“The level of service we have in these buildings exceeds any condo building that you’re ever going to find in Chicago,” added Bailey, standing on the 12th floor of 500 Lake Shore Drive, another of Related’s Chicago apartment towers. The building boasts the newest class of amenities, from full-scale business centers and communal kitchens to movie theaters and professional-class gyms. The building is almost fully leased, with rents comparable to 111 W. Wacker, which competitors in the market are calling a milestone.
“The related sale of 111 W. Wacker represents the confidence that major institutional investors have in these urban markets,” said Steve Fifield, president and founder of Chicago-based Fifield Cos.
Fifield, which develops both multifamily apartment and office properties in Chicago, cites the growing number of younger millennials who are moving not just to cities, but to city centers. In fact, the Chicago metro area saw the largest gain in population in its downtown area from 2000 to 2010 than any major city in the nation. This is according to a U.S. Census survey that measured the number of residents living less than two miles from city hall. The biggest driver of that growth was younger workers.
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“With them we are getting the employers, because the large companies, particularly the high-tech companies, are following the millennials,” said Fifield. “In other words, they’re bringing their jobs to where the millennials live. Why? Because millennials would rather live, work and play in the same area.”
Tech companies like Google, Motorola Mobility and Groupon are moving into downtown Chicago. In 2011, the iconic Wrigley Building was sold to a group of investors that included the founders of Groupon.
Fifield Cos., which stepped away from the office market during the recession, is now, according to its founder, acquiring a 100-year-old office building in downtown Chicago, with the intention of renovating and converting it into, “creative office space to meet this huge demand of tech companies that are moving offices downtown,” added Fifield.
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All these new workers need housing, and rental demand continues to be strong. The Chicago metropolitan area saw a bigger jump in rent growth than the rest of the nation at the end of 2014, according to Axiometrics, a real estate analytics company.
“Job growth in the Chicago MSA, which slumped during the early part of 2014, began picking during the second half of the year, which is one reason for the occupancy and rent growth,” according to a recent Axiometrics report.