The Chicago skyline is dotted with cranes. Streets are lined with new construction, some actively in the process of being turned into inventory for buyers and renters, and others sitting untouched for months or even years.
Leading the market share in the Chicagoland area, @properties recently released its 2016 @report documenting trends, insights and risks for condominium and townhome development in the city.
The report focuses on eight core neighborhoods in the city and identifies five particular risks that developers need to keep in mind while planning and executing a development in the city.
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Gold Coast, River North, Streeterville, Loop, South Loop, West Loop, Lincoln Park and Lakeview are covered in the report.
To compile the report, @properties surveyed people who are in the trenches designing, building, financing and selling new construction in the city. Brokers, architects, general contractors and bankers offered their insights and their most prominent worries about the future of the market.
“We believe there’s a lot of information here that will spur conversations and provide some guidance on future development. We’re excited to get the report into the marketplace and discuss the findings with our clients and the industry,” added @properties co-founder Thaddeus Wong.
For condo developers, the No. 1 concern for the coming year is rising construction costs. Another big struggle for condo developers is the political challenges in moving forward in the construction process. Other common concerns reported were increasing costs and competition for land and the local economy.
Common issues impacting for-sale residential construction
According to the report, 79.1 percent of developers identified rising construction costs as their no. 1 concern with for-sale residential development this year. And another big concern is the lack of talent.
Rory Tihinen, vice president of pre-construction at Leopardo Companies, Inc., told @properties that 25 percent of construction workers left the industry in the past eight years and fewer individuals are entering trades.
But beyond the rising cost of construction is simply the ability to do so in the city of Chicago. The report found that twice as many developers were concerned with political hurdles than obtaining a loan to begin building. Zoning, approvals and permits was the second highest concern for developers.
The new Affordable Requiremtns Ordinance is one hurdle standing in the way. Legal and architectural fees and delays are all major concerns for developers.
And the Chicago economy is a whole different story — but ultimately, things are staying fairly rosy.
Gauging on a 10-point scale, 72 percent of respondents rated their confidence in the economy at a seven or above. Only 8 percent rated their confidence below five. And while 75 percent of developers said their for-sale development activity will increase, about 40 percent of bankers who responded said they plan to increase condo financing.
