Dees Stribling, Contributing Editor
Chicago–Apartment fundamentals in downtown Chicago will probably strengthen in the near future, according to a new report on the market, as well as anecdotal leasing evidence. Marcus & Millichap’s 1Q10 market update for the city predicts the market stands to benefit from in-migration of suburban renters looking for good deals on interesting downtown space.
The report notes that the class-A Loop submarket in particular has seen a decline in vacancy since early 2009, dropping 640 basis points. Incentives have had something to do with that. Operators in the Loop currently offer an average of 44 days of free rent, roughly one week more than any other part of the Chicago market.
“With completions in the city expected to spike this year and the shadow market remaining a threat, owners of existing assets will continue to ramped up concessions,” the report says. “For the first time in over two decades, incentives are higher in the city than in the suburbs.”
Demand for apartments throughout metro Chicago will rise during the second half of the year, according to Marcus & Millichap, provided employment recovers, a fact that might benefit the CBD most of all. Led by hiring rebounds in the professional and business services and trade, transportation and utilities segments, the Chicago labor market will probably gain traction in the second half of 2010, causing payrolls to expand by 1.2 percent with the addition of 49,500 jobs. Last year, roughly 234,400 positions were eliminated in the Chicago labor market.
As for anecdotal evidence regarding the returning strength of downtown Chicago’s apartment market, Chicago developer Fifield Cos. says that some 200 leases at the west tower of its new-construction Alta at K Station have been inked since it opened in March, out of a total of 420 residences.
The development’s east tower, which opened this week, will offer an additional 428 residences. An apartment community registered for Silver LEED certification, Alta at K Station marks the third and fourth apartment towers to be completed within K Station, which is a $850 million master-planned community of more than 2,100 apartments.
Fifield posits that the location and amenities of the property are driving the demand for Alta at K Station. Currently, four models are available at Alta at K Station, including studio, one-bedroom and two-bedroom layouts. All units offer floor-to-ceiling windows; kitchens with granite countertops and stainless steel appliances; ceramic tile baths with oversized vanities; in-home laundry areas with washer and dryer; and individually controlled heating and air conditioning.
The property’s K2 club on the eighth floor includes a full-court indoor sports court; a resident lounge with multiple seating areas; and party suite with a balcony equipped with outdoor seating and a grill; a 23-seat home theater; game center; men’s and women’s locker rooms–each with a sauna; and two workout areas featuring Techno-gym equipment with iPod compatibility. Wii, Xbox or PlayStation equipment can be checked out from the K2 concierge to use in the game center.