Q2 2012 Chicago, Illinois Apartment Property Sales Analysis

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Q2 2012 Chicago, Illinois Apartment Property Sales Analysis

Metro Volume and Pricing

Chicagoland apartment investment sales slowed from the strong pace of the prior four quarters in the second quarter of 2012. Reis reports ten deals during the quarter, with $110 million in property sold, at a mean price of $118,000 per unit.* It was the lowest dollar total since the first quarter of 2010, and the second lowest mean price since the third quarter of 2010. In the second quarter’s largest deal, TGM Associates Inc. paid Invesco Real Estate $86.7 million ($150,000 per unit) for the 578-unit Lincoln Meadows property in Schaumburg. The deal closed in April. As noted in Special Real Estate Factors, there was a distressed apartment sale in Schaumburg in late July.

Top Submarkets

The 1,551 units sold in the Schaumburg/Hoffman submarket over the past four quarters is the most among the submarkets. The South Shore submarket placed second in units sold at 1,426. The Gold Coast leads in total dollar value at $317 million and in average price at $301,776 per unit.

Cap Rate Comparisons and Forecasts

Chicago’s quarterly mean cap rates have generally been lower than the U.S. and Midwest region averages. The mean cap rate for second quarter deals was 5.5%, still below average but the highest here since the first quarter of 2011. The rolling 12 month mean cap rate was pulled up 10 basis points to 5.2%, but it remains among the lowest Reis has recorded in this market. Reis predicts the rolling 12 month mean will rise in 2014, reaching 5.7% at the end of that year.