Condo development has come to a screeching halt in Chicago.
Zero condo projects are under construction in downtown Chicago, a stark reality that hasn’t been seen in years, the Chicago Tribune reported.
Soaring construction costs and high interest rates have stymied development, leaving a glut of unsold high-end units and a shift toward rentals.
About 2,500 condos have been developed across several towers downtown since 2015, and about 600 of those units are still available, Gail Lissner, managing director for Integra Realty Resources, told the outlet. That works out to 24 percent vacancy.
Meanwhile, Downtown apartment occupancy hit a lull last year at over 94 percent.
Apartment developers added roughly 31,000 rental units to downtown in the same timeframe, many of which are in Gold Coast, River North, South Loop and the West Loop neighborhoods.
Not only are zero condos under construction, but none are in the pipeline.
“It’s not as much fun to talk about the condo market as it was 20 years ago,” Lissner told the outlet. “If you want new construction, there are very few choices.”
Some boutique condo developments have had success in recent years, catering to niche markets. However, towering condo projects like Cirrus in Lakeshore East or the Reed at Southbank won’t be seen in the market for years to come, said Jonathon Cordell, development director for Lendlease Development.
High interest rates are a challenge for potential condo buyers, especially first-time buyers, he said. Lendlease offers mortgage rate buydowns and allows qualified buyers to rent their units for up to a year before closing.
The condos built in recent years have predominantly been large, ultra-luxury properties, which can be a tough sell in this market.
The motivation for condo purchases has shifted from investment-driven to lifestyle-oriented, especially as average downtown condo prices have remained relatively stable, rising from $543,000 in 2019 to $547,000 in 2023.
—Quinn Donoghue
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