Rent prices for newer, more expensive apartment buildings Downtown rose to a record $3.18 per square foot in the second quarter, another sign the demand for rentals has not weakened.
Second-quarter rents were up 5.7 percent year over year, according a report from consulting firm Integra Realty Resources, analyzed by Crain’s. Class A occupancy rate held steady year over year at 94 percent.
The numbers extended a nine-year run of rising rents and strong occupancy, as the preference for renting over buying continues and more downtown workers look for apartments.
In the past four years, developers have delivered more than 13,000 apartments Downtown. Integra forecasts developers will complete 3,000 apartments Downtown this year, down from a record 4,348 in 2017, making it the first year since 2014 that demand exceeds supply.
Integra also forecasts developers will complete a record 4,500 apartments Downtown in 2019 and another 4,700 in 2020.
The apartment boom is happening everywhere Downtown, from River North to the West Loop to the South Loop, where two projects — NEMA Chicago and Essex on the Park at the southern end of Grant Park — will soon deliver nearly 1,300 units.
Rents at less-expensive Class B buildings rose to $2.65 per square foot in the second quarter, up 0.4 percent from second quarter 2017 and just shy of the record $2.67 in first quarter 2017.
Investors’ desire to add rental units to take advantage of the market also has led to the continued trend of condo deconversions. Most recently, New York-based Greenstone Property Group paid $27.2 million for a 188-unit condo tower it will convert into apartments in Edgewater. [Crain’s] — John O’Brien