2 Reasons Rents Will Drop
| Multifamily rental growth in Chicago is going to flatten out soon, according to Kiser Group principals Lee and Estella Kiser. Here are two factors that weigh into their prediction: | ||
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1) Shell Shock Wears Off: Many factors contributed to the rent growth at Chicagoland apartments, Lee tells us, but perhaps none as important as the affluent tenants’ preference to rent instead of purchase, seeing buying as too big a gamble. But that was then. Condo and single-family home values are stabilizing now. The fundamental “rent versus own” equation will begin hitting this generation of renters square in the face, especially with interest rates at historic lows. People will again begin asking themselves “How much could I buy with the amount of rent I’m paying?” |
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2) That Bulging Construction Pipeline: In the spring of 2013, the first rental units in a construction pipeline of more than 7,000 will be delivered, Estella points out. Record-setting rents per foot will be achieved in many of these properties. Older buildings that were previously hitting high marks of their own will be competing with these even newer state-of-the-art units and amenities. And it will happen fast. By fall, older buildings will be either reducing rents or offering concessions (lowering effective rent), especially as even more units come online in new buildings. |
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