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Over 10K new apartments could flood Downtown Chicago by 2022. But there’s a catch
New data from Integra Realty Resources shows huge increase in number of units, but concerns about property taxes
The downtown market in Chicago is going to continue to see growth through 2022, according to a new data analysis.
But that doesn’t mean Chicago apartment owners should expect tax breaks on rent.
Chicago has seen a huge boost in construction of downtown, high-end apartments over the last five years. The number of available units has increased by 51 percent to be exact, and Chicagoians will continue to see that grown over the next couple of years, according to Integra Realty Resources, which authored the report. More people have been moving out of the suburbs and into the downtown area due to increased housing supply and the proximity to major companies that have moved to downtown Chicago.
Because of the strong job market, absorption remains high, with a 93.2 percent occupancy rate for Class A buildings, according to Integra.
The average net rent at Class A buildings downtown rose slightly to $3.13 a square foot at the end of 2019, though it’s far below the growth seen in 2017. Average net rents at Class B buildings also increased to their highest levels since 2014, though occupancy rates remained the same, according to the research.
Downtown rents are expected to rise about 2 percent in 2020, according to Integra.
It’s expected that more than 10,000 new apartments will be delivered in Downtown by 2022.
That number could be lower if some of the planned projects fail due to high construction costs, taxes and Affordable Requirements Ordinance standards Ron DeVries, senior manager of Integra told the Tribune.
“I think these ARO requirements are to some extent driving development out into the neighborhoods,” he said to the Tribune.
Specifically, DeVries said he is worried about how high property taxes are going to rise. This is due to an overhaul by Cook County assessor Fritz Kaegi who has been adamant about replacing the old tax assessment model.
DeVries said new property assessments are coming to the city in 2021 and could bump taxes to around $5,000 to $6,000 per unit. This is almost double what it was a few years ago, according to DeVries.
“The million-dollar question is, how high are they going to go?” he said to the Tribune. [Tribune] — Jacqueline Flynn