The pace of apartment construction is at the highest in the Chicago region since 2004:
Rental construction reached its highest level in more than a decade last year in the Chicago suburbs, and 2018 is shaping up as another busy year. More than 4,200 units were completed in 2017, and about 3,900 more units are projected for this year, according to data from Marcus & Millichap and MPF Research…
The rental resurgence is the result of several factors, including a rising disparity between suburban and downtown rents, pent-up demand after little new construction over the past decade, and declining home ownership, industry experts say…
Unlike downtown Chicago, where much of the development is clustered together, many suburban projects are miles from another new development, meaning they face minimal competition for new renters…
“Now, with condo development just about going away, you’re seeing towns and cities giving building permits to apartment projects they wouldn’t have considered a few years ago. Also, I think apartments have lost some of their stigma because now they’re so damn nice.”
Three quick thoughts:
- While this may be an increase in apartment units, this is still behind the construction of single-family homes. For example, the Chicago region had 6,000+ new housing starts for single-family homes in 2016.
- It is interesting to note where the apartments are being built: probably in desirable communities (relatively wealthy, close to jobs and amenities) and often in downtown areas (this is cited in this same article). To flip this around, apartments are not desired everywhere or by all suburban communities.
- Will the trend toward apartments in the suburbs continue to increase? This might be a correction to a lack of apartment construction in the last decade or it might represent an enduring change as suburban residents desire more rental units.
Overall, apartments in the suburbs are relatively unique compared to the overwhelming preference for owner-occupied units. Thus, the numbers regarding apartment construction in the suburbs bears watching.