Crash Era is Officially Over

Crash Era is Officially Over For 

South Shore, Chatham, Grand Crossing, Auburn Gresham

The post crash era is officially over for the neighborhoods. Cap rates are continuing to improve and bank lending is back in play. Outside money is continuing to push from Europe, Far East, Canada, East and West coast and last but not least..... the North Side. 

There's also growth in localized buyers and operators and with a healthy amount of trade taking place. Even though many owners and brokers are in love with the out of town buyers the majority of the deals are closed by local buyers at about 70%. Out of town buyers who do close on deals seem to be partnering with local management companies in an effort to mitigate their risk. 

Reported occupancy and collections are at pre-crash levels with application/demand for apartments higher due to lower unemployment & drop in loss of hours combined with a wave of millennials coming out of their parents basements. 

Appraisals are continuing to edge higher in values with no challenges from banks as to the validity of the final number.  An additional element to note is that vacancy factor has been shrinking from 15%-20% range to the 7%-10% rate. 

Cash deals which used to dominate the distressed property apartment building market has been replaced by stabilized property trading coupled with bank financing. some of the lenders that have stayed away from the South Side market are back in play.

Distressed properties continue to be part of the market and have always been historically at higher levels then the north side but are fewer and farther apart. There is a bigger inventory of 1-4 distressed property available with healthy trading and rehab of distressed sf and small multi unit properties in some markets. 

Some neighborhoods are seeing drastic increases in sale price due to speculations on the impact of the Obama library in Washington Park & the sub market of South Shore on Lake Shore drive from 67th 71st. 

Interesting note to consider:

South Shore, Chatham Grand Crossing and Auburn Gresham are at a cross roads of demographics. On one hand an aging population is shrinking while on the other hand millennials are finding jobs and are entering the market in search of cost effective housing that fits their budget.



Written by: Eiran Feldman
Contributed: Anthony Hardy - Marcus & Millichap
                     Noah Birk - Kiser Group
                     Eric Wolok - AIA
                     James Kutill - Appraisal Rsearch