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Rogers Park Market Update


The continuous barrage of political and economic news can seem overwhelming at times. This information shapes the aggressiveness or conservativeness of our buying and selling attitudes. Despite the affect this news assault has on our moods, how much does it really influence the Rogers Park market? Does trade policy with China impact gross rent multiples on Touhy Avenue? Do impeachment proceedings in Washington alter price-per-units on Eastlake Terrace? And how much do the fears of rent control, housing plus and property tax reassessments change the capitalization rates on Estes Avenue?

Rather than relying on the insights of a grizzled broker, perhaps we should simply look at what has transacted this year in the Rogers Park apartment market and compare that data to prior years. And assuming this isn’t fake news, the facts may be surprising.

Through the first three quarters of 2019, there have been 11 larger apartment sales in Rogers Park. For purposes of this discussion, the 11 building, 181-unit Eastlake Terrace portfolio is counted as one transaction since it closed as a single sale. Although each transaction is unique, the overall metrics are helpful in framing market trends.

Of the 2019 Rogers Park apartment transactions, the average price per unit was $128,800. The average GRM was 10.3. And the average capitalization rate was 6.0%.

By comparison, in 2018, Rogers Park had 19 transactions with an average price per unit of $112,400; an average GRM of 10.2; and an average capitalization rate of 5.9%.

These metrics seem to indicate that GRMs and capitalization rates haven’t substantively changed year over year. The $16,400 (14.5%) increase in price per unit is due, in part, to higher rents across the market, but primarily to the larger average unit size of the 2019 sample group. For example, if a $1,100 one-bedroom apartment experienced a typical 3% rent increase ($33 per month or $396 per year), then applying a 10.3 GRM equates to a $4,079 increase in the price per unit ($396 x 10.3).

This is great… it looks like Rogers Park is immune to macro-economic news! Well, not exactly. First of all, one doesn’t become a grizzled broker without hedging a little bit… although we prefer to call it “providing disclaimers.” Second, the Fed’s early-2019 interest rate cuts woke-up investment markets from last winter’s hibernation and soothed many of the market’s fears. Third, despite many political and economic challenges, Chicago’s multi-family market has remained a safe and steady performer. Strong job growth, absorption of new product and rising construction costs have given nervous apartment investors shelter from the storm of negative news.

So, since we agree that Rogers Park probably is subject to economic and political forces, what does this mean for investors looking forward? Certainly, some owners are deciding to sell now rather than waiting for another cycle. Conversely, we see other investors who have a longer-term investment horizon, subscribing to the adage: “Buy and wait. Don’t wait and buy.”

But as any grizzled broker will invoke when it comes to predicting the future, those who know don’t say and those who say don’t know. But I will say this…

  • There has always been confusing political and economic news; there are just more ways for it to reach us today. Recessions, re-assessments, elections and the like meaningfully influence the market but they don’t instantly dictate supply, demand and prices.
  • Beware of self-fulfilling prophecies. The first sign of bad news does not mean the sky is falling.
  • The problems of rent control, housing plus and property taxes are real and could have a meaningful adverse effect on the market.
  • Prices are always “Too High.” Unless you’re the seller.
  • There are still far more buyers than sellers and debt is cheap.
  • Don’t overleverage. Be a good manager. And stay with non-recourse if you can get it.
  • Eat more vegetables and less carbs. And don’t panic. Rogers Park values are holding up well in this uncertain time!


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