Making Their Way Downtown: Why Many Chicago Residents Will Continue Renting
The time has come for workers to make their return to their downtown Chicago offices. For some workers, that return may be easier than others, since they have opted to live just a short walk away from Chicago’s downtown office hub — and developers are taking notice.
Liz Gagliardi, senior managing director and co-lead of Newmark’s Multifamily Capital Markets Group, said downtown Chicago has bounced back, particularly within the multifamily sector, with fundamentals exceeding pre-pandemic levels. Within the multifamily industry, Gagliardi has been representing clients in dispositions, joint venture structuring, portfolio sales, valuation and underwriting for more than 17 years.
Crain’s Chicago Business said the downtown Chicago multifamily market has been on a growth trajectory, with plans for 9,065 units in the West Loop and another 2,139 units in varying stages of development in the area set to be delivered between 2022 and 2024. Fulton Market District has also been on multifamily developers’ radar, as they strive to create units for employees and residents who want to be close to their corporate offices while having easy access to shopping and dining options.
“We are seeing record-breaking rent growth in the Chicago market with rents up over 15% in the first quarter as compared to last year,” Gagliardi said. “Along with robust rent growth, the absorption and delivery rates are almost equal. We are seeing what is anticipated to be a supply-demand imbalance, with more demand for multifamily and downtown living than product under construction.”
Gagliardi said that because housing prices are continuing to increase, in addition to the recent interest rate hikes and historically low inventory levels, Chicago residents—particularly those in the Generation Z age group—will likely opt to stay put in their apartments rather than leaping into buying their first homes.
She said that while many people were motivated to move back to the city simply to take advantage of the proximity to the office, others, including Generation Z, have been drawn to Chicago multifamily units that can provide luxury amenities that can’t be found in a single-family home.
“As companies have been calling people back, we’re seeing people who had moved outside the urban core choose to return because of their lifestyle preferences,” Gagliardi said.
To cater to this population, she said, Chicago multifamily developers are incorporating amenities, such as co-working and conference room spaces, to give people working from home the space to take work calls in privacy and without disturbing roommates. Additionally, residents continue to be drawn to buildings with full amenity packages, including fitness centers, pools and roof decks.
One of these properties is West 77 in the River North neighborhood of downtown Chicago. The property is currently being offered for sale, with Newmark representing the seller. The property offers studio apartments as well as one-to-three bedroom units and features a 24-hour fitness and wellness center, lounge space, premier WiFi, bicycle racks, storage and a rooftop terrace featuring an indoor and outdoor pool. While the property offers access to public transportation, residents are also located within walking distance of retailers and popular eateries.
“It is a neighborhood-friendly location, immediately adjacent to convenience retail as well as some of the best nightlife options and dining the city has to offer, like Whole Foods and Starbucks, while being both walkable to the River North and Loop employment and accessible to the West Loop,” Gagliardi said. “They’ve done a great job with providing amenities for people who are going to be looking for a well-appointed apartment in a fantastic location.”
Gagliardi said multifamily properties within more vibrant neighborhoods that are walkable are showing the strongest performance; however, the downtown market as a whole is performing extremely well.
“Chicago’s overall housing market is at one of the strongest points ever,” she said.
This article was produced in collaboration between Studio B and Newmark. Bisnow news staff was not involved in the production of this content.
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