Market Watch: Curt Bailey of Related Midwest on the Buzzing Rental Market
He oversees a $2 billion real estate portfolio and says Related is raising the bar for South Loop living. So far, he's had perfect market timing.
Last July on Bloomberg TV, Curt Bailey of Related Midwest made a case for Chicago's booming rental market. “[Mayor] Emanuel brought the jobs," he said, 17,000 of them. Condo inventory was under six months supply, we had a 10 percent year-over-year growth in the rental market, and a luxury market 95 percent rented. A year later, Bailey says demand is even higher and Chicago is still the developers primo destination.
“There's a lot of cranes in the market,” he says. Consider this: “There are 5,000 units that will get delivered in the next, let's call it 24 months. Given the lack of product that's been delivered over the last four to five years, and the population growth that's occurred in that time frame, the numbers are indicating that all those units should be absorbed fairly easily. But I'll tell you, there is now very little product available on the condo side and you have really got a tremendous pent-up demand.”
Bailey cites a 2012 Census special report on population growth in major citiesgrowth within two miles of city hall. Chicago ranked number one. “What you're seeing is this desire to be back in the city,” says Bailey. And a desire for good product to move into.
According to Appraisal Research Counselors, there's only about a thousand condo units available in downtown. Bailey says it probably less than that, closer to 800. And 430 of those are Related Midwest's. “You have a Lincoln Park 2520 and the Ritz residences on Michigan, but that's just a tiny amount of product. I think you're going to see in the next 12 months a number of for-sale developments announced.”
“I think it was CA23 in the West Loop,” recalls Bailey. “They sold somewhere around 40 units. They won't deliver them for almost a year and a half – they're completely sold out.” What caught Bailey's attention is that all the units were three bedrooms. He extrapolates it means these are people who want families. “I think that's an incredible indicator of the vibrancy of Chicago and its viability long-term.” And with a shrunken inventory, buyers snap up property even during off season.
Before Related's 500 condo resale hit the MLS they had already logged 73 sales, with almost no advertising and during the worst months – winter. The properties, part of Related's South Loop Luxury Collection, includes three buildings: The Grant, Adler Place and the Harbor View. “These buildings are beautiful building,” says Bailey. “We were able re-imagine these buildings [and] were fortunate to have the capital, in this case $25 million, to improve them.”
Now Related wants to develop and help you find a house through its new brokerage division. It's a crowded, competitive field, but Bailey tagged real estate veteran David Wolf to head sales and believes Related can be in a market defining position with a top-tier team. “And that's what we're assembling. If you look at our legacy of developments, from the Park Tower to 840 Lake Shore Drive to 340 East Randolph, we have the expertise.”
That expertise is on display with the latest Related re-imagined building, the much talked about signature luxury apartment at 500 Lake Shore Drive. “It's 500 units with some of the most spectacular amenity space not only in the city” says Bailey, “but maybe in the country.” In the country? That's raising the bar.