or deferments) it will be much harder to afford $2500 + for a 1 BD.
Just walked by a massive development under construction in Evanston on Chicago Ave. south of Main Street. Looks like it will be hundreds of apartment units, and a friend of mine in the neighborhood says most will be 1-bedrooms.
I wouldn’t doubt the demand. 3000 units is a drop in the bucket in the Chicago housing market and they’re likely to replace old dumpy vintage northside units scattered around the city. considering all the multi units that have been torn down and replaced with 5 star luxury sfh in the last 10 years some new nicer apartments are welcome.
I see now the Trib article Sabrina links to mentions the Chicago Ave. development in Evanston that I saw. The comment someone made here about Gen Y makes sense to me. With school debt so high, how are these people ever going to be able to make a down payment? No wonder it’s anticipated there will be more renters.
Most rentals are shitty, any new construction is welcome I guess… long as they dont sit abandoned or go Section 8, who cares
“I just saw the Case Shiller spokesman on tv and he said the reason that Chicago is one of only 2 cities to see negative prices in October was because Chicago didn’t see the boom (so why would it participate in the rebound?)”
Not only is that false, but it doesn’t even make any sense… who was this spokesperson? Should start a new running cribchatter joke about him whenever prices are wacky
The rental stock in Chicago is severly dated. The choices are vintage walkup with severe deferred maintenance or modern (meaning crappy architecture built in 60s/70s80s) midrise/high rises that still have the original musty carpeting and 8 foot ceilings. When I bought my first place a prime driver was that we couldn’t find anything worthwhile to rent. There is pent up demand for decent rental stock targeted at young professionals.
How many more single, $70k+ making, Gen-Y’ers (under 35) are out there that want to live near the Loop that are not already doing so? I just don’t see how the saturation point doesn’t hit at some point in the next 2 years.
I know this is extreme, but will rising rents kill River North? As prices rise, it force people to be older to be able to afford to live there. River North seems to be made up mostly of SINCs and DINCs who move out when baby Timmy comes along, and retirees. If the S/DINKs can no longer afford to live there, then what happens?
most of the people eating at fancy restaurants in river north are older folks who actually have money… Most of the kids here are getting money from mommy and daddy so they don’t care really how much teh rent costs, most working clowns right out of college “want” to live in RN but can’t so they slum it in some 8br or 1br POS iwrigleyville till they ‘make it’ or maybe trixie will want to get hitched and move to Schaumburg first… yeah generalizing is so much fun, I don’t think that these rents will kill the housing market, as long as its developed properly. And if they are stubborn at lowering their rents, maybe it will help the terrible condo market /shrug
“The rental stock in Chicago is severly dated. The choices are vintage walkup with severe deferred maintenance or modern (meaning crappy architecture built in 60s/70s80s) midrise/high rises that still have the original musty carpeting and 8 foot ceilings.”
Russ: you’re thinking Lincoln Park or other north side neighborhoods. These 3,000 units are being built in the downtown market alone. There are only a few larger buildings being built outside of downtown right now. Everything else I’ve seen being built on the north side has been condos. So these buildings aren’t replacing the dated rental housing at all. That’s still there.
The 2 roommates renting the $1500 place in Wrigleyville aren’t suddenly going to up and move to River North and rent the $3600 2-bedroom place instead.
“There was just an article in LinkedIn about the financial hit the generation Y has taken because of low salaries and huge school debt so this post ties great into that conversation.”
Ditto on all the worries about Gen Y, it’s a huge looming cloud. These people have no money. Plus, their generation is increasingly made of up children of impecunious immigrants. All those 4,800 sf homeowners out on Gilmer Road, Wynstone, those types are screwed, they have no take-out buyers. Now, parts of Lake View seem to defy all analysis, I was at a home on Lakewood, south of Addison, and that hood is just the golden zone, it’s better than LP….in LP the people are jaded, in Lake View they’re still all-American and just great. Good looking kids.
“River North seems to be made up mostly of SINCs and DINCs who move out when baby Timmy comes along”
You should take a look at the playground at the corner of Kingsbury and Erie on a sunny day. LOL
“Now, parts of Lake View seem to defy all analysis, ”
This does not defy all analysis. The middle class is disappearing. Those that are left either move up, like myself, or they move down, like some of my siblings. Chicago has an especially large upper-middle class job base. Not all those homes are ‘wealth’ a lot are simply a veneer of wealth hiding behind a DTI ratio. I don’t have the time nor the inclination at this point to show that the middle upper classes are growing but I’ve seen evidence in the past that it is given the income gains of the past decade. I know I’ve moved up. I grew up in a middle class suburb and I’ll solidly in the upper middle class in nearly every respect. Now of course I’m on the lower end of that upper middle class but hey, my generation as a whole is poorer, despite a larger number of people making more money than previous generations. FOr example , my best friend in grade school married a lawyer and he’s doing some consulting or something and between the two of them they’ve got to be making in the $300’s or more, and they’re just two regular people from suburbia – his mom works for the post office or something.
” All those 4,800 sf homeowners out on Gilmer Road, Wynstone, those types are screwed,”
Long term those people are screwed, especially those with 4,800 sq with vinyl siding and high utility bills in a far flung suburb far from downtown. There will always be demand for nice housing in nice suburbs within 30 min rush hour commute from job centers (schaumburg, oak brook, rosemont, various corporate campuses, Naperville). Astella just built a huge building off 294 in Northbrook there’s going to be a lot of good high paying jobs in that building. It’s the ‘bad’ suburbs with lower middle class / workign class folks that have taken a hit, along with the far flung suburbs. But 2,000 – 2,500 sq ft of finished space – even if it’s dated but structurally sound – in a suburb 30 minute or less from a job center (Which btw excludes much of lake county, mchnery, kane, kendall and will), have held their value *relatively* well. This isn’t rocket science here.
“.in LP the people are jaded, in Lake View they’re still all-American and just great. Good looking kids.”
Yo Hater in chief, firstly, what straight guy talks so much about looks? Let’s not even go there with remarks about children’s appearance which is just creepy. Secondly, given that by all-American you mean white American (forget that native Americans were anything but white) according to wiki, most of the group are from German, Irish, and British heritage neither of which are considered to be much of a looker among Europeans in fact quite the contrary…lol But hey, beauty is in the eyes of the beholder.
http://en.wikipedia.org/wiki/White_American
you’re a whack job, miumiu. I complimented Lake View. Sorry that bugs you.
“I know I’ve moved up. I’m solidly in the upper middle class in nearly every respect.”
Good for you, reading that must really make JZ burn…plus, the fact you’re not divorced.
homedelete: “I know I’ve moved up. I’m solidly in the upper middle class in nearly every respect.”
Sorry to burst your bubble, but aren’t you the debtor turned wage-earner who can’t even afford to pay for his own tuition?
There’s not a whole lot of “upper middle” about that. Win a few million dollar case at 33% contingency, and pay off your freakin debts to society. Then start calling yourself “solidly upper middle.” Until then don’t embellish/b.s. too much. Law degree or not, call it what it is, working class.
brad f, the severely underwater FB commerical real estate guy livkng in a dumpy loft on the west side is telling me that a few million dollar cases makes someone upper middle class. your view of wealth is as skewed as your real estate purchases. maybe you should find something else to do in life instead of bullying anonymous Internet posters. get a life!
jz and brad are probably friends.
“the severely underwater FB commerical real estate guy livkng in a dumpy loft on the west side”
I think you are mixing up greater-smith-park Bradford, with hot-water-squat-leapfrog-millionaire Brad F, but can’t be sure without alpha-access to the Wiki. Why wasn’t I included in the test-group, Icky?
“maybe you should find something else to do in life instead of bullying anonymous Internet posters. get a life!”
And they said irony was dead.
homedelete: “telling me that a few million dollar cases makes someone upper middle class. your view of wealth is as skewed as your real estate purchases.”
—-
That’s funny because I’m not underwater on anything I own. You, however, are way underwater on your education. You borrowed money to pay for it, and judging by your comments after that investment you still apparently aren’t that smart. Btw, that money you borrowed came from me and people like me.
The implication of my statement about winning a few million dollar case is that you should put at least 33% of a few million in the bank before you spout off about how upper middle you are. I’ve actually worked on cases with multiple billions at stake for the litigants, does that make me super rich or on the path to being there? Of course not.
Since you haven’t even paid for your education yet, I’d guess that your net worth is pretty close to zero, yet you declare yourself upper middle class. You probably have far less money than most uneducated tradesmen (masons, plumbers, heck even the UPS guy).
It’s interesting that when someone contradicts your grandiose claims about your class in society, you immediately attack that person. Not by refuting anything they said (b/c apparently it was all true) but by attacking your perception of the quality of their residence. What kind of people do things like that? People like Homedelete.
If someone can comfortably afford to live in Park Ridge, Deerfield, Glenview, etc. that’s upper-middle-class by Chicago standards. One also need to be married and have children to be classified under that traditional term (UPM), it applies to well-rounded families. “Single guys” living in lofts, no matter how much money they make or claim, aren’t considered to be fully men and don’t even merit in the discussion.
I would say that having little to no net worth should exclude someone from being UPM. I’ve met people underwater with negative NW currently living in nice Park Ridge homes with families, who would meat your definition, UPM? I’d say no.
Do UPM people live in Park Ridge, Glenview, etc, yes, I’m sure some do. But does living in one of those areas with a family MAKE you UPM? Nope, there’s your logic flaw. That’s the problem, everybody wanted to leverage to the hilt to live in nice areas so they could form the appearance or illusion of middle class or upper middle. A fragile illusion that didn’t work out so well for most.
It’s really a matter of the whole definition of “middle class” getting screwed up. It’s supposed to mean those in the middle between rich and poor, such as business owners and investors (such as myself), doctors, PhD tenured professors at well known universities, and successful established attorneys (who have presumably more than paid off their school loans 10x over). Middle class is supposed to mean not rich, but not a typical shlub either. Now it has come to include average working people, bunched together around the median. Typical wage earners who are a job loss away from a forced lifestyle change fall under the new bastardized definition of middle class. Middle class and especially “upper middle class” people shouldn’t be on lower financial footing than uneducated tradespeople. Or postmen, or teachers, or chain store district managers.
“Middle class is supposed to mean not rich, but not a typical shlub either. Now it has come to include average working people, bunched together around the median. Typical wage earners who are a job loss away from a forced lifestyle change fall under the new bastardized definition of middle class. Middle class and especially “upper middle class” people shouldn’t be on lower financial footing than uneducated tradespeople. Or postmen, or teachers, or chain store district managers.”
Brad F.: Middle class has nothing to do with “professional”. In fact, most professionals would be deemed upper middle class.
Middle class, in my opinion, are those living on about $45k to $80k a year. Ever try and raise 2 kids on $60k? That is middle class. Upper middle class are those above that with 401k accounts, kids college savings plans, $4,000 ski vacations or cruises. Sure- some people simply charge the lifestyle. But ultimately, income determines what you are.
Again- perceptions on this blog are skewed because most readers are upper middle class. But in the general population, very few people make $100,000 a year or more. Very, very few. Heck, if you’re a woman, your odds are only about 1% (of making six figures.)