2011 Development Market Report
By Michael Golden and Thaddeus Wong on May 1st, 2012
2011 @properties report on development market activity & pricing trends.
Welcome to the inaugural @report, an overview of market activity and pricing in 2011, prepared for our developer, investor and institutional clients. The @report has been a long time in development, and we hope it will become a valuable resource for you in evaluating current and future opportunities.
In today’s market, it’s tough to tell where the housing crisis ends and the recovery begins. We won’t make fools of ourselves by trying to pinpoint that moment. However, there were a number of reasons to be hopeful throughout 2011, and the positive signs continue into this year.
After slowing to a crawl after the expiration of the housing tax credit in June 2010, the market finally began to shake off the doldrums late last spring. In the second half of the year, we experienced strong absorption in a number of @properties-represented developments – from the very entry level ($130,000 studios at R+D659 in the West Loop) to the peak of the luxury market ($3.5 million condominiums at the Elysian). Then, mild weather and pent-up demand contributed to a relatively active winter, and spring 2012 arrived early, and with considerably more life than a year ago.
Still, Chicago remains a highly price-sensitive market. Overpriced product languishes indefinitely, while sellers who have the flexibility to price at – or under – market values have found they not only can move product but also control velocity to a certain degree.
For the year, pricing was down almost across the board in the seven neighborhoods we tracked. The good news is product sold. Inventory levels are down considerably from last year and down astronomically from the height of the crisis.
By no means are we out of the woods. However, after wrestling this market for the past three and a half years, we at @properties feel like we have a good handle not only on how to make for-sale multi-family product move, but also how to maximize its value for the developers, investors and institutions we serve. In fact, in terms of our infrastructure, marketing, resources, partnerships and talent on the sales floor, we believe we are better equipped to sell developments today than at any time in our history.
We will update the report on a semi-annual basis. In the mean time, please visit us at http://www.atproperties.com/developer-services for case studies and information on our developer services. If you’d like to talk about a specific project or opportunity, or just want to discuss the market in general, contact us any time.
Thank you for reading the @report.
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