Housing Developers Look For The 'Missing Middle'
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The Great Recession killed off the metro area’s condo market for nearly 10 years, and developers only recently waded back into the sector. Most concentrated on creating luxury condos far above what most renters could afford. However, in the next few years, more builders will aim for the “missing middle” and create homes that fall somewhere between affordable and luxury.
That means more risk, but the demand certainly exists.
“The apartments getting built in the current cycle are not family-size units,” Belgravia Group Executive Vice President and Chief Operating Officer David Goldman said. As construction and land costs balloon along with interest rate bumps, creating such homes at reasonable prices remains a challenge.
Belgravia has decided to put more focus on mid-rises, buildings it “can bring in at a lower cost.” Next summer, the company will break ground on Triangle Square, a seven-story condominium building that will nestle between Lincoln Park and Bucktown, near the site of Sterling Bay’s contested Lincoln Yards proposal.
These affluent communities have a lot of expensive homes on the market. The median listing price for new homes in Lincoln Park, for example, is $719K, according to Redfin.
The Triangle Square site was underused for years, but development that attracts new residents recently sprouted up on the surrounding blocks. A new Mariano’s grocery store opened adjacent to Belgravia’s land, and the nearby Midtown Athletic Club finished a complete renovation and expansion of its facilities.
“Being right by the Mariano’s is a huge factor,” Goldman said.
In addition, the city reconfigured Elston Avenue and untied the massive traffic jams that used to occur regularly at its intersection with Damen and Fullerton avenues.
The company purchased the land for $21.8M. Managing Director Sean Connelly of 33 Realty represented Belgravia in the sale. Justin Moore, Michael Weaver and President Eric Janssen of Chicago Real Estate Resources Inc. represented the seller.
Coupled with Sterling Bay’s Lincoln Yards, and R2 Cos.' plan for the Salt District, a mixed-use entertainment and office complex on the site of the former Morton Salt warehouse, as well as C.H. Robinson’s new office headquarters across the Chicago River from Mariano’s, the neighborhood’s industrial character seems likely to fade.
But Belgravia hopes it will not be a neighborhood just for the super-rich. Triangle Square will offer new-construction condos starting at $495K.
“As the factories move out, residents want to move in because they’re getting in on the ground floor of an area that will serve as a gateway to Lincoln Park and Bucktown,” Goldman said.
“But it’s tough to find sites that are affordable and that we can use to build affordable homes.”
Jeff Benach of Lexington Homes said educators, healthcare workers and tradespeople priced out of gentrifying city neighborhoods all want “missing middle” housing, and he believes infill sites can satisfy that demand.
His firm answered the call with communities like Lexington Village at Avondale, which offers 22 single-family rowhomes priced from the low-to-mid $500K in Chicago’s Avondale neighborhood.
“This infill site was a hidden gem and allowed us to build new-construction family homes for almost $100K less than similar new and existing homes in the neighborhood,” he said.