FOR IMMEDIATE RELEASE July 14, 2008
Chicagoland Apartment Association:
CITY AND SUBURBAN RENT HIKES VARY FROM 1.5 PERCENT TO 7 PERCENT
DeBat Media Services
CHICAGO—Apartment hunters will find rents all over the waterfront this summer as increases vary from 1.5 percent to as much as 7 percent in the city and more than 5 percent in the suburbs.
According to the Chicagoland Apartment Association (CAA), that is the mixed bag renters will find as some landlords wrestle with a marketplace battered by talk of a recession, joblessness and sky-high gas prices.
“Some apartment mangers have comfortably raised rents, while others have resorted to rental concessions,” said Judy Roettig, executive director of the CAA, a 300-member organization that represents more than 2,500 apartment professionals who own or manage more than 600 properties and more than 136,000 apartments in the greater six-county Chicago area.
“I think it depends on whom you talk to,” said Carl Pettigrew, a longtime CAA member and managing partner of New Venture Realty—which owns and manages an assortment of garden walkup buildings in Chatham on the city's South Side.
“Rents on the South Side are rising 1.5 percent to 2 percent at the most,” he said. Typical rents on a 1 bedroom are $650 to $700, and typical rents on a 2-bedroom are $750 to $850, Pettigrew said.
For renters in Old Town and Lincoln Park, increases are averaging 5 percent to 6 percent this spring on vacant apartments and 3 percent on occupied units with holdover tenants, according to Victorian Independent Properties. The North Side company manages about 50 apartments in vintage walk-up buildings in the area and the properties are nearly 100-percent occupied.
Monthly rents currently range from: $1,100 to $1,250, on 1-bedroom units; $1,500 to $1,700 on 2-bedroom apartments, and $1,500 to $2,000 on 3-bedroom layouts with 1 or 2 baths.
“All of our buildings are fully owned without outstanding mortgages, however this year’s higher real estate tax bills are taking a toll,” said Mary Prekop, leasing agent for Victorian Independent Properties. “One owner recently was hit with a $34,000 tax bill for an older 8-unit building.”
If you’re looking for an apartment in downtown Chicago, you may find some bargains because landlords there are facing leaner occupancy rates than generally desired, though rents have ticked up, according to a recent report by Appraisal Research Counselors, a Chicago consultancy that tracks housing trends.
Class A occupancies downtown rose slightly to 91.9 percent from 91.3 percent in the final quarter of 2007. However, that’s lower than a year ago when occupancy was at 93.4 percent in the first quarter of 2007.
Class A properties downtown reportedly had effective rents at $2.29 a square foot, including such concessions as free months of rent, in the first quarter. That’s a 1.8 percent increase over the $2.25 a square foot in the fourth quarter of 2007 and the first quarter of 2007.
If you ask CAA member RMK Management, for example, rents headed up across their portfolio of properties in Chicago and the suburbs in the first quarter of the year.
“Most of our sites are at average increases in market rents of 4 to 5 percent with renewal increases of 7 percent on average,” said Diana Pittro of RMK.
RMK Management’s properties include 333 East Ontario and 4334 North Hazel Street in Chicago and properties in Naperville, Oswego, Schaumburg and other suburbs.
In the city, monthly rents at RMK Management properties currently range from $1,200 and up for 1 bedrooms and $1,600 and up for 2 bedrooms.
At suburban properties, RMK Management’s properties currently are charging $900 and up for a 1 bedroom, $1,300 and up for 2-bedroom units, and $1,500 and up for 3-bedroom layouts.
While rents in the suburbs rose 5.7 percent in the first quarter of 2008 when compared to the first quarter of 2007, occupancy rates dipped to 2003 lows, according to Appraisal Research Counselors.
Occupancies in the suburbs didn’t budge from 93.3 percent in the fourth quarter by the end of the first quarter of 2008. That’s down from 96 percent in the year over comparison to spring 2007 and the lowest since at least the second quarter of 2003.
Market forces affecting rents and occupancy rates in the city and suburbs include a depressed economy, joblessness, expanding apartment supply in some areas, and the troubled homes and condo markets.
With these factors swirling, you get a variety of scenarios that reflect the precarious times in the city and suburbs when you drill into the experiences of some CAA members.
But rents aren’t the full story for landlords. Occupancies are down a few percentage points, averaging between 90 and 93 percent, Pittro said. Concessions are gone at RMK’s downtown properties, but are still in play—though minimally—elsewhere.
“Only some suburban rental projects up north are still using some type of special or bonus of about 3 to 4 weeks on certain style units,” Pittro said.
And traffic is off a bit, though Pittro said there has been an uptick of late. “Traffic has been down 30 to 40 percent between 2007 and end 1st quarter of 2008. But spring traffic has picked up somewhat, so we are hopeful. We are still seeing job loss and transfers in Naperville and Lake County areas.”
Plus, said Pittro: “Denials for bad credit are also affecting our leasing goals. About one in every three comes back denied due to bad credit.”
Draper & Kramer--which includes South Loop, Gold Coast, Fulton District, South Shore and west suburban properties in its portfolio of properties--is offering concessions at many of its properties.
“Concessions are back due to the high deliveries of new units as well as the ghost condominium market,” said Lynette Vanderheyden, director of marketing. “Our properties are all offering at least a half a month’s rent concession for the most part. We have maybe two or three that aren’t offering concessions, but for the bigger properties, most of them are.”
Draper & Kramer properties include 1350 North Lake Shore Drive, 1420 N. Lake Shore Drive, 1130 S. Michigan, The Chicagoan, 55 W. Chestnut, 5550 Dorchester, Island Terrace, and 180 N. Jefferson among others in the city. Its western suburban properties include Homestead in LaGrange Park and FieldPointe in Schaumburg.
Among its properties that are not offering concessions, Vanderheyden said, are Prairie Shores, Lake Meadows and Lake Park Crescent. “That’s probably due to it being forecasted that the B and C product were going to be doing better than the A product,” Vanderheyden said.
Meanwhile, on the South Side, Pettigrew’s tenants are dealing with the ongoing quandary of static incomes and job woes. However, he raised rents slightly this spring. The increases don’t nevertheless put New Venture Realty’s properties where they should be in the marketplace, Pettigrew said.
“On the South Side, there’s still a lot of vacancies, a lot of for-rent signs,” he said. “The South Side rental market is driven by the job market.”
For more information on the Chicagoland Apartment Association, please call 847-678-5717. Please visit http://www.caapts.org/.
FOR: CHICAGOLAND APARTMENT ASSN.
9950 W. Lawrence Ave.
Suite 119
Schiller Park, IL 60176
CONTACT: Don DeBat
Jean Williams 312-944-1177
OR: Judith Roettig 847-678-5717