Any resident of Chicago will attest that the number of cranes working on residential projects is on the rise. Chicago is a part of the 12 city group in the U.S to exhibit a boom in condos and luxury apartments.
According to the Wall Street Journal, citing Crane Index (which is a biannual crane activity survey curated by Rider Levett Bucknall North America) as of November last year, Chicago had 56 construction cranes busy with residential buildings. Coming in second place is Seattle with 23 residential cranes, working currently. At third place is Denver with 10.
Millennials behind the boom in apartment construction
Looking at construction throughout the 12 cities, most of it was dedicated to residential development projects. Executive Vice President of RLB, Paul Brussow said that there has been a big increase mostly in the residential market. Frequent sightings of cranes are a definite sign of growing demand for luxury rental properties. Fueling the boom in residential development are millennials born after 1980. Given the nature of their work and delays set off by recession, more and more people are focusing towards owning an apartment or condo as against a home. Millennials do not have the savings or job security to invest in a home. Construction has begun on 386,000 new apartments in 2015, the highest ever recorded number in the U.S since 1987. Of which, 35% were solely apartments, again a record high since 1973, according to census data. Definition of an apartment is a housing unit containing five or more units.
Thousands of apartments slated for 2017 delivery
Boom in apartment construction has continued in 2017 with expected delivery of thousands of new units. As explained above, the city has a high demand for apartments and according to Luxury Living Chicago Realty, 33 new buildings offering 6,600 units will be delivered by the end of 2017.
Delivering such a high number is not new for realty developers in Chicago. Thousands of units were also delivered in 2015-16. Number demand for 2017 is the highest ever to be successfully delivered by the city’s developers. As Chicago’s skyline awaits new additions, behind downtown a large number of transit-oriented developments are under construction along Milwaukee Avenue.
Apart from apartment complexes, there are 44 other major high rises: new hotels, office spaces and upscale condos. Such a boom is giving rise to doubts of oversupply which could lead to a possible break in pace.
Current rental options in Chicago suburbs
Until a decade ago, suburbs were the residential choice of exclusive few who had resources to spare. Now, not so much! Residing in the suburbs has become more affordable. There are more options available. Over 3000 units went up last year alone which is twice as much since 1997. Till recently only condos were favored. After the postbust trend of renting over buying, everything changed especially in suburbs where apartments are fewer. Rent got so high that construction of new apartments started to look cheaper. To match the high demand, developers are constructing apartments with plush amenities just to stick to the tag of luxury. Examples of a few amenities offered are movie theaters, pet-washing stations, and golf simulators, walking trails, clubhouses and high-speed internet.
Chicago Boom to fizzle or not?
Will construction reach saturation post-delivery? Only time will tell. Trends suggest that it is highly likely that the boom will fizzle with rents falling by 14.7% in the fourth quarter. New apartment rents have been unaffected with developer’s adamant on sticking to asking price. Deals like free rent for a few months with every lease sign may become common practice to attract renters.