Commercial Real Estate Chicago
Commercial real estate in Chicago saw a major boom in the first part of 2007. But by fall, the housing market slump that hit had cooled the commercial sector as well. However, there are still a number of major developers putting up commercial projects in the city even though demand may have slowed down a bit.
By definition, commercial real estate in Chicago is any type of property that produces or generates an income. There are a lot of properties and buildings that can be classified as commercial. Obvious examples like theaters, grocery stores, shopping centers, restaurants, boutiques and spas might be the first that come to mind. Other examples of commercial real estate in Chicago that work on a larger scale are apartment complexes, hospitals and medical centers, hotels, factories, warehouses and recreational centers.
Investing in commercial real estate in Chicago can be a short term or a long term prospect. Some developers are cashing in on the recent increased demand for apartments and hotel rooms. With apartment buildings, sometimes the developer will build the project with the intent of selling it once it is completed or maybe a few years in the future. Hotels are normally a long term investment, and demand for rooms and convention space has increased, prompting several new hotel projects.
Besides a number of smaller boutique hotels, bigger developments like Trump Tower, Mandarin Oriental and the Ritz-Carlton are easily recognizable. According to some statistical reports, six of the current major hotel developments will add about 1,500 rooms, which is only a small percent of the 33,500 hotel rooms available downtown. Tourism has rebounded somewhat after the 9/11 attacks and rates for hotel rooms near O'Hare International Airport are on the rise. But there are also several experts who predict that the hotel market will cool slightly in 2008.
Mixed-use buildings, often high-rises where the lower levels are leased as office space, retail shops, spas or even hotel condominiums make up a large portion of the commercial real estate in Chicago. Office space downtown continues to be in demand, and as building space there is limited it has pushed growth to the suburbs. With only so much land zoned for commercial development, many large corporations lease office space in the communities surrounding Chicago.
Another growing sector of commercial real estate in Chicago is the need for senior housing. As the general population ages, there is more demand for assisted living and even luxury type senior housing. Clare at Watertower is one example of a large scale development for seniors. Many developers are also switching from condominiums to apartment towers. An increase in people more inclined to rent than buy has fueled the need for more apartments. Even housing built specifically for college students takes up a part of the commercial real estate in Chicago.
These types of housing projects are called niche markets and while they aren't a huge section of commercial real estate in Chicago, it is a growing market. There are usually age limits and sometimes income restrictions. With developments targeted at older buyers, you often find extra services offered such as basic health care advice or nutritional and dietary planning in addition to the usual fitness centers. State funding or tax breaks can even be given to developers of commercial real estate in Chicago who put up housing for lower income or mixed-income residents.
Another growing section of commercial real estate in Chicago is devoted to storage space. These can range in size from individual storage lockers all the way up to warehouses. The spaces are leased by individuals who just need extra space for everything as well as businesses, factories and corporations who have to have additional room for goods.
With so many different uses and applications, the demand for commercial real estate in Chicago will most likely remain high for years to come. While the market for this type of real estate is tied in with the housing market and general economy, the effects are felt somewhat slower and less drastically. Plus, with the exchange rate favorable, foreign investors see the commercial real estate market in Chicago as a good deal and are predicted to continue buying properties. Statistics show that retail and commercial property prices in town rose about nine percent in 2007, compared to prices in 2006, lending credit to the confidence developers and investors can have in this market.