Thursday we attended the Chicago Real Estate Investment Association event where the multi-family state of the Chicago market was discussed. Top takeaways from this discussion include:
– 2018 has seen an increasing spread between Class A and B housing. A typical spread approximates 13% but market is witnessing upwards of 18%.
33’s Insight: We view this spread as an opportunity for investors to target workforce housing. Seek out suburban communities with strong blue collar employment base where competition for buildings is lower.
– No surprise here that there is a strong supply of units coming on in Q2 2018. Chicago will deliver 2,000 units new luxury units.
33’s Insight: Best in class leasing and management will be paramount to stand out.
– Retention should be a major priority this Summer.
33’s Insight: Start your retention marketing plan 90 days prior to renewal and ensure managers are keeping tenants happy all year long. Make managers demonstrate tenant satisfaction through surveys.
– Value add deals are harder to come by and don’t always make sense. Developers need to examine the appetite in the neighborhood for increased rent vs. current rent roll.
33’s Insight: Volume construction can be an efficient upgrade if strategically analyzed. Older buildings need to keep pace and if they are in neighborhoods where renter expectations are high this quickly pays for itself.