Demand has increased significantly in the “for rent” multifamily arena, according to Pierre Cowart, senior vice president of Leopardo Companies, Inc. “For sale” multifamily is also gaining momentum, as Leopardo is commencing work on a 24-story, high-end condominium building in the next two months.
The 35-unit luxury condominium development, known as 4 East Elm, by Convexity Properties, LLC, the real estate and management arm of DRW Real Estate Investments, is located at the northeast corner of Elm and State in Chicago’s Gold Coast neighborhood. Designed by Solomon Cordwell Buenz, the 201,700-square-foot building will officially break ground later this year and has a scheduled completion date in spring 2016.
“We are also seeing increased construction activity in industrial/office, which is aligned with improved vacancy trends and positive absorption over the last 24 months,” Cowart said. “Urban grocery-anchored retail has been strong in the Chicago area, and Leopardo has completed several projects in this space, with more on the horizon. The underlying economic fundamentals with employment gains, and very low interest rates, have been a positive for the industry.”
Ravenswood Station is one of the urban grocery-anchored retail projects recently built by Leopardo. Ravenswood is a 240,000 square foot retail center anchored by Mariano’s Fresh Market, located at 1800 West Lawrence. Adaptive re-use projects in urban locations are hot right now, Cowart said, and healthcare remains strong.
“Most key submarkets have stabilized and enjoy far more year-over-year opportunities today, with the possible exception of public sector niches, like public safety or school work, where larger project work is still slow. Higher education will be very strong for the foreseeable future.”
As far as speculative construction goes, Cowart says Leopardo is seeing it primarily in the industrial sector, with larger projects in low vacancy submarkets starting to pencil out again.
He added, “You still won’t see much speculative office construction in Chicagoland in the near future, especially in the suburbs.”
Construction financing fundamentals remain the same with lenders demanding strong credit, strong tenancy and good sponsors, according to Cowart. However, terms and loan-to-value ratios are improving for projects possessing those attributes.