3. Integra Realty Resources Inc. www.irr.com
State of the Chicago Residential Market
January 2018
Integra Realty Resources (IRR) – Chicago
Gail Lissner, CRE, SRA
Integra Realty Resources - Chicago
400 East Randolph, Suite 715
Chicago, IL 60601
4. Integra Realty Resources Inc. www.irr.com
“After nearly 50 years, property consulting
firm enters new era” Crain’s Chicago Business 10/09/17
Integra Realty Resources (IRR) – Chicago
Formerly Appraisal Research Counselors
5. Integra Realty Resources Inc. www.irr.com
Homeownership Trends
Chicago is at 64.7% as of 3Q17
60.0
61.0
62.0
63.0
64.0
65.0
66.0
67.0
68.0
69.0
70.0
71.0
72.0
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
Chicago National
6. Integra Realty Resources Inc. www.irr.com
2007-2017Avg Sales Price Trends – Chicago MSA
Source: MRED LLC Compiled by Integra Realty Resources - Chicago
7. Integra Realty Resources Inc. www.irr.com
2007-2017Avg Sales Price Change – Chicago MSA
Source: MRED LLC Compiled by Integra Realty Resources - Chicago
8. Integra Realty Resources Inc. www.irr.com
IRR 65-Building Downtown Chicago Sales Price Trends (PSF)
2007-2017
Survey of Closed Sales Price Trends in
65 Buildings with 20,000+ Units
• Up $100 PSF from bottom of mkt
(+30%)
• Up $28 PSF from 2007 (+7%)
But – individual buildings had very different
results!
Source: MRED LLC/ Integra Realty Resources - Chicago
9. Integra Realty Resources Inc. www.irr.com
Submarkets of Downtown Chicago
North of the River:
Gold Coast
Streeterville
River North
South of the River:
Loop
West Loop
South Loop
125,000+ units
10. Integra Realty Resources Inc. www.irr.com
Downtown Chicago Residential Market
New Unit Deliveries: 1995-2019 projected
Annual Deliveries –
averaging 3,245
units with
47% rental units &
53% for-sale units
Rentals – dominated
since 2010
13. Integra Realty Resources Inc. www.irr.com
Challenges of For-Sale Development Downtown
Post-recession development:
• Land seller expectations
• ARO requirements
• Construction costs
• Pre-sale and equity requirements
• Delays and uncertainty of new construction
• (buyers want it “today”)
• Slow condo price growth
• Investors no longer fueling demand
Rental deals are easier to get done!
14. Integra Realty Resources Inc. www.irr.com
Downtown Units Delivered Since 2004 –
Resale Price Trends
Resale market
provides lower cost
alternatives PSF but…
Source: MRED LLC/Integra Realty Resources - Chicago
15. Integra Realty Resources Inc. www.irr.com
Downtown Unsold Developer Condo Inventory
Below
1,000 units
since 2013
17. Integra Realty Resources Inc. www.irr.com
Downtown Unsold Developer Condo/TH Inventory
Targeting the luxury
segment of the market –
89% over $700 PSF and
large unit sizes
19. Integra Realty Resources Inc. www.irr.com
61 W. Erie
900 West Washington The Hayden
360 West Erie
The Bentham
Boutique Bldgs:
$690-$900+ PSF
2,100-3,400 SF
10-38 units
New Condo Projects – Started Marketing in 2017
1000 S. Michigan-325 units
Superior House
20. Integra Realty Resources Inc. www.irr.com
And some buildings converting back to rentals!
Characteristics of De-conversion candidates:
• Large percentage of investor-owners
• Small unit sizes (i.e. studios/1BRs)
• Lack of price appreciation – sales lagging the market
• Renovation work needed (special assessments looming)
• Location in an area of strong rental demand
• Potential as a development site
21. Integra Realty Resources Inc. www.irr.com
Where is the Condo Market Headed in 2018?
Smaller-sized developments with few exceptions
• Easier to finance
• Absorption/sell-out more manageable
Larger-sized units with few exceptions
Higher priced points due to feasibility
Pricing will continue to trend upward modestly
Great opportunities - Strong pent-up demand for mid-priced new units and townhomes
Continued de-conversions of modest condo buildings
