The Great Recession caused the housing-trend pendulum to swing from posh downtown high-rise condominiums to luxury rental apartments over the past eight years. Now another new trend appears to be underway.
Skyrocketing rents over the past few years in downtown Chicago’s new luxury high-rise apartment buildings are pricing out many Millennials and young professionals, experts say.
The average monthly rent in the Chicago rental market currently is $1,580, up 14 percent from $1,386 in 2013, reported Axiometrics, a Dallas company that tracks rentals from coast-to-coast.
Feeling the weight of paying off hefty student loans, many young renters are migrating north up the lakefront to more affordable rental neighborhoods such as Uptown, Edgewater, Rogers Park and North Lincoln Square.
Demand is creating an apartment-rehab renaissance in older high-rises and 1920s walk-up buildings along the North Side lakefront. Former downtown renters realize that Lake Michigan bike paths and beaches stretch all the way up to Evanston, and the greenery of Lincoln Park extends north past Bryn Mawr Avenue.
As a result, out-of-town investors are rushing to buy rental buildings along the Sheridan Road Corridor north of Foster Avenue and along the CTA Red Line north of Loyola University. Hundreds of rental units valued at tens of millions of dollars have changed hands in recent months, real estate brokers say.
To attract young professional, investors are renovating the aging apartments with high-end upgrades and amenities typically found in new-construction high-rises downtown, and they plan to eventually cash-in with higher rents.
In Rogers Park and Uptown, rents rose 2.8 percent in 2016 as occupancy hit 97.2 percent, reported Axiometrics. Rents in Lincoln Park and Old Town jumped 4.8 percent last year with occupancy at 96.5 percent.
The young renter’s wish-list includes such features as gleaming granite counter tops, stainless-steel kitchen appliances, cabinetry, designer lighting, hardwood floors and new baths.
Young professionals also are shopping for other upscale amenities—such as an upgraded lobby, resident club room or lounge, free wireless Internet, a high-tech laundry center and roof-top deck with fire pit and barbeque, noted Reside Living, a Chicago-based company that manages several thousand rental units in the city.
The apartment-rehab trend also is inching its way west to undiscovered off-the-lake neighborhoods such as West Ridge, North Lincoln Square and Arcadia Terrace.
At the new 20-acre nature preserve at Western and Ardmore avenues you can fish, bird-watch, canoe, kayak and stroll on walking paths. Two blocks west of the nature preserve, renters can lease a renovated 2-bedroom apartment in a vintage 1920s walk-up for $1,250 a month including off-street parking.
A typical 1,200-square-foot unit features an individual gas forced air heating system, central air conditioning, mini-blinds and oak hardwood floors.
The renovated kitchen showcases new oven-range with vented hood, microwave, refrigerator-freezer, dishwasher, oak cabinets, faux-granite counter tops, a ceiling fan and a walk-in pantry.
Appraisal Research Counselors reported that since mid-2005, the number of new-construction downtown apartments has increased 150 percent. Developers currently were building 6,880 downtown units in the third quarter of 2016. And, about 3,500 new apartments hit the market in 2015 and 2016. That’s about double the annual average over the past 24 years.
With many the Millennials migrating north and the downtown market over-built, occupancy rates have slipped to 92.2 percent, and there has been a slight slippage in rents, reports Appraisal Research.
Rents in downtown “Class-A” buildings dropped to $2.98 per square foot in the third quarter of 2016, from $3.05 per square foot in the second quarter, Appraisal Research noted.
That means a typical 1,000-square-foot new apartment in the Loop, West Loop, South Loop, Streeterville, Gold Coast and River North now leases for $2,980 a month, down from $3,050 a month.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.