ChicagoDowntown / Loop

Will the downtown rental market boom or go bust this spring?

by Joe Zekas on 3/4/13

One of my correspondents sent the following brief note: “Nothing is moving. This spring is going to be huge for rentals or a bust.” Not much guidance there!

The buildings that came to market last year, including SoNo East, Randolph Tower and 1225 Old Town, reported leasing up rapidly with minimal concessions.

The 496-unit K2 at K Station and 515-unit Coast recently began their leasing programs. Also coming to market this year will be the 325-unit Optima Center, 500 N Lake Shore Drive (500 units), AMLI River North (427 units), and Hubbard Place (450 units).

You can see the status of all of the new downtown apartment projects at YoChicago’s at-a-glance list.

AMLI River North, pictured above, recently topped out and is nearly fully-enclosed. Architecture buffs are anxiously awaiting the painting of the concrete to determine whether the building establishes a positive visual presence on the skyline.

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{ 5 comments… read them below or add one }

tone March 4, 2013 at 8:32 AM

What the hell does that quote mean?

Reply

nwzimmer March 4, 2013 at 1:58 PM

It will be interesting to see how the ‘bust’ part of this boom/bust cycle plays out.

And make no mistake, there is a boom in the rental market. (Is there really anyone out there that thinks it isn’t a boom? Don’t think I’ve heard one)

The only question is when, and how dramatic the bust is. Personally, I think that rents will level off in the next year (actually it seems like they already), be flat for maybe another year and then decline two years out.

Probably not a huge bust, maybe declines of 10-15%, maybe 20%. But compared to the increases of the past couple years that WILL seem like a huge decline…

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the urban politician March 4, 2013 at 3:48 PM

I think it’s pretty premature to say “nothing is moving”. Considering that it’s still winter and a pretty bad winter at that, I’m not surprised that not a lot of people are interested in moving right now.

I had a tough time filling beautiful apartments I own in Ukrainian Village back in November/December in large part due to timing, despite very low vacancy rates in the area.

Not only does season matter, but we have no idea what price points your “correspondent” is seeking. Is he asking for too high of a rent (overshooting the market)? One comment by one person should not necessarily say much about where the market is headed.

I still think there is a lot of demand out there, but I am worried that downtown is being overserved. There should be more developments in the neighborhoods, but there really is relatively little.

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pedro March 6, 2013 at 12:45 PM

I have not heard of leasing slowing down, it must be a bad agent.

Reply

Joe Zekas March 6, 2013 at 1:39 PM

It’s from a good agent, pedro – perhaps a bad choice of a quote on my part.

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