The recent Marcus & Millichap Multifamily Chicago event was packed with information about the apartment sector of commercial real estate around the area. On our team, Julie Sorensen, a business development director at GRS | Corteq, was on the ground floor for the conference. She said that job growth downtown has helped bolster Chicago multifamily, and that plenty of new projects are expected to pop up across the metro area. Sorensen recently spoke to us what she witnessed at the event and what was discussed.
What was the overall feeling at the conference? Was it upbeat, or did you find that people were starting to see a bubble?
The overall the conference was very upbeat. The feeling is that the fundamentals are still very strong for multifamily. Developers certainly think so. There are some 8,000 apartment units expected to be open for business this year, according to Marcus & Millichap. Also, the new units will mean new investment opportunities, especially for institutions and life companies, with cap rates as low as between four and five percent.
It seems like Chicago is doing very well. What is driving this?
Job growth downtown. New jobs in the tech sector are spurring demand for luxury units that are coming online or are under construction. Additionally, General Electric is adding a slew of jobs to the city, and bringing the headquarters of its GE Healthcare division from the United Kingdom to Chicago.
The zoning process there seems to be frustrating. Is this holding investors back from getting deals done?
It makes land sales difficult because of the uncertainty regarding zoning. In order to apply for zoning, the applicant has to have architectural work and engineering work done. The fees for this work are substantial, so there is an unwillingness to buy land with such uncertainty, which obviously slows down transaction flow.
Did you hear about any exciting new developments there in the pipeline?
One big discussion was on the Wolf Point project with its developer Joseph P. Kennedy Enterprises’ chairman Chris Kennedy. This mega project has been in the process for some time. It will eventually be home to four buildings: a parking garage, which is open now; an apartment tower; and two other towers, one with one million square feet of office, with residential on top, and another that will likely house apartments.
How can GRS help investors and clients get deals done in the Chicago area?
Our local personnel have been working in this industry in the Chicago area for over 20 years. We know many of the players and understand the idiosyncrasies of Chicagoland to fulfill all of their due diligence needs.