Apartment Investors Give Chicago a Much Needed Nod
We all know the Chicago rental market has been less than ideal. Prices have fallen and vacancy rates have risen. Couple that with staggering unemployment statistics, and a slew of other national (and local) financial problems and the result is a dreary, almost hopeless housing outlook for 2009.
But wait! Today in Crain?s, the ?biggest downtown real estate deal of the year? just so happens to be the 480-unit Cityfront Place at 400 N. McClurg Court. Miami-based luxury high-rise developers Crescent Heights (30 E. Huron, Park Place Tower and Regent?s Park) put Cityfront Place under contract for $83 million and the deal is supposed to close this month. According to the article, this acquisition is the first downtown apartment building to sell in over two years which is a good indicator that the rental market might rebound before any other division in the housing market.
Known at “Condo Converters”
Crescent Heights is known in Chicago primarily as condo converters. One could easily assume that the apartment building was bought for conversion, but Tomer Bitton, a Partner at Crescent Heights noted that ?The condo market is dead. The rental market is at the bottom and is beginning to improve.? It seems likely that Crescent Heights will keep the 39 story Cityfront Place as a rental building until the housing market and condo prices improve.
I see this as very positive news for the Chicago rental market. This kind of investment activity may seem counterintuitive given the current unemployment rate for Illinois stands at 10.5%. However, the Regional Economics Applications Laboratory at the University of Illinois predicts the state?s workforce will shrink by 4.15% to about 5.4 million jobs by September of 2010. Larger investors can take this information and speculate that they can see the bottom, which gives them a reasonable basis for projections and ?worse case scenarios? that they were unable to see before.