By: Jeffrey Steele, Contributing Writer
Chicago–When the Lincoln Park Builders of Chicago convened its 26th Annual Real Estate Forum Thursday evening, it did so under the banner “How’s Your Vision?” The six Windy City industry experts who made up the panel seemed delighted to train their sights on the future of Chicago multifamily development.
Taking the Germania Place dais, moderator James Jann of JAB Real Estate Inc. put a series of questions to five seated panelists. They included Gregory T. Mutz, chairman and CEO of AMLI Residential Partners LLC; Chris Feurer, CEO of Jameson Sotheby’s International Realty; Alan Dooley, senior vice president of Heitman Portfolio & Asset Management Group; Lee Kiser, co-founder of Kiser Group; and Peter Tortorello, senior vice president of Newcastle Limited.
A major topic of discussion was the Millennial generation, what members of that cohort are seeking and how soon they will convert from renters to home buyers.
Noting that only 30 percent of home buyers today are first-time buyers, a far cry from historical rates of 40 to 50 percent, Feurer observed, “How many 28-year-olds can afford mortgages? But we see it coming.”
Dooley said Chicago’s renting scene is “benefiting from all the money the states of Wisconsin and Michigan are putting into educating their kids. They’re figuring it out; they like it here. They’re doubling up, finding roommates and some are having their parents pay their rents. They’re delaying getting cars, delaying getting married. They figure if they’re going to live to be 100, they’ll delay growing up until 25 and rent until then.”
Mutz noted 68 percent his company’s units are occupied by one resident, and that Equity International’s Sam Zell has predicted home ownership rates will eventually fall to 56 percent. “If we keep having Millennials live where they live, we’re in good shape downtown,” he observed. “If it changes, holy moly, we’re in trouble for a while.”
“I think things have just been deferred,” Feurer jumped in to say. “We’ve figured out what young people want [as renters]. That’s changing things. And seeing people whacked buying condos in 2008 is going to make them think twice.”
Responding to Jann’s query about “where the trendy are going,” Kiser noted that in Chicago, trendsetters don’t get pushed out of their current neighborhoods. “They leave and find new neighborhoods and we follow them,” he says.
Noting long languishing near Northwest Side enclaves Logan Square and Humboldt Park have both been discovered by Millennials, he predicts the next emerging neighborhoods will include West Town, Pilsen, possibly Bridgeport and the north side Broadway corridor from Montrose Ave. all the way up to Evanston.
While being close to CTA L stops and bus lines has always been important to both renters and developers, Kiser suggests public transit has become a bit less essential. “The traditional transportation like train lines isn’t all you need to look at,” he said. “Today, it’s Uber, proximity to Divvy bike sharing stations and car sharing. Being right on an L stop isn’t quite as important as it once was.”
Panelists were uniformly upbeat on the final question of how Chicago’s multifamily scene would look in five years. Mutz summed up the much of the prevailing opinion.
“I’m cautiously bullish,” he said. “We’ve got political problems, and a divided city of rich and poor. There are a lot of challenges, but we live in a great city, and if we screw it up, a pox on us.”