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Why Invest in the Chicago Suburban Apartment Market?

By Jay Madary, President and CEO

Description:

Why are we so bullish? Chicago is positioned to offer attractive investment opportunities for the long term based on new data from the HFF and Marcus & Millichap reports.

Keywords:

apartment market, multifamily investment, HFF report, Chicago multifamily market, Marcus & Millichap report

For JVM, suburban Chicago is more than the home of our corporate office. It’s also an apartment market that we are bullish on and one in which we intend to expand our presence as we build our portfolio throughout the greater Midwest.

The reasons why are clear. Like our other target areas, the suburban Chicago apartment market is characterized by strong operating fundamentals, stable job growth and lower acquisition costs. Stated another way, suburban Chicago is well positioned to offer attractive multifamily investment opportunities to investors for the long term.

Data Dive

A quick review of the stats will confirm suburban Chicago’s status as a strong apartment market. According to HFF’s fourth-quarter 2017 report on the Windy City, the suburban Chicago multifamily market had an occupancy rate of 94.9 percent.

Effective rents in suburban Chicago climbed 6.9 percent – to $1,221 per month – during 2017, Marcus & Millichap reports. Furthermore, “although the balance of construction is equalizing, conditions in the suburbs are sufficiently tight to enable operators to lift rents significantly again this year,” the research firm adds in its first-quarter report on the Chicago apartment market.

Finally, job growth is essential to the health of the apartment sector, and suburban Chicago is in good shape on this front as well. As the HFF report points out, Chicago has created the fourth-highest number of jobs since the U.S. employment market bottomed out in 2009, with 600,000 jobs added in that timeframe. The suburbs specifically are home to such Fortune 500 companies as Walgreens Boots Alliance, Caterpillar, Allstate and AbbVie Inc., and appear poised to continue to enjoy healthy employment growth.

A Growing Presence

JVM currently owns three communities in suburban Chicago, and we are committed to growing our portfolio in this important market. Our portfolio includes Avant at the Arboretum, a 310-unit community in Lisle; the 340-unit Enclave at 127th in Plainfield; and The Aventine at Oakhurst North, a 464-unit community in Aurora.

Looking ahead, our goal for 2018 is to acquire $200 million in Class A properties in our existing Midwestern markets. Therefore, we will be closely evaluating potential acquisitions in suburban Chicago this year – and in the future.

Put simply, with all that it has going for it, suburban Chicago is a market where multifamily investors will find strong returns and immediate cash flows. It is also home base for our corporate headquarters and one in which we will always have a presence.

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