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Political Risks Cloud Horizon for Chicago Multifamily Sales
The multifamily investment sales market in Chicago has a great deal going for it, ranging from surging renter demand to the positive cap rate spread compared with primary coastal markets. However, Marcus & Millichap’s Institutional Property Advisors (IPA) says transaction activity has moderated and could decrease further, as political downside risks have begun clouding pro forma assumptions.
Two major issues stand out: Gov. JB Pritzker’s publicly supporting the implementation of new rent-control legislation statewide, and the Cook County assessor dramatically increasing property assessments in the northern suburbs.
“The assessor has only just begun a reassessment process that will take three years for the entire county, so the full impact has not yet been felt. But, those properties that have already been reassessed offer insight into what could be in store for apartment buildings throughout the county,” IPA says. Accordingly, investors will employ conservative underwriting on all potential acquisitions throughout Chicagoland.
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