Even Pampered Apartment Market Sees Slowdown

CHICAGO-The Chicago region’s multifamily market softened slightly in Q3. It will weaken further in future months, analysts say, as economic hardships begin to take a negative toll on occupancy and rental rates. While occupancy rates in the market have held steady around 96% for the past few years, experts say, they have fallen to less than 95% and will continue to fall into Q4 and 2009.

“In the past few years, we have had increases in occupancy in the Chicagoland area,” says Greg LaBerge, acting regional manager with Marcus & Millichap. “We have had decreases in vacancy in the last several years and rents that have grown at a sizable clip in both the city and suburbs. Things haven’t turned entirely negative by any stretch, but 2008 is really a point in time where we certainly have seen things slow down, and this is the first year in some time that we’ve had job losses.”

Ralph DePasquale, associate partner with Hendricks & Partners, agrees, saying his company has already seen a few-percentage-point hit to occupancy rates in submarkets throughout the Chicago area–decreasing rates from the mid to low-90s. “The Chicago market in the short term is going to be a little more demanding, but in the long term, it is going to be very strong,” DePasquale tells GlobeSt.com. “You’re already seeing little to no development in the suburban market and a cutoff in development in the downtown Chicago market after next year. This is going to bode well for the apartment market, and we still see a strong market going forward long term.”