March 28, 2018By Paul Yoon
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Recent anecdotal stories seem to indicate that larger apartments are becoming more popular as Baby Boomers downsize from their single-family homes into apartments, or as young residents stay in apartments as they begin to have their first children. Coupled with the well-documented challenges toward millennial homeownership, one would think apartment sizes have been increasing. According to data from the Census Bureau, however, these trends may not necessarily be true.
From 2011 to 2016, the median size of newly-completed apartments decreased slightly from 1,117 to 1,085 square feet. At the same time, the median size of new single-family homes grew substantially from 2,233 to 2,422 square feet. These trends indicate that, if anything, the size gap between apartments and single-family homes has only grown.
These trends may be indicative of several demographic and economic factors. The shrinking size of apartments may simply be a reflection of the steadily decreasing household size over multiple decades. According to the Census, household size was 3.33 in 1960. As of 2017, there were 2.54 people per household, one of the lowest figures ever recorded. The introduction of micro-units in some of the more urban markets, as well as the growing plethora of neighborhood and entertainment options that encourage residents to spend more time outside of their apartments, may be additional contributing factors.
At the same time, homebuilders have been forced to build larger homes thanks to several pressures. These include increasing land, construction and labor costs, as well as tighter credit requirements limiting the pool of potential homebuyers to the more affluent relative to the boom years.
Breaking down the same data by region gives a similar picture, as median apartment sizes either shrank or remained stagnant in three of the four regions. The South saw apartments shrink the most from 1,205 to 1,101 square feet. The Midwest generally had the largest apartments, followed by the South. Apartments were smallest in the Northeast, followed by the West.
Looking at regional data for median single-family home sizes only makes the distinction clearer. Single-family homes grew markedly in every region, with homes in the Midwest growing the most from 2,105 to 2,297 square feet. Interestingly, the single-family home sizes by region almost read like an inverse of apartment sizes by region. Whereas apartments are the largest and single-family homes are the smallest in the Midwest, apartments are the smallest and single-family homes are the largest in the Northeast. Although it is difficult to tell if this is a general result of differences in zoning stringencies, demographics, or other causes, the data seems to suggest the Midwest has a smaller gap in housing sizes, while the gap is larger in the Northeast.
If we examine the average size of apartments by the metro areas with the most units under construction, per recent data from CoStar, we see that apartment sizes will likely shrink even more substantially into the future. With the exception of Greater New York City, apartments are set to be smaller in Dallas-Fort Worth, Washington, DC, Los Angeles and Seattle, even though construction has dramatically ramped up over the past seven years.
Census data on the number of bedrooms in apartments and single-family homes confirms the same divergent trend of unit sizes. Together, the share of studios and 1-bedroom apartments among newly-completed units increased from 2011 to 2016, while the share of 2-bedroom and 3+ bedroom apartments decreased over the same time. Among newly-completed single-family homes, the share of homes with 3 or less bedrooms decreased over the same period, while homes with 4 or more bedrooms increased from 39 to 46 percent.
While it is possible that certain demographic groups or niche customer groups are demanding larger apartments, it has not yet borne out in the data, which show that overall, apartments have become somewhat smaller. Whether this means apartment developers are already serving the desires of customers wanting smaller apartments, or if there is an untapped market for larger apartments, remains to be seen.
Paul Yoon, NAA Research Analyst
Wingspan Development and Nicholas & Associates, Inc. has announced Marquette Management will handle the lease-up and management of Buckingham Place Apartments.
DES PLAINES, IL, USA, March 21, 2018 -- Wingspan Development and Nicholas and Associates, Inc. has announced that Marquette Management will handle the lease-up and management of the new Buckingham Place luxury apartments. The new 267 unit wrap-style apartment property in northwest suburban Des Plaines is scheduled to open in the summer of 2018, bringing the highest level of amenities and finishes. “Marquette was an early front-runner for us. They understand this market and the lifestyle we’ll be offering. With Marquette, this property will hit its full potential. They see the vision through our eyes and bring the same passion and commitment to providing the best living environment. They don’t just manage and analyze properties, they also predict performance and will provide an extraordinary customer experience to our future residents. They’ll do a great job showing our beautiful property,” said Nick Papanicholas, Jr. Vice President of Nicholas and Associates, the General Contractor and Construction Manager for the project.
Marquette Management, a real estate management company based in Naperville, IL, manages properties in five states. “We understand the unique, competitive advantages that Buckingham Place has within its submarket and we also have the very best team of people focused on creating the ideal living environment for our residents,” said Jim Cunningham, COO and Executive Vice President at Marquette. He added, “We’re successful because, since our founding in 1983, we have a mission to redefine the quality of life for our residents by providing extraordinary customer service. We will bring that spirit and philosophy to Buckingham Place.”
Buckingham Place is less than ½ mile from the Cumberland Metra station, offering express service into Chicago’s Ogilvie Station in less than 30 minutes. The property also boasts multiple resident amenity spaces including an outdoor courtyard complete with a swimming pool, hot tub, grilling stations, sun cabanas, and lounge chairs. Inside, there’s a two story lobby lounge, demonstration kitchen, theater screening room, club & gaming room, vending lounge, fitness center, yoga studio, business center, pet spa and more. “Buckingham Place will be the most sought after address in the northwest suburbs,” said Chris Coleman of Wingspan Development, “We’re excited to be working with Marquette and know that they’re a great fit for this property.”
Wingspan Development Group delivers the highest quality projects across multiple real estate segments; residential, commercial and land development. The firm’s core team has over 80 years of real estate and construction experience combined with an unparalleled commitment to detail and execution. By blending broad capabilities and a nimble organization, Wingspan capitalizes on diverse market opportunities to create value for clients and stakeholders. Wingspan has offices in Mount Prospect, IL and Milwaukee, WI. For more information, contact Christopher Coleman at 847.394.6200 or CColeman@WingspanDevelopmentGroup.com.Chris Coleman
Wingspan Development Group
Forecasting Chicago's retail outlook
March 9, 2018 | Matt Baker
Nationally, rising consumer confidence levels and the potential for higher wages should carry retail momentum through the year. This is according to Marcus & Millichap’s 2018 U.S. Retail Investment Forecast.
Increased concerns about the impact of e-commerce on store closures have been tempered by historically low completions and strong retail sales. However, the popularity of online distribution, a tight construction lending environment and investor caution are all leading to restrained development.
In Chicago, vacancy has tightened to the lowest level in 10 years as local retailers backfill space. There are also fewer large-scale, multi-tenant projects set for completion, dropping deliveries below the five-year average.
Construction activity has been the strongest in the northwest suburbs. The largest project due this year is the 280,000-square-foot Mellody Farm in Vernon Hills which will include Whole Foods, REI, Nordstrom Rack and Home Goods storefronts. In Buffalo Grove, a 236,000-square-foot center anchored by Woodman’s Market is due for completion.
In downtown Chicago, roughly 300,000 square feet of new inventory is expected this year, mostly as part of mixed-use office and residential projects. Lincoln Commons, for example, will deliver 100,000 square feet of retail and nearly 600 residential units to the former Children’s Memorial Hospital site in Lincoln Park.
Chicago ranks 32 on Marcus & Millichap’s National Retail Index (NRI), a drop of five points from the previous year. This position at the head of the bottom third in the country aligns with the rest of the region, as five of the bottom six markets on the Index were in the Midwest: Milwaukee (#42), Cleveland (#44), Kansas City (#45) and St. Louis (#46).
However, with more clarity in the economy, investor appetite for retail assets in Chicagoland is growing. “Although the pricing gap between buyers and sellers remains, it is beginning to narrow,” the report’s authors wrote. “Investors remain selective, doing extensive and detailed due diligence to ensure the long-term viability of the asset.”
Marcus & Millichap forecast that roughly 40,000 workers will be added to Chicago payrolls in 2018, up from a gain of 26,100 jobs last year. Much of this will be led by growth in the construction sector. They also foresee an increase in asking rents by 1.2 percent.
Following the delivery of 2.1 million square feet in 2017, the pace of construction should ease to 1.7 million square feet this year, mostly in the suburbs. This slower construction pipeline will contribute to vacancy declining 60 basis points in 2018 to 6.4 percent, with a net absorption of 4.4 million square feet.
The development at 20 W. Northwest Highway will include 73 apartments and an attached two-story restaurant with rooftop seating, expected to be Mia's Cantina.
"We feel this is going to be a catalyst to development throughout the downtown area," said Nick Papanicholas Jr. of contracting firm Nicholas and Associates, which is leading the project. "This site has been probably the most prominent site in Mount Prospect from a visibility standpoint, from commuters taking the train in and out of town, through town."
"This is going to have a tremendous amount of curb appeal," he added.
The development is expected to generate more than $25,000 in sales and food and beverage taxes annually and more $250,000 in annual property taxes.
Despite winning village board approval, some concerns remain about parking for the apartments. Under the plan, there will be 78 parking spaces, fewer than the 93 required by village code.
However, proponents stay the building's location across from the village's Metra station will draw some residents who don't own a car.
"This is transit-oriented development perfecto," said Chris Coleman, vice president of the Wingspan Development Group, a member of the development team. "You couldn't get closer to the train unless you were on the tracks."
Community Development Director Bill Cooney noted there is a 383-space public parking garage across the street from 20 West, as well as the Metra lot with 143 spaces available weekday evenings and weekends.
Another issue that bears watching is how the development will affect traffic in the alleyway behind Brick City Tavern, at the corner of Main Street and Busse Avenue. Cooney said the village has met with the Illinois Department of Transportation in hopes of changing Busse Avenue from a one-way to a two-way street to address those concerns. He said IDOT thinks the proposal has merit.
Aside from the parking issues, village trustees voiced excitement about the project.
"The development of that triangle has been such a frustration for me," Trustee Michael Zadel said. "This is the kind of thing that will make (Mount Prospect) a destination."
Chris Coleman, VP of Development at Wingspan, periodically shares his thoughts and observations on property development news.