These days, finding a good apartment around Chicago is about as easy as getting center row tickets for the hit musical “Rent.” In both cases, the house is practically sold out.
Renters say there aren’t enough nice places to lease. They complain about the lack of choices.
One young professional, for instance, was looking for an apartment in Chicago’s Streeterville neighborhood. At first, she didn’t believe landlords who told her there were only one or two units left in their large apartment buildings.
She figured it was a negotiating ploy. But when she saw the same eager renters touring every building where she went, she started to believe the shortage was real. Now she feels lucky to have leased the last one-bedroom apartment in a big building where she pays $1,225 a month.
Which brings up the other big gripe: rents. Prices seem to be headed nowhere but higher and higher.
Real estate experts say the trouble in the city is that no new big rental buildings have been constructed in seven years. Occupancy levels are about 98 percent. That means apartments are scarce, which translates into hefty rent hikes.
Several factors have put new construction on hold, industry experts say. Commercial lenders are hesitant to finance apartment projects because the market became overbuilt in the late 1980s and early 1990s, causing vacancies to rise.
Also, high taxes in Cook County mean most developers want monthly rents of about $2 a square foot–a price at which many people would prefer to buy instead of rent.
The suburbs are also witnessing a tight rental market with escalating rents and little new construction–except in the western suburbs, where several thousand new apartments have been built. There, most developers are putting up high-end or so-called premium units that rent for $900 to $2,000 a month.
The idea is to capture a new breed of apartment dweller–renters by choice, usually people who can afford to buy a house but prefer for a variety of reasons to forgo the hassles of ownership.
The fact that upscale apartments are being built in the suburbs is partly a reflection of another factor in the apartment crunch: Suburbs usually eschew rental development, but upscale complexes are passing muster with strict municipal zoning laws.
So, renters who need an affordable spot have the toughest time of all.
Kristin Starns spent weeks looking for an apartment in the northwest suburbs. She works in Glenview and wanted to be within a 30-minute drive of her job. Her budget for rent was about $700 a month.
“There was something wrong with either the location, the size or the price,” she said. “And usually all of those things were wrong with the apartments.”
Starns finally used a service to help locate an acceptable apartment building. She took the first unit that became available and will move there in March.
According to a report from Chicago real estate company Draper and Kramer Inc., no new apartment buildings have been constructed in the downtown area since 1991. Rents in good buildings now average about $1.80 a foot, or about $1,800 a month for a two-bedroom apartment.
William E. Montana of Draper and Kramer expects rent increases of 3 to 6 percent this spring, the time when many leases expire. This comes after rent hikes of about 3 to 7 percent the year before.
But, Montana said, “Some areas have had double-digit increases.”
One new apartment building, called 1 W. Superior, has broken ground on the block bounded by State, Superior, Huron and Dearborn Streets. The 52-story, 809-unit luxury rental building should be complete late next year. But experts believe one building won’t affect the market much.
Neil Ratner, owner of Apartment and Home Seekers, helps find tenants for 300 buildings on the city’s North Side. He says rents for two- and three-bedroom apartments have increased about $150 a month in the last two years.
“If the unit is halfway decent, it will rent,” said Ratner.
Further depressing the supply of city apartments is the surge of condominium conversions.
A report from Appraisal Research Counselors Ltd., Chicago, says 27 rental apartment buildings were converted into “for sale” buildings from 1991 to 1997. As a result, the city lost about 5,800 rental units.
In suburban Cook County, Draper and Kramer figures about 3,000 rental apartments were converted into condominiums between 1991 and 1996.
Today, rents are high enough and interest rates are low enough that it makes sense for many tenants to become homeowners. This has contributed to the booming city market for lofts and condominiums, a trend that has helped keep rents from increasing even faster than they already are.
People figure if there are few places to rent and those units cost as much as a place to buy, then why not purchase a home?
The Habitat Co. manages 15,000 apartment units, mostly in Chicago. The apartments range from government-subsidized properties to luxury units.
“There just aren’t as many choices,” said company vice president Janice Stewart. “There are no deals out there for renters. There are no concessions.”
Finding a nice, affordable city apartment is difficult. Landlords say well-kept studio and one-bedroom apartments from $350 to $475 a month are easy to rent. But because of the lack of low-cost apartments, people who can’t afford high rents–mostly seniors, students and single parents–are trying different living arrangements.
Two single-parent families might rent a place together. Seniors share rooms or take spots in boarding houses.
Young people are doubling up, getting roommates. They’re also scaling down, taking one-room apartments they wouldn’t normally choose. Others opt to live at home with their parents, realizing it’s not such a bad deal–at least financially.
“People are occupying so-called subordinate locations,” said Tracy Cross, president of Tracy Cross & Associates, a real estate consulting firm based in Schaumburg.
Perhaps the biggest gap exists for those not eligible for public housing and yet able to afford only the least expensive market-rate place.
“There is a demand for more affordable apartments than what we have to offer,” said Gabriella DiFilippo, director of delegate agency programs at the Chicago Department of Housing.
Recognizing the problem, the city recently began offering a service called Affordable Apartments for Chicago. It hopes to link low-income renters and inexpensive apartments.
Working in conjunction with a private company, Visual Properties Inc. of Chicago, the city has developed a data base of affordable apartments.
Potential renters come to the Department of Housing offices at 318 S. Michigan Ave. A counselor enters their requirements for an affordable apartment into a computer system, which then displays pictures of apartments that are available for rent.
Before the system was developed, DiFilippo says housing counselors were available for advice but they didn’t have access to where apartments actually were located.
“It was hit or miss,” DiFilippo said.
Currently, there are 53 buildings on the computer system, thought to be the first of its kind in the country. Hoping to make the service more accessible, a Web site was opened last month. It also will soon be available at public libraries and community centers throughout the city.
In the suburbs, rents generally are not as high as rents in the city. More apartments are available, too.
Mannie Pace just moved here from the Dallas area because of a job change. He rented an apartment in west suburban Bloomingdale. He feels he had a good choice of apartments and he rented a two-bedroom unit that allowed him to keep his two cats.
But the rent is higher than he expected. His monthly bill is $925, about $200 more than his rent in Texas. The rent is also about $120 a month more than he was paying when he lived in the Chicago area three years ago.
“Prices have gone up,” Pace said.
Even so, he got a bit of a break. Pace received a half month free rent up front. His damage deposit was also less than one month’s rent, whereas city dwellers will usually pay at least one full month rent to the landlord as a security deposit.
Rent concessions are most common in the western suburbs, says Kathryn Romanelli, director of referral services at Tribune-owned Relcon Apartment Finders, Oak Brook, which receives a fee from landlords to help them find renters.
Specials may offer as much as a $300 rebate on the first month’s rent. But Romanelli said: “Only the premium buildings with high rents are offering specials.”
A fair number of new apartments are being built in the western suburbs. According to the Draper and Kramer apartment report, the Naperville/Aurora area added more than 1,800 units in 1996-97. And more units are being constructed now.
“DuPage County has 4,000 units in about 17 new developments that are being built or planned to be built,” said Montana of Draper and Kramer.
The report says Lake County has had only two new projects, about 400 new units. One development was built in suburban Cook County, a 283-unit high-rise building in Evanston developed by the John Buck Co., Chicago.
Most new suburban apartments are expensive. Developers say they are catering to “renters by choice”–in other words, upscale residents who prefer to rent even though they could buy if they wanted to.
Francine Johnson and her husband rent by choice–a 1,700-square-foot three-bedroom place at the Vinings of Towne Green, a new development in Bloomingdale. She and her husband own a business and they have one daughter, a college student who lives with them.
The Johnsons have owned a number of houses and they still have a summer home. But they like not having the responsibility of being homeowners.
They also like the luxury-type appointments in their rental unit.
“For us it’s wonderful,” said Johnson. “Less really is more.”
Developers describe their expensive projects as “for sale” style apartments. That means the units have amenities similar to those found in the condominiums and townhouses that people buy.
Two-car attached garages are common. Entrances are private. Inside, apartments include features like walk-in closets, washers and dryers, and fireplaces. Most of the upscale communities have swimming pools and recreation areas, workout rooms and business centers.
But developers aren’t just building high-end projects because that’s what renters want. Upscale apartments are getting built because suburban towns are notorious for tough zoning laws.
Most towns want small, but expensive, apartment projects in order to attract a handful of upscale residents.
“The approval process for a multi-family project is long and difficult,” said Greg Esterman, director of development at Avalon Properties, Lombard. “Cities can be very selective.”
Because new development opportunities are limited, some companies are buying old apartment complexes and upgrading them.
Village Green Companies of Farmington Hills, Mich., has two new developments in the western suburbs. It also has purchased three suburban apartment complexes, two of which have been upgraded. The third one is being rehabbed now.
“We are catering to the young professional, just out of school, who is not established yet,” said company spokesperson Timothy Smith. “These units are good for someone who just can’t swing something new.”
