Please join us in celebration of our 8th Annual Naughty or Nice Charity Event. Enjoy drink specials and hors d’oeuvres provided by Chicago Real Estate Resources.
For admission please bring an unwrapped toy or sporting good to support the Marine Toys for Tots Foundation.
Rockit Bar & Grill @ 22 W. Hubbard
Wednesday, December 4th from 6pm – Last Call
As we all know, Chicago winters can be rough. This applies to weather as much as it does the housing market. Unfortunately, we all can’t choose to sell our homes during the prime selling season, typically beginning around March.
CRER’s Residential Broker Neil Hackler knows the coming months can be rough for those trying to sell their homes and has answered a the common questions being about the market this winter:
Why is typically harder to sell your home during the “off season”
It is generally more difficult to sell a home during the winter months, simply because less people are looking. In addition to the winter weather making house hunting undesirable, many families and individuals who might otherwise be looking for a home are busy prepping for the holidays. Additionally, someone looking to transition from renting to owning will be bound by the terms of their lease, which typically expire April through September.
Following the new year, many soon-to-be buyers may continue to hold off until they file taxes so they can use their return as part of their down payment.
How will this year’s fall/winter “off season” differ from last year’s?
In some ways, this is where it begins to look up for home owners looking to sell their homes over the next few months.
Heading into the fall – though it already seems like winter – we saw a much lower inventory than compared to last year this time (largely due to the fact that home sales were abundant over the summer). As such, many buyers who lost out on opportunities during the summer or even those who have just started to look (hoping to utilize the low interest rates) are competing on homes and eager to purchase property.
What are the pros and cons of attempting to list and sell a home during the fall/winter months?
- There are buyers in the market place looking to jump on newly-listed properties and, due to the lower inventory, sellers may see higher levels of activity compared to normal.
- Buyers want to take advantage of the current lower interest rates
- Single-family homes are flying of the shelf in the good neighborhoods, so there will be many buyers still looking throughout the winter.
- If a property is listed but does not sell through the winter, then the high number of days listed will still be showing on the property information sheets. When a property has a higher number of days on the market, buyers start to wonder if there is something wrong with the property or that the seller is not very negotiable on the price.
- Activity may be lower through the holiday season and buyers may wait until the beginning of the year, or even until after tax season, to purchase.
- Upkeep on the home throughout the winter to keep it ready for showing can take more time and energy.
What advice do you have for sellers that can help them list/sell a home faster and more successfully during the winter/fall months?
My number one piece of advice: be more aggressive with your listing price, meaning asking for a slightly lower price, and keeping your home properly staged throughout the showing process. You don’t necessarily have to stage it throughout with a full set of furniture, but at minimum, do a walk through with the broker, add/remove things to keep it simple, have the property looking as nice as possible and always make sure the sidewalks and front stoops have been shoveled and salted.
What mistakes should the sellers avoid during the winter months?
Unless necessary, try to avoid listing your home during the off season in general. You’ll get quicker results if you wait until February and March to list. If listing your home is inevitable, make sure that you keep up on any and all repairs. Existing repairs will be written into the property disclosure form and may become difficult to fix as the weather worsens (mainly referring to exterior repairs).
When it comes to staging the property, remember to keep it clean and clutter free by tidying up the rooms, removing a majority of your personal photos and utilizing storage if you have an abundance of belongings. Additionally, though you may be tempted to decorate for upcoming holidays, it’s always better to keep the décor to a minimum.
Growth in Chicago’s startup community has led to a very tight market for appropriate office space, particularly in the River North neighborhood, according to a new report by CBRE.
The analysis of what the real estate firm called the “technology submarket” sprung from internal discussions about the increasing number of local startups hunting for space, said David Egan, director of research and analysis. Many of these companies seemed to be alums of 1871, the collaborative hub for digital startups that opened last year in the Merchandise Mart. Built In Chicago, an online community for the tech sector, counts nearly 200 digital startups that launched locally in 2011 and 2012.
Egan said his group set out to determine whether “we really have hundreds of new companies growing in Chicago with real estate needs.”
CBRE counted 42 downtown Chicago office buildings with a startup tenant. The vacancy rate of this subset is a slim 6 percent, much tighter than the 14.9 percent rate for Class B downtown buildings and 13.9 percent for Class C. In 2010, the vacancy rate for the technology submarket was nearly 14 percent. Gross rents, which includes expenses, have risen sharply during in the last two years. CBRE said the average gross rent for this submarket was $26.07 per square foot in the second quarter, up 17.2 percent since 2010 “with further upside potential.”
CBRE’s analysis showed that most of the startup offices are clustered in River North, although tech firms have also established a presence in the West Loop and Fulton Market areas, along with North Michigan Avenue. Egan said Google’s plans to move its Chicago office to the Fulton Market Cold Storage building by early 2016 “provides a roadmap” for more tech companies to migrate westward, especially as supply dries up in River North.
“There’s going to be a force of gravity that will exist with Google,” Egan said.
CBRE’s report noted that landlords seeking to rent to startups must “carefully strike a balance between the best economic deal and meeting the needs of a growing company.” High-growth tech firms typically look for short-term leases of fewer than five years and want room to expand. River North lofts have been particularly hospitable to startups, not just because the neighborhood’s landlords are accustomed to tech companies’ needs, but because the spaces themselves are suited to the non-conventional office layouts that the firms prefer.
As the market continues to tighten in River North and its surrounding neighborhoods, “trying to get yourself on the right deal is harder than it looks” for many startups, Egan said.
He added that the market conditions indicate “the strength of what’s happening in the tech space in Chicago…This is not just a blip. This is real.”
Story by: Dennis Rodkin
The most precise local housing market data for the first half of the year arrived Tuesday, and it’s full of good news. Foreclosures and short sales are taking up less room in the market, the gaps between what sellers think they can get for their homes and what they can actually get is narrowing, prices are up, birds are singing, and rainbows are shining.
The report, produced by Midwest Real Estate Data LLC, shows that in the first six months of the year, the Chicago-area real estate market’s recovery finally kicked in for real—even if it came many months behind the recovery in several other big cities.
Here are some of the most significant improvements the data showed:
• Lots, lots more conventional, non-distressed homes sold in June 2013 than in June 2012. MRED reports that 7,998 conventional homes sold in the region in June; that’s a little over 30 percent more than sold in June 2012. May had been even better: there were 39 percent more conventional sales than in May 2012.
And they sold faster. The average time on the market for home sold in June was 96 days, or about two-thirds what it had been a year before. June was also the first time market time on conventional homes dropped below 100 days since at least the beginning of 2012. The peak was February 2012, when the average market time for a conventional home was 195 days.
• The big uptick in conventional sales also means that foreclosures and short sales—distressed properties—are loosening their stranglehold on the for-sale market. In January, they represented 49 percent of all homes sold (35.4 percent were foreclosures, and 13.6 percent were short sales). But in June, they were just 28.6 percent (18.6 percent foreclosures, 10 percent short sales). That is, they’ve dropped from being almost five out of every ten sales to being fewer than three out of ten.
Why does that matter? It means that in many neighborhoods, sellers have been able to stop looking down the block at the local foreclosures they were competing with. The distressed homes were pulling down prices of conventional homes. With the proportion of conventional homes at, 71.2 percent, its highest level since the beginning of 2012 (the earliest data available), the real estate market in June was being driven much more by conventionally sold homes than it had in a long time.
The caveat: MRED’s data shows that June 2012 was also the high point for conventional sales that year. They were 66.09 percent of sales in June; after that, their share shrank every month through February. CoreLogic reported last week that 8.7 percent of Chicago-area mortgages were in serious delinquency in May, the most of any city; if a large number of those end up foreclosed, we could see the share of distressed sales rising again.
• Sellers, who had been trying hard to pull prices up by starting with ambitious asking prices, have backed off a little bit. In the chart above, the green line is what people are asking for their homes and the red line is what they’re getting; you can see that the gap has narrowed. A few months ago, I was worried by the expanding space between those two lines. In June, sellers got the message and cooled their jets a little—with no negative consequences on the sale prices, which kept rising, as you can see highlighted in yellow.
• About those prices. While the FNC Index that came out Monday said Chicago’s prices have declined 0.2% since the start of the year, MRED’s data shows movement in the other direction. For all homes, distressed and not, MRED’s data shows prices in June were 8.3% above June 2012.
Taking conventional homes by themselves, MRED says prices were 2.7 percent over June 2012. That’s healthy, though it doesn’t put us on par with the craziness in cities like San Francisco and Las Vegas, where prices have notched annual increases of more than 20 percent.
By: Richard Gatto
Downtown is back as the first spec building since 1998 gets under way. McDermott, Will & Emery leased 225,000 square feet at the 41-story 444 W. Lake, which got the green light to start construction. It is a sign of how much the market has improved that the building failed to get underwritten with 640,000 square feet of leases as recently as 2009. Clearly investors have faith in the strength of Chicago as a major business and cultural capital.
The downtown office market is still being driven by the resurgent tech and professional services sectors, including law firms. According to Transwestern, 23,000 of the 29,000 jobs created in metro Chicago in 2012 were in the professional services. Although the reported vacancy rate remains relatively flat at 14.9 percent in the fourth quarter, according to statistics from CBRE Inc., the numbers are actually better if you consider that they don’t include Google Inc.’s 572,000-square-foot lease at Merchandise Mart for its Motorola Mobility unit that is relocating from Libertyville.
The numbers do include the Sara Lee deal at 400 S.Jefferson, a 230,000-square-foot building in the West Loop. CBRE is reporting net absorption of just 69,935 square feet for last year (compare that to the pre-2007 market when it was routinely in the millions of square feet), mostly because of all the old-line companies reducing their footprint to lower cost. For example, Citadel will only renew 222,000 square feet when it’s existing 325,000-square-foot lease expires in 2013.
The big stories? The continuing migration downtown from the suburbs as companies chase the highly skilled knowledge workers who want to rent in places like River North and the West Loop. Proof of this trend continuing is the fact that there are 1,500 apartments planned for River North alone – $500 million of new construction that would double the housing supply in that prized neighborhood. Another 192 units are planned in the West Loop, one of the country’s hottest residential and restaurant districts. It’s not surprising to see so much new multifamily construction when you consider that occupancy rates are 95 percent.
A number of headquarters relocated downtown in the fourth quarter including GE Transportation, which will join GE Capital at 500 W. Monroe St. with a 54,000-square-foot lease; The Marketing Store Worldwide, which signed a 31,000-square-foot lease at 55 W. Monroe St., increasing their CBD presence; and Bike gear maker SRAM International Corp., which moved its HQ to 70,000 square feet, in the former Fulton Market Cold Storage warehouse, which will be converted to offices by 2014. The largest new signing in the fourth quarter was a 136,678-square-foot deal by accounting firm Grant Thornton LLP at the former Chicago Title & Trust Co. building at 161 N. Clark St, moving from 175 W. Jackson Blvd. Capital One Financial Corp., meanwhile, finalized a deal to sublease 65,484 square feet at 77 W. Wacker Drive from United Airlines.
On the investment side, the market was flooded with capital chasing yield at a time when capital is cheap and T-bills are at historic lows. Fifty transactions closed in the city worth $2.2 billion with half of that closing in the fourth quarter. That’s an average cap rate of 6 ½ percent. Part of the late rush to sell was motivated by the jump in capital gains passed by Congress as part of the fiscal cliff deal.
By Greg Maloney, president and CEO of JLL Retail
While the national retail property sales transaction volume only hit $8.2-billion in the first quarter of 2013 (down nearly 29% over the same time period last year), the retail pipeline remains robust and the sector is definitely the “wild card” in commercial real estate.
Regional malls are among the product types that may throw investors a curve ball as we’re seeing a greater number of bids and shorter marketing and closing timeframes. For example, a recent grocery-anchored property sale in Atlanta begat pricing well above expectations, driven by dozens of bids and ultimately, a bidding war amongst three very well-capitalized bidders.
However, differentiation is key. According to JLL’s retail investment sales experts, managing directors Kris Cooper and Margaret Caldwell, malls with high sales per square foot will sell quickly, while B and C malls will be more challenging to market, given there is currently plenty of that product type on the market. Cap rates for those B malls range from 7% to low 8%, depending on sales per square foot and other factors, while trophy malls could garner cap rates in the low 4% range, and could even see further compression in the months to come. In the meantime, there is essentially no compression in cap rates for class C and D malls, as investors are questioning the long-term viability of these investments.
For more visit: globest.com