With the metropolitan Chicago condominium market cooling off, investors buying apartment buildings are increasingly likely to maintain them as rentals, according to a semiannual apartment survey by Marcus & Millichap, a California-based investment brokerage.
Meanwhile, scant new apartment construction, stronger job growth, tightening apartment vacancy rates and rising effective rents are pushing up per-unit prices, said Greg A. Moyer, a Marcus & Millichap managing director.
In March, for instance, a 13-unit building at 3414 N. Racine Ave. sold for $173,000 per apartment, approximately 10 percent more than it would have fetched a year earlier, he estimated.
Among the region’s approximately 1.3 million rental apartment units, the overall vacancy rate at the end of June was about 6.1 percent, down from 7.4 percent in early 2004 but up from 3.7 percent in late 2000.
By year’s end the vacancy rate should drop to 5.8 percent, with average monthly effective rents at $1,430, up from $1,398 in 2005, the survey suggests.
From 2003 through late last year many buyers of multifamily buildings tended to convert them into condominium projects. This year, however, “there are fewer buyers,” Moyer said, and “they’re more likely to keep buildings as rentals.”
By the end of 2006 buyers can expect apartments to generate a 7 percent increase in net operating income compared to last year as landlords eliminate concessions such as a month of free rent, he said.
Renting for less: The law firm Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP said it has joined the ranks of downtown tenants who are signing new leases at lower rents.
For the 97,000 square feet that it will occupy at 200 West Madison St., “on a per-square-foot basis, our rent is less because the market has changed since we signed our current lease in 1991 at 333 W. Wacker [Drive],” said Howard Kirschbaum, the firm’s managing partner.
Women at work: Female real estate professionals finding it tough to reach top jobs with top pay, take heart. You aren’t alone, according to a national survey released earlier this year by Commercial Real Estate Women (CREW Network) based in Lawrence, Kan.
Although more women are entering the industry, only 24 percent earn more than $150,000 a year, compared with 58 percent of the men among the 1,834 survey respondents. Of those with at least 20 years’ experience, 23 percent of women held top financial or management posts, compared with 44 percent of men.
“Now that we’ve documented what’s happening, we want to understand why,” said Sharon Krohn, president of CREW Chicago.
In August it will join 18 other CREW chapters in conducting a new study on the roots of the problem, said Krohn.
North Side acreage: Investors interested in buying a roughly one-acre parcel of land at 750 N. Hudson Ave. on the Near North Side for at least $12.6 million will have an opportunity to bid at a July 31 auction ordered by a federal bankruptcy court.
The site was surrendered this spring by a partnership that businessman and political fundraiser Antoin “Tony” Rezko founded. As many as 326 units could be developed there, said Daniel Hyman, president of Millennium Properties R/E Inc., which will broker the sale.
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“To eliminate tire kickers, bidders must first come up with a certified or cashier’s check for $200,000,” he said.
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