Well, the craziness continues. Another apartment developer just acquired a piece of land in the west loop on Jackson and plans to break ground by November on a new apartment building. Buildings that broke ground at the beginning of the rental boom are now finally open and filling up quickly but the question still remains how long will this craze last?
Personally, I’ve seen market times increasing for rentals in Chicago. I’m observing this from my own personal listings only and have not run my own data analysis but I would assume market times are slowly increasing across the board. Prices increased a great deal over the past couple years but I cannot see any large year over year increase in 2014 as thousands of new class A rental units hit the market.
What I find most amazing are the amount of developers who continue to push forward and investors who continue to acquire large scale apartment projects as cap rates continue to decline as prices rise….when will it end? Many apartment developers continue to use to the phrase “apartment demand is sustainable” but for those of us who have a half way decent memory we heard this phrase plenty of times from developers in 2005, 2006 and even at the end of 2007 when the condo boom was coming to a screeching halt. Will we ever learn?
Smart Money: I saw smart money move over a year ago from apartment buildings back into condo development. Right now they’re sitting pretty selling out even before completion of their small projects.
Sure, there will always be demand for apartments but if there is one thing the real estate market has taught me, it is that when demand is for 2,000 units developers love to build 4,000.