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For the next couple of years, suburban Chicago multifamily development will be a tale of the haves and have-nots -- developers who have access to capital versus those who do not.
After a decade of growth, construction starts for suburban Chicago apartments are expected to be lower in 2023-2024 due to rising interest rates and a pullback by banks on construction loans. But because demand and rent growth remain historically high, developers with access to capital are expected to benefit paddy power casino reviewfrom the lack of new deliveries and enjoy a still-strong, less-competitive market.
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More than 750,000 apartment units are under construction nationally, the highest since the 1980s, according to CBRE. When those units are delivered, the vacancy rate will still only be just over 5%, and 2.3 million new units will be needed nationwide over the next decade to maintain healthy market fundamentals.
Although not as active as Sun Belt markets -- for example, Dallas/Fort Worth has 74,000 apartment units in the pipeline -- Chicago's suburbs have added almost 27,000 new apartment units since 2013, according to CBRE, including 3,911 new units in 2021, 2,085 in 2022, 2,775 projected units in 2023 but only 406 units to date planned for 2024.
paddy power pokerThe drop in supply, as noted above, is primarily because of difficulty in obtaining financing, not lack of demand. The overall suburban Chicago occupancy rate is 95%, and rents were up year over year by 13% in 2022, and 8% in 2023. Rising rents, which increase a property's income and value, also have helped bring historically high sale prices.
Although the Chicago metro area has lost population in recent years, many suburbs are growing, such as Schaumburg, Skokie and Mount Prospect, according to Redfin. Another key driver of multifamily growth is a strong job market. Chicago ranks No. 10 nationally for job growth, per the U.S. Bureau of Labor Statistics; it also has 35 Fortune 500 companies, second only to New York.
Capital helps projects take flight
For developers pursuing new multifamily projects, one way over the financing hurdle is to launch a private fund. Developers taking this path forward are likely to have an easier time securing financing to get their projects out of the ground, but only if they have a team well-versed in raising private funds and projects in prime, diverse locations so investors are not pigeonholed into one asset.
Wingspan, for example, has $200 million in multifamily projects under construction in suburban Chicago, southeast Wisconsin and central Florida. Part of the financing for these projects has come from the nearly $25 million we've raised to date through our private WDG GP fund, which is run by a two-person team with more than 40 years Paddy Power Casinoof experience in finance raising private funds.
While there's no such thing as a sure thing, private investors want to get as close to that as possible, so we're focused on projects with in-demand amenities that are near/in suburban downtowns with a growing population, multiple transit options, and a thriving lifestyle and entertainment scene. One example is Sixteen30, our new 284-unit apartment community in Plainfield.
Already 92% leased, it features a 7,500-square-foot clubhouse with cybercafe, fitness center and coworking spaces, as well as an outdoor grilling area, resort-style pool, bocce court, pet spa and bark park. And Maple Street Lofts, across from the Metra station in downtown Mount Prospect, is a fully stabilized 192-unit luxury paddy power casino reviewrental building with a ground-floor Angelo Caputo's Fresh Market grocery store.
Our fund is also helping finance part of 5400 Old Orchard, which will be built through a joint venture with Tucker Development and is located near the Westfield Old Orchard Mall in Skokie. Upon completion it will include 249 apartments, 49 rental townhouses and retail space.
So while banks' caution is limiting some developers' access to cash and therefore slowing their new apartment starts, with alternative sources, Wingspan continues its prudent executions -- with new projects to meet the seemingly insatiable demand for suburban rental living.