The Real Deal Chicago

Resi construction volume down in Chicago area for 2nd consecutive year

The nearly $5B spent on new homes in the region is about 20 percent less than last year
September 17, 2018 05:00PM

Foundation work on Related Midwest’s One Bennett Park residential tower, taken in 2016 (Credit: iStock)

An estimated $4.95 billion will have been spent on new home construction in the Chicago area by the end of 2018, representing a 20 percent drop year over year and a decline of one-third since 2016.

Money spent on home construction in the region more than tripled between 2011 and 2016, jumping from $2.26 billion to $7.29 billion, according to data New York-based Dodge Data & Analytics reported by Crain’s. The number has been declining ever since.

Funding for nonresidential construction, by contrast, saw an 8 percent boost over last year to reach $6.61 billion, according to the report. But that figure is still down from the post-recession peak of $7.34 billion in 2015.

Factoring in all building types, Dodge measured a 5.8 percent decline in construction funding between 2017 and this year.

The three most expensive construction projects launched in 2018 all have been for non-residential spaces. In order, they are Riverside Investment & Development’s 54-story office tower at 110 North Wacker Drive, Sterling Bay’s 19-story office complex at 333 North Green Street  and the new security concourse being built at Midway Airport.

An report published by Integra Realty earlier this month indicated slowing rent growth in the Chicago’s suburbs, where more than 1,300 apartments have been built so far this year and more than 4,000 others are under construction. A similar review of Chicago construction data predicted a record 4,500 apartments will be built Downtown in 2019, plus another 4,700 rentals in 2020.

Integra calculated Chicago’s median apartment rent 5.7 percent higher this year than 2017, and observers say the ongoing influx of new businesses into the city means residential construction would have to step up even further in order to slow rent growth.  [Crain’s] — Alex Nitkin