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Apartment Metrics Continue Climbing in Chicago Region, Except for Deal Flow
Multifamily developers in the Chicago region are on pace to match last year’s record deliveries, yet vacancy continues to fall despite the robust pipeline, Marcus & Millichap says. The firm’s year-end report projects a 40-basis-point decline to 4.9% by the end of this year, building on the 60-bp decline experienced in 2018. Meanwhile, rents are expected to record a 6.6% year-over-year increase by Dec. 31.
That being said, the report notes that property tax concerns and some economic uncertainty have impacted buyer confidence. Transaction velocity has declined 19% over the past year, while the price per unit has slipped 2.5% to an average of $153,600.
Despite the headwinds, yield-driven investors are seeking value-add opportunities around the downtown core, especially in neighborhoods farther south including Bronzeville, Hyde Park and South Shore. Cap rates for Class C assets in these areas averaged in the upper 8% range, according to Marcus & Millichap.
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