Condominium growth has come to a screeching halt in Chicago.
Zero rental tasks are beneath building in downtown Chicago, a stark actuality that hasn’t been seen in years, the Chicago Tribune reported.
Hovering building prices and excessive rates of interest have stymied growth, leaving a glut of unsold high-end items and a shift towards leases.
About 2,500 condos have been developed throughout a number of towers downtown since 2015, and about 600 of these items are nonetheless obtainable, Gail Lissner, managing director for Integra Realty Assets, instructed the outlet. That works out to 24 % emptiness.
In the meantime, Downtown residence occupancy hit a lull final yr at over 94 %.
Condo builders added roughly 31,000 rental items to downtown in the identical timeframe, a lot of that are in Gold Coast, River North, South Loop and the West Loop neighborhoods.
Not solely are zero condos beneath building, however none are within the pipeline.
“It’s not as a lot enjoyable to speak in regards to the rental market because it was 20 years in the past,” Lissner instructed the outlet. “In order for you new building, there are only a few selections.”
Some boutique rental developments have had success lately, catering to area of interest markets. Nevertheless, towering rental tasks like Cirrus in Lakeshore East or the Reed at Southbank gained’t be seen available in the market for years to return, mentioned Jonathon Cordell, growth director for Lendlease Growth.
Excessive rates of interest are a problem for potential rental consumers, particularly first-time consumers, he mentioned. Lendlease presents mortgage fee buydowns and permits certified consumers to hire their items for as much as a yr earlier than closing.
The condos constructed lately have predominantly been giant, ultra-luxury properties, which could be a powerful promote on this market.
The motivation for rental purchases has shifted from investment-driven to lifestyle-oriented, particularly as common downtown rental costs have remained comparatively secure, rising from $543,000 in 2019 to $547,000 in 2023.
—Quinn Donoghue
