Lux Apts Booming in Chicago
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Fifel Co. - The Emerson, Evanston
Thomas Roszak - "Jeff Jack" at 601 W. Jackson
Optima, Inc - Optima Chicago Center
Related Co - 111 Wacker and 500 Lake Shore Drive
Amli - Amli River North
The Habitat Co - Hubbard Place at 360 Hubbard
Chicago Tribune -
Chicago luxury apartments battle for renters
A serious game of one-upmanship is underway in downtown Chicago's rental market, as developers race to open shiny apartment towers tricked out with swank extras and some eye-popping rents.
Have a dog? Drop off your four-legged friend at the in-building spa. Friends coming over to watch the game? Throw a party in one of the gathering areas, outfitted with big-screen TVs, plush furniture, fireplaces and a gourmet kitchen. Working out? After using the fitness center or the golf simulator, wind down in the sauna or steam room.
Despite monthly rents that generally start at around $2,000 for a studio, the resort-style amenities and well-appointed units are attracting tenants and making apartment towers built just a few years ago seem a little less special. Yet there are concerns that the building boom is leading to a market imbalance that will push down rents and potentially trip up developers.
"Demand is not keeping up with supply that is already being delivered," said Ron DeVries, a vice president at Appraisal Research Counselors. "Our occupancy in the market has moved down, and now we're going to be adding another 2,300 units this year plus over 4,000 units next year."
"There's a lot of market tension for a developer to be able to sell what makes their project unique," he added.
Economic as well as demographic trends are fueling apartment construction. Corporations are moving downtown, and young adults, waiting later to have children, are interested in living in cities longer. Downtown Chicago's renaissance of restaurants and entertainment options is creating more options for after-work activities. And consumers either don't want to, or can't afford to, buy a home.
On the business side, planned condominium projects went bust during the housing market's meltdown and have yet to return, but financiers are eager to become equity partners in well-conceived rental projects.
A decade ago, in 2004's first quarter, there were about 17,200 rental units in an area bordered by North Avenue, Cermak Road, Lake Michigan and parts of the Chicago River and Ashland Avenue. By the end of next month, there will be about 26,800 units, a 56 percent increase. In 2015's first quarter, there will be almost 30,000 apartments in that downtown area, estimates Appraisal Research Counselors.
Between 2000 and 2010, Chicago's downtown population increased by 48,000 residents, according to census data.
That confluence of factors continues to attract developers, both those who moved to the sidelines during the housing downturn and those who pushed through it. They are doing infill development, as well as expanding the definition of what was considered desirable downtown living.
"It's harder to find good sites," said developer Steve Fifield, who is juggling several residential projects in Chicago. "Whatever boundaries people perceived 10 to 15 years ago have all been broken. There isn't a red line that says buildings on this block will do great and buildings on this block won't. The next cycle is a cycle of buildings that weren't on people's radar two years ago."
Two years ago, Fifield Cos. started negotiating for a site north of Chicago Avenue, at 347 W. Chestnut St., near Orleans Street. The company hopes to get city approvals to move forward on the project this year and deliver a 31-story, 333-unit apartment tower in 2016.
Meanwhile, architect and developer Thomas Roszak, whose last large project was the South Loop's Vetro condo tower, where the final units were auctioned in 2009, is back with partners and has begun construction on a 15-story, 190-unit rental building at Jefferson Street and Jackson Boulevard in the West Loop. The building, which will be complete in the spring of 2015, will include an "eco-garden," and Roszak promises interior finishes that will rival what's found in the upscale Streeterville developments.
"There are a lot of jobs being created, a lot of tech companies," Roszak said. "These kids, 25- to 39-year-olds, come from these nice dormitories. They do not want to come and live in a three-story walk-up in Wrigleyville anymore. This demographic is a little bit more demanding than 15 years ago."
Closer to the lake, Optima Chicago Center opened in the Streeterville neighborhood only in October, but rentals are running "several months ahead of schedule," so Optima Inc. president David Hovey hopes to start construction this year on a second tower next door. That one, a combination of 365 apartments and 270 hotel rooms, could be ready for move-ins in 2016, Hovey said.