Marcus & Millichap, a respected investment real estate brokerage firm, recently released its Q4 Apartment Research Market Report for the Chicago metro area. The summary:
The release of pent-up demand and tempered hiring by employers this year will keep the Chicago apartment market on track to post a vacancy rate less than the level recorded at the start of the recession. Renter demand remains strong across the entire market, and especially in city submarkets such as the Loop and the Gold Coast. However, absorption may moderate over the next several months amid lingering concerns over the U.S. and local economies, forcing many prospective renters to defer decisions regarding rental housing. Still, demand at less than full potential will remain sufficient to put downward pressure on the vacancy rate due to limited construction. Projects slated for completion this year will represent one of the lowest annual totals on record, providing owners of existing properties with an opportunity to further strengthen operations before a new construction cycle be¬gins. New rentals will likely emerge in the city submarkets, but lengthy approval and building processes will spread deliveries over an extended timeline, minimizing the likelihood of a supply glut hitting the market all at once.
Of seven city sub-markets reported, Lincoln Park had the lowest vacancy rate, at 2.1%, a 90-basis point tightening from last year's rate. Effective rents in Lincoln Park were only the fourth highest of the sub-markets, at $1,149 a month, up 2.4% year-over-year.
The Loop experienced the greatest year-over-year reduction in vacancy rates, 390 basis points, but that still left the area with a 6.3% vacancy rate, outperforming only the City West's 9.1% vacancy rate.
The South Shore sub-market had the city's second-lowest effective monthly rents, at $847, and was the only city sub-market to show a year-over-year decline in rents, at 0.1%.
The Gold Coast had the highest effective rents, at $1,606 per month, and the strongest year-over-year increase, at 2.8%.
The full report is freely available by registering at the firm's website.