As Apartment Rents Rise Developers Unveil New Condo-Tower Plans
After years of battling higher real estate taxes and operating expenses, Chicago landlords finally are taking advantage of the urban apartment boom and pocketing some hefty rent increases.
More than $14.3 billion in rent was paid in the Chicago area in 2014, an increase of 7.4 percent from a year earlier, according to a new analysis by Zillow. That translates into a $50 average monthly rent increase for Windy City renters, compared with a U.S. average boost of $26.
However, tenants in other hot rental apartment cities are paying more. In San Francisco, the average rent hike was $163 a month in 2014, and landlords there raked in a hefty $14.6 billion.
Average rents in Denver jumped $86 a month, and Seattle renters paid an average of $71 more per month in 2014. Rents in Washington, D.C. and Miami-Fort Lauderdale rose an average of $59, and Boston tenants paid $58 more a month last year.
With the nation’s homeownership rate slipping to 64.3 percent in the third quarter of 2014, from about 70 percent before the Great Recession, Zillow economists expect rents to rise faster than home values in 2015.
With rents skyrocketing, it’s no wonder Chicago home and condominium developers are scurrying to lock in sites for new-construction units. Experts say the pendulum appears to be swinging back toward building for-sale units after a nearly seven- year hiatus.
Downtown, plans for new condo high-rises popped up nearly every week in December and January:
• Wanda Group, a Chinese developer, and Chicago-based Magellan Development Group want to build an 88-story condo/hotel tower on the south bank of the Chicago River in the Lake Shore East neighborhood. Dubbed Wanda Vista, the project calls for 390 condos, 250 hotel rooms and 9,000 square feet of retail space are planned in the $900 million project.
• Related Midwest is planning a 67-story tower adjoining a 1.7-acre park on the southwest corner of Grand Avenue and Peshtigo Court in Streeterville. The tower would include 100 condos and 250 apartments. Under the site is a 900-space parking garage. In November, Related also took title to the 2.2-acre Chicago Spire site at 400 N. Lake Shore Drive, but plans have not been announced.
• Belgravia Group reportedly is in negotiations to secure the air space above an underground garage at 403 N. Wabash immediately north of Trump Tower in River North. Preliminary plans call for building a 16-story high-rise with 52 condo units.
Developers also are moving to acquire sites along the South Branch of the Chicago River in an emerging neighborhood now being called “River South.”
• CMK Development, a Chicago-based residential developer, has acquired one vacant riverside parcel and is buying two others between Congress Parkway and Roosevelt Road.
A pending acquisition is 5.1 acres at Franklin Point, along the river, just south of Harrison Street. CMK has acquired a 1.8-acre site on the river just south of River City condos.
In 2014, CMK broke ground on a 144-unit building at 1345 S. Wabash, the biggest downtown condo project since the real estate crash.
The land-rich River South neighborhood also includes a vacant 62-acre riverfront parcel located south of Roosevelt Road. Rezmar Development originally proposed 4,600 homes and condos on the site before the Great Recession, but that plan faded and the land was sold to General Mediterranean Holding, a Luxembourg-based conglomerate.
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.