Key Real Estate Trends for 2008
- Jan 08, 2008
Few topics captured more headlines in 2007 than the housing industry. From the mortgage meltdown to over-supply, it seemed each month brought more bad news. Although everyone has their own opinion on the state of housing and what to do next, several top Chicago-area developers identified the following six key trends to watch in 2008 for both their market and the U.S. as a whole.1) Remaining a RenterAmidst uncertainty about when the ownership market will return to a positive trendline, as well as tighter lending standards, some apartment developers predict people will remain renters for longer than in years past as well as some owners returning to the renter pool. “For more and more people, the rent-vs.-buy debate will be pretty simple, and they’ll opt to rent for a longer period of time,” predicts Rick Cavenaugh, president of Chicago-based Fifield Cos. “Thus rental developments will see higher resident retention rates and, with that, an increased demand for developers to creates lifestyle choices and a sense of place.” Fifield Cos. is in the third phase of K Station, its billion-dollar, master-planned community near the Fulton River District. Once complete, the development will bring 2,400 luxury rental units, a one-acre city park and retail centers, including a Jewel-Osco supermarket, to this quickly emerging area. “We’re not just creating an apartment building, but rather a vibrant neighborhood with a complete lifestyle and a sense of place,” Cavenaugh says. Anthony Rossi Sr., president of RMK Management and developer of Regency Place in Oakbrook Terrace, Ill., points out that creating a sense of community among residents is especially important when there are many transferees. “When relocating, it can be hard to meet people outside of work life,” Rossi points out. “When a transferee rents in a community with clubhouse amenities and resident appreciation events, he or she can more easily forge friendships,” he adds. For Marquette Companies, the extensive renovation of the clubhouse at Bourbon Square in Palatine brings a new opportunity for neighbors to meet and interact. “Since the pool, fitness center and club house are exclusive amenities, residents know each person they meet will be a neighbor,” says John Eifler, vice president of Marquette Companies. “Beyond the clubhouse, we’ve updated the apartments to a level today’s renters would find in for-sale condos. These upscale finishes complement Bourbon Square’s floor plans, which are the largest apartments in the area. The homes live like a townhome or single-family home with fireplaces, dining rooms and storage.”2) Optimism in ’08Even amidst negative reports, this past year; some real estate veterans see opportunity — the silver lining of a seemingly grey cloud. “While sales activity has been slow, other conditions have been favorable for starting a homebuilding company,” says John Wozniak, president of Naperville-based J. Lawrence Homes. The 25-year industry veteran, together with partner James Chittaro, launched J. Lawrence Homes in the fall of 2007. The company could have as many as 400 homes in its development pipeline by next year, according to the two principals. “Interest rates are low, capital is still available and there are good deals on land. We’re well-positioned for what we think will be an industry comeback in 2008 and 2009,” says Wozniak. Another builder making big plans for the coming year is Chicago-based Lexington Homes. Its executive team, which has built more than 40,000 homes in the Chicago area under the Lexington and Concord brands, is back in the market and planning a number of new communities for 2008. Lexington’s focus will be on infill locations in established Chicago suburbs like Wheeling, Des Plaines and St. Charles, and city neighborhoods like Bridgeport and Brighton Park. “We’ve weathered storms before, so our experience will certainly come into play in this challenging market,” says Jeff Benach, Lexington’s executive vice president of sales and marketing. “But by focusing on high-quality locations and innovative designs and keeping our inventory low, we feel we will be in a good position in 2008 and beyond.” 3) An Increase in Infill The Chicago market, for example, is full of well-established inner-ring suburbs that have flourished over several decades thanks to commuter-friendly locations and reasonably priced homes. Today, these infill areas are undergoing a demographic shift as Baby Boomers prepare for an empty nest, while their Generation Y kids set out to purchase their first home. As a result, builders like Lennar will focus their efforts on building maintenance-free homes in popular infill locations like Arlington Heights, Orland Park, Des Plaines, Morton Grove and Bridgeview. According to Lennar, these new communities are a necessary supplement to the aging housing stock that currently characterizes many inner-ring suburbs. “While inner-ring suburbs have always been popular with home buyers, long-term we foresee a steady increase in demand for new-construction homes in these areas,” says Leigh Nevers, vice president of sales and marketing for Lennar’s Chicago region. “Demand will come from Boomers who want to downsize without moving to a new location, while on-the-go young professionals will continue to see the financial benefits of living in a commuter-friendly suburb.” 4) Green Goes MainstreamWhile this trend has been growing for the past couple of years, some developers say 2008 will be the tipping point for green building. A survey by the National Association of Home Builders find 50 percent of its members plan to participate in some kind of green building this year. As more green developments come online, buyers will rely even more on the independent accreditation of the U.S. Green Buildings Council (USGBC), according to developer Ibrahim Shihadeh, co-principal of Winthrop Properties, developer of Winthrop Club in Evanston. The contemporary high rise is designed to meet the requirements for Silver LEED (Leadership in Energy and Environmental Design) certification from the USGBC. “The third-party endorsement of the USGBC will help people differentiate just how environmentally sound the development is,” he says. Steven Fifield, CEO of Fifield Cos., adds that it is not limited to for-sale units. “Many would-be buyers are opting to rent instead, but they still want the high-end features they’d expect in a luxury condominium,” says Fifield.5) Technology is the New StandardTo fit buyers’ fast-paced lifestyle, developers will increasingly include cutting-edge systems that easily integrate technology into the home. “Buyers want full access to tech tools that enrich their daily lives and make functions that control the home’s environment even more intuitive,” says Andrius Augunas, founder and principal of Rokas International. “Smart Home technology, once reserved as a luxurious upgrade in the custom home market, has greater appeal for a wider audience.” At 2100, a timber-loft condo conversion adjoining a new-construction high rise by Rokas International at 2100 S. Indiana in the South Loop, “Smart Home” technology is included in every home. Via their “Smart Home” touch screen, homeowners will be able to control home systems such as heating and cooling, lighting, audio and video. They’ll also be able to access their system remotely via the Internet.6) People in Glass HousesNew-construction high rises are increasingly showcasing contemporary styles, which developers and designers cite as a top trend for 2008. Among the most prominent is Trump International Hotel & Tower, Chicago, by Skidmore, Owings and Merrill. The glass-and-stainless steel exterior will give residents unprecedented city views, as the 92-story tower features the highest residential floor ever. “A glass facade follows the ‘less is more’ design philosophy. It’s sleek and stylish yet simple. And few features have as much impact on a home’s interior than overs
ized windows,” believes Ted Mazola, president of New West Realty, developer of 1555 Wabash in the South Loop. This contemporary mid-rise features large windows in each residence. Also in the South Loop is Printers Corner, a contemporary high rise with a faceted design allowing each unit to have floor-to-ceiling corner windows. And for seniors, The Clare at Water Tower, downtown Chicago’s first high-rise continuing care retirement community, showcases curving glass architecture to maximize views of Lake Michigan.