Midwestern Multifamily Real Estate Is A Real Rollercoaster
November 16, 2017 | Chuck Sudo | Bisnow
Chicago multifamily real estate is struggling with flat rent growth in downtown submarkets, a packed pipeline through 2019, and rising construction and labor costs. Those same issues are being grappled with by developers across the Midwest.
CoStar Market Analytics Economist Brandon Svec said that as more Class-A apartments are being delivered, pre-leasing percentages at new buildings are declining, even as the pace of lease-ups remains the same. This is a sign renters recognize they can shop the market for the best abatement packages and keep their rental costs down over the term of a lease.
The flexibility that renters have to chase abatements is coming at the expense of Class-A buildings delivered earlier in the cycle. Svec confirmed observations by developers like Fifield Cos. CEO Steve Fifield and Golub & Co. principal Lee Golub that lease retention rates are on the downswing.
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