By Scott Harris
For those of you who haven’t joined the party, there is a surge of investment activity going on in the South Side of Chicago. While its reputation may cause skepticism, there is plenty of upside to South Side apartment investment and tremendous room for growth. With the right management in place, the South Side offers returns hardly found nation-wide.
The “South Side” encompasses a number of different neighborhoods. While each neighborhood is unique and high returns can be found throughout, I believe Woodlawn and Washington Park offer the most attractive in-place returns, with plenty of upside for the following reasons:
- Proximity to New Developments
In the past few years, the South Side has received more and more press, infiltrating everyday conversation. Woodlawn and Washington Park, both bordering Hyde Park: home to the University of Chicago, are benefitting from development plans such as the Obama Library and the Tiger Woods redesigned Jackson Park Golf Course. These developments offer potential jobs and increase the flow of money to the area. In addition to these big-ticket items in the news, retail on the South Side is also becoming more prevalent. An example is the news of Jewel Osco opening in Woodlawn.
Washington Park is bordered by the Dan Ryan Expressway to the west, and Woodlawn is bordered by Lake Shore Drive to the east. Both neighborhoods also offer easy access to public transportation. The Green Line “L” train has multiple stops in Woodlawn and Washington Park, which provides an easy commute throughout Chicago.
- Available Debt
Debt sources are readily available for South Side investments. Because deals are flowing at a high velocity, and barriers to entry are low for this product compared to other markets, more lenders have found their way to the South Side. One of the reasons is that high returns create relatively high debt service coverage ratio. For the aforementioned reasons, lenders are becoming confident in South Side investments.
The current state of the South Side market is a fascinating case study. If you have interest in exploring what the South Side has to offer, please feel free to reach out.