CHICAGO—As reported last week in GlobeSt.com, the Chicago region's apartment construction boom should continue in the short-term, with rents rising at a healthy rate in 2017, even as developers add another 8,400 units, roughly the same as in 2016. At the same time, lenders have started to become more conservative, at least when it comes to financing new construction, leading some to believe the sector will soon hit a pause. But that pause will probably not seriously dampen the enthusiasm among investors for apartment properties in the metro region.

“There are a lot of reasons to be optimistic about transactional velocity,” Steve Rachman, regional manager/managing broker of Marcus & Millichap's Chicago O'Hare office, tells GlobeSt.com. “A lot of money is still sitting on the sidelines,” and with healthy rent growth forecast for 2017, investors should be willing to place a lot of bets on the apartment sector, even if it means having to settle for compressed yields.

The average effective rent will climb 4.5% to $1,442 per month in 2017, building on a 5.4% increase registered last year, according to the latest forecast from Marcus & Millichap.