Chicago—SVN ended 2015 strong with the sale of seven multifamily buildings in Chicago’s South Shore, totaling 317 units at a total sale price of $13 million. Jeff Baasch of SVN represented the sellers in all the transactions and no brokers were involved. The sales consisted of a four-building portfolio and three other buildings within blocks of each other sold weeks later.
“Demand for multifamily properties has been extremely strong in all the neighbor markets in Chicago. Deals are trading at such low cap rates on northside properties, investors have been drawn to higher cap rates deals on South Shore properties,” Baasch told MHN.
Drexel Properties was the seller of the 181-unit, four-building portfolio, which was purchased for $9.5 million and consisted of buildings located at 6715 S. Paxton, 6755 S. Paxton, 6701 S. Merrill, and 6920 S. Ogelsby. The four buildings were well-occupied at the time of the transaction and the Florida-based buyer has plans for a major renovation of the properties.
Out-of-state investors were the buyers for the majority of the buildings. “We’re seeing accelerated demand from out-of-state buyers for Chicago multifamily properties that have been priced out of more expensive markets,” Baasch said.
Baasch added that strong apartment fundamentals, including low occupancy, increasing rents and favorable financing options, lead the demand for multifamily properties to exceed the available supply of apartments currently on the market.
He’s also positive about Chicago’s multifamily market in 2016, saying, “All indicators point to continued demand in Chicago for multifamily properties in all submarkets, including South Shore properties. Rental supply constraints of the neighborhoods, strong rental market and historically low interest rates have created a favorable market for sellers.”