We thought we could deliver a product that renters would appreciate and pay for.
Not yet, apparently. That’s David Lynd of the Lynd Company, on his expectations for the EnV apartment high-rise in River North. Lynd hoped to open the tower with 100-percent occupancy, says Globe St; instead, it opened with only 40 percent of its units leased, and with no retail tenants.
Could it be a pricing problem? At $2.95 per square foot, EnV has the most expensive average rental rates in the city.
Your blog took my comments completely out of context. The reason we are at 40% occupied is that we delivered in late July which is well after the prime leasing season in Chicago. To be at 40% occupied in 4 months is fine with me. If we had opened on time in May we would be in the high 90’s% by now. We are leasing a steady 8-10 a week and at that pace we will be 95% occupied in April. We are still getting our rents at 2.96 per foot and with steady leasing. The market will speak to the fact that we did deliver a product they are willing to pay for. Next time I am in Chicago I would like to tour you through the building so you can see why we are getting the rents we are. Send me your contact info. Thanks
David,
Thanks for the context, and for the invite. We’ll take you up on it.
About 15 or 20 years ago, I began hearing that the notion of a “prime leasing season” was no longer valid in Chicago, especially in the downtown / lakefront markets. There had been a time when May 1 and October 1 move dates accounted for a huge percentage of lease turnovers, but those days were gone.
When I read what we had published, my reaction was that most developers would be thrilled to open a rental high-rise with 40% occupancy, i.e. that this is a much more than satisfactory achievement and a sign that the market has already validated your product. That’s especially true given the fact that you were one of six towers with more than 2,000 units opening at virtually the same time.
I think most people in Chicgo have ben surprised by how strong the rental market here has been for the new buildings.
If you trust the MLS as a reliable sample for distinguishing rental timing in Chicago, then here are some figures of interest. Searching in the area from North Ave. to Lake St., from Halsted to the Lake, for (1 and 2 bedroom) apartments rented (i.e. not just listed but shown as rented) in the past 12 months, there are 2,454 results. From April through September, 1,654 units were rented. That leaves only 876 units rented during the other 6 months of the year; almost a 2:1 ratio That looks like the prime season IMO.
Thanksgiving through mid February are basically dead except for transfers and one-offs.
Thanks, Jon.
I do trust the MLS stats for condo rentals. Unsure whether they directly track to apartment rentals, but it’s a fair guess that they do.
If it’s not too much of an imposition to ask, what percentage of those took place in the period relevant to EnV, i.e. July – October?
Joe,
July through October totaled 962 units rented. Below are the monthly results sorted January through December (Nov. and Dec. are 2009, Jan-Oct are 2010).
125, 119, 210, 317, 262, 266, 311, 258, 240, 153, 134, 135.
Many, many thanks, Jon.
Going back in history, May 1 and October 1 were the busiest nominal move-in dates for Chicago renters. Legend had it that Chicago landlords manipulated those dates to make it difficult for tenants to move based on the school year cycle. That resulted in two prime rental seasons, March-April and August-September.
The month-by-month numbers you provided, which would have reflected when leases were approved and units went off the market, rather than move-in dates, support my suggestion that EnV, if it missed the prime rental market at all, only missed a part of it.