By Ioana Neamt, Associate Editor
Fueled by the steady employment growth, income growth, urbanization and a booming tech industry, the Chicago multifamily market is expanding at a fast pace. More than 3,100 housing units are scheduled for delivery in core Chicago submarkets in 2015, according to Colliers International, with an additional 6,400 units scheduled for completion in 2016. Multiple condominium developments are currently in the works, including CIM Group’s Block 37 at 108 N LaSalle, which is the largest multifamily project in the Loop in decades. Hines and Magellan are also working on Wolf Point West, a luxury condominium tower to feature 509 rental units.
Multifamily completions in Chicago have reached the highest level on record since 2000, according to Marcus & Millichap. This year the vacancy rate is expected to drop 10 basis points to 4.2 percent, after a 70-basis-point drop registered in 2014. Job growth is also driving multifamily demand, as the tech sector continues to expand and companies such as Google are establishing a presence in Chicago.
2014 experienced a strong year in terms of multifamily transactions, totaling $2.48 billion, according to data collected by Colliers. Notable examples include Related Midwest’s sale of OneEleven at 111 W Wacker Dr. to Heitman, at a record price of $328 million; the sale of The Seneca at 200 E Chestnut St. for $74,875,000; and the sale of K2 at 365 N Halsted St. for $215 million.
Multifamily development is expected to continue on a positive path in 2015, especially in the Streeterville, River North and the Loop submarkets. Many investors are drawn to the suburbs, where large scale developments such as Tapestry Naperville and The Springs at 127th have already been completed, Colliers reports. Nearly 2,300 units are expected to be delivered in suburban Chicago in 2015, with an additional 6,131 units planned, according to Pierce-Eislen forecasts.
Chart courtesy of Marcus & Millichap