By Roxana Baiceanu
Chicago reached roughly $2 billion in multifamily transactions during the first nine months of 2017, according to Yardi Matrix data. It seems there is more room to grow before the end of the year, given the large inventory of high-end properties on the market. This year’s investment activity is competing against the $3.6 billion worth of transactions conducted in 2016.
Investors are showing increased interest in high-rise residential buildings in the metro’s core areas. Four out of the top five best-performing submarkets by sales volume are located in Chicago’s urban area, each of them boasting more than $100 million in transactions since the beginning of the year. At the same time, several Chicago real estate owners closed individual deals for more than $70 million each.
The following list highlights the top 10 Chicago submarkets, ranked by total investment volume. Data is provided by Yardi Matrix and is based on all transactions closed in the metro area between January and September 2017.
10. Roselle: $84.9 million
More than half of Roselle’s multifamily inventory consists of properties built between 1970s and 1990s, occupied by high- and middle-income households, according to Regional Housing Solutions. Newer luxury communities are rather scarce, which leaves residents, most of them aged 40+, pay more for high-end amenities. The submarket made the top 10 list after Camden at Bloomingdale, a 360-unit community, traded for $84.9 million in March.
9. Naperville East: $91.3 million
Two communities changed hands in suburban Naperville East this year for a combined $91.3 million. The priciest one, Green Trails, is located at the border of Naperville and Lisle, Ill. The 360-unit property traded for $78 million in March.
8. Naperville West: $92.5 million
Naperville West ranks eighth in the list due to a $92.5 million deal that closed in August. TH Real Estate acquired 803 Corday, a 440-unit luxury community located within minutes of major employment centers in downtown Naperville.
7. Downers Grove: $98.7 million
The majority of Downers Grove’s resident pool is composed of white-collar workers, especially from the tech sector, as the suburb is the home of Midwestern University. As a result, home prices tend to rank among the highest in the state. Downers Grove has seen three communities change hands since January, which makes it one of the most dynamic Chicago submarkets. The priciest deal closed at $75.5 million and involved Brook Hill, a 408-unit community located minutes from the university.
6. Batavia: $109.7 million
Residents of Batavia are close to several employment opportunities, including some the communities in East and West Naperville enjoy. The submarket itself is home to the corporate headquarters of ALDI, Suncast and Fermi Research Alliance. Employment opportunities are just one of the factors that triggered the interest multifamily investors took in Batavia communities. In one deal, a buyer shelled out $109.7 million for two properties. The most expensive transaction was Preserve at Cantera (343 units), which traded for $72.4 million in August.
5. Near West Side: $117.6 million
Home to The University of Illinois at Chicago, the United Center, the Illinois Medical District as well as Google and the upcoming McDonalds corporate offices, Near West Side is considered one of the most dynamic submarkets in the metro. Since January, two communities traded in the area for a combined $117.6 million. The Madison at Racine (216 units) tops the list with a price tag of $99.6 million, marking the third most expensive Chicago multifamily transaction closed so far this year.
4. Near South Side: $125.1 million
The area is known for the Adler Planetarium, Soldier Field and the Museum Campus, but also for its dense condominium buildings, which are illustrative of the adaptive reuse approach. The urban submarket ranks fourth on our list due to the sale of 1333 Wabash, a 305-unit community that changed hands in August for $125.1 million. The deal is the second most expensive multifamily sale closed in Chicago since January.
3. Wheaton: $141.5 million
Upscale Wheaton is the only suburban submarket that found its way into the top five. Two properties traded hands in the area for a combined $141.5 million. One of them is The Retreat at Danada Farms, a 305-unit community located just across the Danada Square. The asset changed hands in August for $73.5 million.
2. The Loop: $222.5 million
Coast at Lakeshore East apartment tower, located in downtown Chicago, is an example of how investors are increasingly looking into properties in prime urban areas. In July, Magellan sold the 45-story, 515-unit tower for $222.5 million to a Canadian investor. The transaction marks the biggest deal closed in Chicago since January 2017.
1. Near North Side: $234.9 million
The best performing submarket so far this year is Near North Side, with three properties and 736 units sold for a combined $234.9 million. The 280-unit property at 100 W. Chestnut St. represents the largest transaction closed in Near North Side since January. The price tag was $85.3 million.
Images courtesy of Yardi Matrix