Downtown Chicago’s Rental And Condo Markets Are Rebounding
The long-awaited recovery of Chicago’s downtown housing market from the crushing pandemic depression finally is underway.
Experts say both the downtown apartment rental and condominium sales markets have gone from a bust in 2020 to a boom in 2021.
The downtown apartment vacancy rate has rebounded to 94.5% in 2021 from 86.5% in 2020 when Covid-19 caused an exodus from high-rises because residents feared being infected in close-contact elevators. In late 2020, when occupancies plummeted some Loop apartment management firms were offering hefty incentives of two months free rent and two months free parking to lure renters.
Integra Realty Resources, a Chicago appraisal and consulting firm, reported that Class A luxury apartment rents hit a record high of $3.41 per square foot in the second quarter of 2021, up from the former record of $3.31 per square foot two years earlier. And, at least one new deluxe high-rise rental building is charging—and getting—$4.20 per square foot.
Despite the lofty rents, downtown apartment leasing in the first half of 2021 ran ahead of the typical volume for a good year, says Ron DeVries, senior managing director for Integra Realty Resources.
Why? Apparently, many young professionals, who left the city and moved back home to their parent’s suburban residences in the early months of the pandemic, now are moving back downtown.
Also, the city’s robust tech-job market is attracting out-of-towners, who want to sign a downtown lease as offices begin to re-open.
Residential relocations in the first half of 2021 accounted for nearly 50% of the new spring leases downtown—35% were move-ins from out-of-state, and 15% came from the suburbs, reported Luxury Living, a firm which manages leasing for about 3,000 Loop apartments.
Apparently, residing downtown within a short walk to work is much more appealing than riding on a crowded CTA bus or packed elevated train for renters who want to avoid exposing themselves to the virus.
Coincidently, the pandemic caused the vacation travel market to shrink, sparking a depression in downtown hotel room rentals.
Meanwhile, a boom is reported in Airbnb rentals in safe, and well-located walk-up buildings.
“Many Chicago vacationers are choosing private homes and well-appointed apartments over downtown hotels as the travel industry rebounds,” noted Realtor Sara E. Benson, president of Chicago-based Benson Stanley Realty, who works with owners of income properties.
In Old Town and Lincoln Park, some Airbnb rental rates for upscale two-bedroom units with private outdoor space and in-unit washer/dryer are running more than $300 per night, Benson said.
Downtown condo comeback
After a dismal sales pace in 2020, year-to-date condominium and townhome sales downtown are running ahead of 2019.
The Chicago Association of Realtors reported in August that 654 Loop condo and townhome units were sold in the first seven months of 2021. That’s a 51% gain over the same period in 2019.
Midwest Real Estate Data shows that a total of 3,997 condo and townhome units were sold in the Loop, Near North, West and South sides through the end of July, 2021, up slightly from the 3,965 units sold in the first seven months of 2019.
In 2020, the pandemic, riots and social unrest practically shut down the downtown condo market creating an over-supply of listings. However, Realtors say in 2021 there still are bargains to be had because prices have not yet reached pre-pandemic levels.
Despite the rebound, condo and townhome sales on the Gold Coast and Near North Side still are running about 25% behind 2019. Only 1,776 units were sold through the end of July.
“It’s primarily because of crime, mostly car-jacking and smash-and-grab near Michigan Avenue,” noted Realtor James Kinney, a veteran Baird & Warner broker.