As if the Chicago apartment scene was not already busy enough, Chicago Real Estate Daily’s Alby Gallun reports that three huge deals have transpired in the final month of 2011, putting the finishing touches on what could be the most lucrative year of apartment transactions in Chicago’s history.
The apartments – the Flair Tower, 1212 S. Michigan Ave., and Echelon at K Station – were all multimillion dollar transactions.
Flair Tower, according to Gallun, was purchased for about $87 million, a seemingly low total for a building that cost $80 million to build and just opened last June. The other two buildings, though, seem to have the same buyer in Crescent Heights, a Miami-based firm that reportedly paid $66 million for 1212 S. Michigan Ave. and $105 million for Echelon at K Station.
As Gallun notes, those latest deals are hardly the first apartment deals in 2011. Thus far, 11 downtown buildings have been sold for a total of $1.07 billion, according to Appraisal Research Counselors. The latest deals, which come out to $258 million, would push Chicago apartment sales volume to $1.33 billion, a new record over 2007’s $1.30 billion.
Appraisal Research, though, is also quick to note that a number of investors are beginning to feel some uneasiness with Chicago’s apartment boom.
“Given the level of activity, combined with asking price points relative to new construction costs and the amount of product in the pipeline, investors have hit the pause button,” says a recent Appraisal Research report.
As we reported before, not only are prices skyrocketing for Chicago rentals, but developers are building as many new units as they possibly can. Seven projects are currently under construction, and the latest Appraisal Research numbers have 5,600 new apartments entering the market by the end of 2014
Chicago is still feeling the effects of the detached housing boom, and as Gallun writes, some apartment developers are clearly trying to avoid that pitfall.
“Fifield already has pulled one property from the market, Alta at K Station, an 848-unit property in River West, and other landlords may follow Fifield’s lead,” he wrote.