Chicago market tough for renters but good for the economy?
Vacancies are declining and rents are increasing in the Chicago metro area. Is this good news or bad news for apartment dwellers? Well, it depends on how you look at it. As always, there are two sides to every story. I’m pretty sure all of us struggling renters will not feel very happy with the rates going up and all; yet from an economic perspective, things couldn’t go any better. Higher revenues for investors, more taxes for the state, strengthening of the real estate sector, these are all signs of an economic rebound with thousands of new jobs coming our way and constantly expanding suburbs that will ultimately benefit the entire community. According to an MHN report, Chicagoland employment will expand 1.1 percent in 2012 through the addition of 46,000 jobs, the largest annual gain in six years. And the forecast follows a strong 2011, when 35,400 positions had been created.
The Windy City has seen much job growth in recent years, with young professionals flooding the rental market and taking up all of the apartment units. In addition, good colleges like Northwestern or the University of Chicago will always attract lots of students from across the country which will have a positively big impact on the overall rental market status. Many of them will live in off-campus rental apartments and will remain here for extended lapses of time as they pay off student loans. The truth is Chicago is the perfect place to settle down. Though a vibrant hub, bustling with city life, thriving businesses and flourishing industry, it’s still got the heart of a small town. Friendly neighborhoods, plenty of green spaces for outdoor fun, charming cafes and marvelous beaches make it extremely appealing to newcomers.
Asking rents are expected to advance 4.0 percent to $1,108 per month (OUCH!) and effective rents to rise 4.9 percent to $1,040 per month (REAL OUCH!) after gains of 1.7 percent and 2.0 percent, respectively, in 2011, as reported by Marcus & Millichap. Rents in the city will grow at a rate slightly greater than the metro average during 2012. It’s all a game of supply and demand really. As long as new units continue to lag, vacancy will stay down. According to the report, builders will complete 900 units in the city this year, accounting for most of the 1,100 apartments slated to come online in the entire market during 2012. Last year, less than 300 rentals were delivered metrowide.