On Wednesday, March 3rd, Luxury Living Chicago Realty hosted a virtual conference. CEO Aaron Galvin, Director of Leasing Strategy Mark Ziemke and Director of Residential Rentals Tristen Heiman shared industry insights with the over 300 attendees that joined live. In addition, the event featured a View From the Trenches panel with Hines’ Will Renner, Related Midwests’ Tricia Van Horn and Fifield’s Jon Schneider, moderated by Aaron Galvin.

Chicago Luxury Renter Perspective with Tristen Heimann

Three Key Takeaways From The Chicago Luxury Renter Perspective Interview

In-person Apartment Showings Important To Decision Making

While virtual tours and offerings have become commonplace in leasing luxury apartments, physically viewing units is still important to make a decision.

Outdoor Amenities More Important Than Ever

Not only offering outdoor building amenities, but in-unit balconies are more important than ever before to Chicago’s luxury renters. With the majority of these renters working from home, being able to sit on a balcony or hang out on an outdoor patio is increasingly important during pandemic times.

Leasing Agents Help Luxury Renters Feel Confident in Their Future Home

The apartment hunting process can be overwhelming for a lot of individuals. In working with a broker or leasing agent, the professional learns the “must-haves” and preferences of the renter and then then guides them to properties that align with their interests. Working with someone that has an established relationship with onsite leasing teams at each building, makes for a very efficient and fun process for everyone.

Thank you to everyone that participated in and attended the Chicago Luxury Apartment Market Update.

Watch Additional Clips From The Event Here

On Wednesday, March 3rd, Luxury Living Chicago Realty hosted a virtual conference. CEO Aaron Galvin, Director of Leasing Strategy Mark Ziemke and Director of Residential Rentals Tristen Heiman shared industry insights with the over 300 attendees that joined live. In addition, the event featured a View From the Trenches panel with Hines’ Will Renner, Related Midwests’ Tricia Van Horn and Fifield’s Jon Schneider, moderated by Aaron Galvin.

View From The Trenches Panel Featuring Aaron Galvin, Tricia Van Horn, Jon Schneider and Will Renner

Seven Key Takeaways From View From The Trenches Panel

Investing In Digital Assets – Well Worth It

Fifield’s Jon Scheider and Related Tricia Van Horn noted that their teams focused on creating digital asset for each of their properties when Chicago shut down last year.

These videos and photos helped them lease remotely, and they see continued value and use for these assets.

Pricing Software, Problematic For Luxury Apartments

Scheider noted that pricing software didn’t handle instability and changes in the market well, which prompted Fifield to stop using it and take over pricing manually. 

Agility Was Essential for Success

Van Horn shared how Related Midwest was monitoring resident sentiment and making decisions based on changing sentiment and marketing conditions.

Galvin noted that LLCR’s leasing team needed and received new training for selling apartments virtually in more of a B2B way versus in person.

In regards to pivoting amenities virtual, Schnieder shared how Fifield did not cut programming budgets and focused on offering virtual resident events to continue to build community at their properties.

On-Site Teams Are Invaluable To Building Community

Renner shared that being able to build a strong sense of community, empathy and respect at a building is not easy to do and relies on the people that work at each property. He was pleased with how their on-site teams were able to navigate a tough year and build rapport with residents.

Scheider also noted the importance of quality on-site teams being able to have tough conversations with residents about closed amenity spaces and new safety protocols to create a safe environment. 

All of the panelists shared a need for increased communication with residents during the pandemic.

Residents Will Pay For Quality

Even in a soft market, Renner saw residents continuing to be interested in ultra-luxury units such as at Wolf Point East. In January and February, he thought Wolf Point East would break records for Hines, but then the pandemic hit. Even through the pandemic, Wolf Point East and other Hines’ properties saw strong interest. Renner also predicts unit sizes will only continue to increase.

Schneider experienced similar strong interest in Fifield’s new developments in Chicago’s neighborhoods. For example, Logan, a new development in Logan Square, is now 90% leased. He credits having the right product, in the right location to 2020’s success.

Working From Home Is Here To Stay & Properties Need To Have Accommodations

Schnieder noted large communal working areas such as large conference tables or rooms are not ideal for residents and also not an optimal use of space at a building. Fifield is exploring additional private rooms for residents to work and take meetings from. For units, they are also ensuring floor plans accommodate a desk and have work from home space.

Renner shared that COVID has accelerated some trends and that Wolf Point West is getting a refresh with work from home in mind.

Residents Needed More Space & Outdoor Amenities

Van Horn shared how their properties with proximity to natural amenities such as Lake Michigan and parks saw increased interest in addition to residents upgrading to larger units within the same property.

Bringing the outdoors inside from natural light to plants to color palette to air quality is important for Related’s developments and existing properties and a trend Van Horn thinks is less obvious, but important for multifamily success.

Thank you to everyone that participated in and attended the Chicago Luxury Apartment Market Update.

Watch Additional Clips From The Event Here

On Wednesday, March 3rd, Luxury Living Chicago Realty hosted a virtual conference. CEO Aaron Galvin, Director of Leasing Strategy Mark Ziemke and Director of Residential Rentals Tristen Heimann shared industry insights with the over 300 attendees that joined live. In addition, the event featured a View From the Trenches panel with Hines’ Will Renner, Related Midwests’ Tricia Van Horn and Fifield’s Jon Schneider, moderated by Aaron Galvin.

Chicago Luxury Apartment Market Report from Mark Ziemke

Six Key Takeaways From Mark Ziemke’s Data Presentation

Apartment Market Changing Seasonality

According to a 2018 Zillow market study, Chicago has the most seasonality of any apartment market in the country. LLCR has found that the leasing season has started earlier and earlier each year.  

“Not surprisingly, there is a significant variance between 2019 and 2020 when it comes to seasonality. 2019 looks like it has for years, while 2020, well, that’s a different story.” – Ziemke 

Q1 2020 was incredibly strong for luxury apartment leasing. The downtown Chicago luxury market was about to see its best year ever until the pandemic hit. April, in particular, saw a near halt in leasing, but May and June saw increases and almost normal leasing.

“We found our groove on remote leasing and there was pent up demand for people waiting to move to Chicago once the stay-at-home order lifted in early June.” – Ziemke

Apartment Rent Began Declining in July

July 2020, a typically strong leasing month, was far from ordinary. For owners, this was the start of a decreasing market, and renters were delaying decisions, which then ended up having a substantial effect on renewals and retention.

“Our Director of Residential Rentals, Tristen Heimann, would tell stories about advising his clients to act quickly because he’s “never seen rents this low. Then, the rent would drop $100 the following day. It was like trying to figure out when to buy GameStop.” – Ziemke 

Revenue Management Software adjusted with no historical data to reference. And the luxury apartment market experienced a race to the bottom. 

By August through the remainder of the year, application volume was exponentially higher than 2019. 

“It was a strange year for sure, but the net result was a lot of leasing, and great momentum heading into 2021.” – Ziemke

Luxury Renters Continued to Move to Chicago From Other Markets 

In LLCR’s exclusive leasing portfolio, 40% of all leases come from relocating residents in 2019. In 2020, relocations increased to 42% of all leases. 

“Contrary to popular belief, people are still very much moving to downtown Chicago.” – Ziemke 

The top five relocation markets included Texas, New York, Michigan and California. 

Rent Impact from the Pandemic Mimics Demand 

LLCR saw the market decrease from its height in Q2 2019 to a low in November 2020. It started to rebound in December 2020, and LLCR is seeing significant increases in early 2021. 

In the first half of 2019, the most common one-bedroom luxury renter was seeing rents in the $2,500 to $3,000 range.

“The challenges really started in July 2020, and by the time we got to November, we saw Class A luxury one-bedrooms renting in the $1,500 to $1,800 range, which in summer of 2019 is lower than a studio would rent for. The good news is, we ended the year strong, and were getting much closer to that $2,000 range. One-bedroom rents are on the rise and should continue to climb.” – Ziemke 

Studio and convertible trend lines run in tandem. These unit types were hit hard during the pandemic, as the typical studio renter could now easily afford a true one-bedroom unit. Studios sat vacant. 

“To fill the vacant units, the rents needed to come down so low to lure a completely different renter to the downtown luxury market. This really was a once-in-a-lifetime opportunity for renters to see sub-$1,000 net rents on studios in a few downtown luxury apartment buildings. That is something we haven’t seen in over 15 years.” – Ziemke 

The last three months of 2020 show that when a price range works, it needs to stay for a period of time. Very few smaller unit types leased in August through September, largely because the pricing was all over the board. 

“By stabilizing these smaller unit types, we were able to get some quality absorption. This is a price sensitive renter and one most likely to struggle again if prices climb too fast, especially because so many are still working from home.” – Ziemke 

Apartment Concessions Peaked in August 2020

A typical concession path for luxury Chicago apartments is minimal in the first half of the year and slightly elevated in the second half. 2020 started the same, and was on track all the way through June. 

“However, the last six months of the year offered heavy concessions, as high as three to four months free in some cases. And while it seemed like we hit the peak in Q4, it was actually August where the most concessions were offered in our portfolio.” – Ziemke 

After a challenging July in the heart of busy leasing season, LLCR knew August was going to be a make or break month. Mid-August saw the most aggressive concessions, and in turn, some of our busiest leasing weeks of the year. 

“Nearly 50% of our leases in August were 18 months or longer and that continued through September.” – Ziemke 

Long-term Leases Essential To Managing Concession Impact & Occupancy

Thank you to everyone that participated in and attended the Chicago Luxury Apartment Market Update.

Watch Additional Clips From The Event Here

On Wednesday, March 3rd, Luxury Living Chicago Realty hosted a virtual conference. CEO Aaron Galvin, Director of Leasing Strategy Mark Ziemke and Director of Residential Rentals Tristen Heimann shared industry insights with the over 300 attendees that joined live. In addition, the event featured a View From the Trenches panel with Hines’ Will Renner, Related Midwests’ Tricia Van Horn and Fifield’s Jon Schneider, moderated by Aaron Galvin.

Keynote Speaker, Aaron Galvin, Discusses the Chicago Luxury Apartment Market Update

Six Key Takeaways from Aaron Galvin’s Keynote

Chicago Apartment Community

“The pandemic has brought us together in a unique way. Whether you’re a developer, industry colleague, renter or anyone else, we have all experienced similar feelings of fear, uncertainty, confusion and now, hope, as we live through a pandemic. As we move forward, it’s going to take listening, empathy, respect, courage, grit and patience to restore the downtown Chicago luxury apartment market to prominence.” – Galvin

Pandemic Impact on Chicago Luxury Rental Apartments

Starting in July, LLCR saw a significant decrease in rents and occupancy in the multifamily industry. Chicago and more specifically the downtown luxury apartment market in Chicago, is already rebounding. 

In fact, the top three properties in LLCR’s exclusive leasing portfolio were still at $4.17 PSF in Q3 2020, when the overall Class A market dropped to $2.89 PSF. 

“Renters will pay for the best of the best and even in a pandemic, and this has held true. As we advise future developers on what to build moving forward, we are most bullish on the ultra luxury rental market.” – Galvin

Rent Prices will Recover

There is minimal supply coming to downtown Chicago. Developers and investors who are able to secure financing and take the risk of building are going to win. 

“By 2023, I would not be surprised to see the newest properties delivering at or above pre-pandemic levels. And by 2024, he expects to see a $4.50+ PSF building.” – Galvin 

Unseasonably High Leasing Velocity in Chicago To Start 2021

In only 60 days, LLCR has leased 550 units. 

“To put that into perspective, in January and February last year, we leased 284 units, and the market was very strong. This is a 93% increase.” – Galvin 

LLCR saw a low of $1,858 average net rent in the first week of the year. Since that time, average rent has increased a cumulative 24% with last week at $2,328 per month. This is a welcome departure from the last six months and provides every opportunity to incrementally increase rent prices for the next 90-120 days as the spring leasing season kicks into high gear.  

Chicago Luxury Renter Demographics Have Not Shifted

The luxury renter socio-economic composition has not changed. Credit worthiness, income levels, previous residence and even the percentage of people relocating to Chicago has remained unchanged in LLCR’s data from 2019 to 2020.

“For the most part, these are renters who maintained employment through the pandemic, were able to work remotely and are most likely to have increased compensation (and disposable income) as the economy recovers. These are the qualified renters we have always had in these properties.” – Galvin 

There’s one dynamic that has materially changed – the number of new renters living in each building. Because of the increased vacancy in the portfolio of properties, LLCR is exclusively leasing and subsequent rent decreases, there are more newly moved in renters in nearly all of LLCR’s properties right now. 

These people rented during the pandemic and much more accepting of the current constraints such as amenities on a reservation system and longer wait time for elevators. 

“These new renters are GOLD because they’re excited about living in your properties. And we need to keep them with this same warm and fuzzy feeling they have right now. This will certainly help create harmony today as we continue to navigate this pandemic but the care, compassion and collaboration we put in now will have a material impact on retention efforts in the future.” – Galvin  

Data Has Never Been More Important

“Our developers are going to continue to have the benefit of our relationship. This includes extraordinary amounts of data and strategy to help navigate this constantly evolving landscape.” – Galvin

LLCR’s exclusive leasing portfolio consists of various types of Class A properties from the newest most upscale lease-ups to stabilized properties and even condo deconversions. In addition, the brokerage firm is currently consulting for a number of developers on the verge of securing financing for future skyline changing ultra-luxury multifamily developments. 

LLCR’s data is helping firms secure financing and maximize future revenues. 

“There is nothing more important than providing the highest level of service for our clients and this community. Market intelligence is the key.” – Galvin

Looking for more of the data? Check out this blog recap of Mark Ziemke’s Data Report.

Thank you to everyone that participated in and attended the Chicago Luxury Apartment Market Update.

Watch Additional Clips From The Event Here

For the second year in a row, Luxury Living Chicago Realty has been named a Finalist and one of two submissions that earned an Honorable Mention in PR Daily’s 2020 Content Marketing Awards for the category of Lead Generation. In our submission titled, Empowering our Audience through Inbound Marketing, we highlighted metrics we track to prove our lead generation efforts.

Here’s how we became a Lead Generation Finalist in 2020:

Between May 1, 2019 – July 1, 2020, over 65% of our brokerage website (LuxuryChicagoApartments.com) sessions were attributed to organic traffic, this is an 18.7% increase as compared to the prior period. Very little of our marketing budget is allocated to paid ad spend; rather content creation through our brokerage blog, social media, thought leadership, and testimonials received (428+ 5 star Google reviews) supports this growth. Content creation is an essential part of our Inbound Marketing strategy and lead generation success. Our investment in creating engaging, informative content and providing value for Chicago renters continues to expand our audience reach and retain our loyal clients.

The LLCR blog is a consistent voice to what is happening in downtown Chicago real estate. This spring, following the onset of the pandemic and Chicago’s Stay at Home Order, we quickly adapted to create new content to inform our audience of how this affects them. The blog post “Can I Still Move During the Chicago Stay at Home Order” became our second most popular post and 7th most visited page on our brokerage website. In a short period of time the post climbed to rank in the top 3 results for online searches such as “Can I move in Chicago” and “Moving during Covid in Chicago”.

In addition to blog posts, social media plays an important role in nurturing lead generation and participating in relevant conversations. This year we launched an IG Live series with our Co-founder Amy Galvin to facilitate dialogue with industry experts around the most commonly asked questions, as well as share insights and timely resources to support our community.

The outcome was an 85% increase in lead generation during this time period.

The primary goal of our Inbound Strategy is to improve the company’s overall search ranking and exposure for relevant topics. Every marketing touchpoint points back to the brokerage website, and is closely monitored to optimize performance.

The Luxury Living Chicago Realty site was built to be a critical resource for anyone looking for an apartment in downtown Chicago. Our goal is to consistently create relevant and diverse content delivered to our audience how they want it – when they need it. 

If you would like to learn more about Luxury Living Chicago Realty’s multifamily marketing services, please sign up for our newsletter below. We share recent thought leadership articles, case studies, multifamily data and more in our newsletter.

Clients, Friends, and Colleagues,

Over the first three and half months of the COVID-19 pandemic, we saw the Class A multifamily market remain surprisingly strong during this unprecedented time. In Chicago, mid-March through June is consistently the busiest period for apartment leasing. The timing of the pandemic and its economic impact had the potential to derail apartment leasing in 2020. However, as an industry, we all banned together to share stories, strategies, and sentiment on how to ensure success during this crucial period.

Apartment hunting as we know it has changed. As the owner of a brokerage firm specializing in apartment leasing, I have seen the current pandemic dramatically shift how apartments are being marketed and leased. And while many in the apartment industry resist change, the pandemic has catalyzed a much-needed improvement in the way we work with customers, where best-in-class technology-enabled service platforms are matched with well-trained salespeople capable of selling in varying environments.

Prior to the pandemic, our firm leased about 5% of our apartments sight-unseen. Customers were often international transfers or those relocating quickly who did not have time to visit in person. We provided 3D tours and sporadic FaceTime showings and had relative success. When the stay-at-home order was issued, we knew we had to act fast. With that experience, coupled with the vision to create hundreds of prerecorded videos of all aspects of our apartment buildings, we were prepared for virtual leasing. Moreover, we trained our team on screen sharing and how to organize floor plans, videos and other assets to paint a picture for someone selecting their home virtually. The result was 90% of year-over-year lease volumes at similar closing percentages to traditional in-person showings.

As we now enter a new phase of the pandemic, where in-person showings are more common but people traveling to cities to view apartments is still rare, we must all adapt to meet customers where they feel most comfortable. This includes traditional in-person touring, self-guided touring and virtual touring.

In-Person Tours

One-on-one leasing tours with a leasing agent have always been the industry standard. These days this includes numerous safety precautions to ensure the health and wellness of everyone involved. Prior to a tour, require everyone who will be on tour to sign a waiver acknowledging the risk of touring during a pandemic and confirming they have not had or been exposed to Covid-19. This level of “social contract” can go a long way toward the greater public health. Tours should be limited to four people, and everyone must wear a face covering. Only the leasing agent should be allowed to open doors or touch surfaces. Since we opened up this tour option in early June, our firm has seen about 60% of customers choose in-person touring.

Self-Guided Tours

Self-guided touring had been picking up momentum for a number of years prior to the pandemic. This is a tour where a prospect gains access to a property and is able to tour without a leasing agent present. Prior to the pandemic, this was most popular for early morning and after-hours apartment showings. The ideal self-guided tour includes a prospect gaining access to a property, meeting an agent in the model who remains a safe distance away and is able to highlight the features and benefits of a model unit. From there, customers should be free to explore two or three more vacant apartments on their own, at the suggestion of the agent. Also allow them to tour amenities and common areas. While this is a new take on self-guided touring, it has been quite popular in our firm, and we expect nearly 15% of tours to occur this way now and in the future.

Virtual Tours

Over the past few months, there have been many variations on virtual tours. We find the best success in having a video chat with a prospect where you can establish a personal connection. When on video chat, agents should follow a specified tour path including the front entry, lobby, amenities, hallways and units. Review prerecorded videos, floor plans and 3D Matterports so that the agent can help a potential renter envision everything about living in the property.

Nearly 100% of our leases were secured through virtual tours during the stay-at-home order. Moving forward, we are seeing around 25% of tour prospects choosing virtual as their preferred option. Many potential tenants are using virtual tours to help narrow down their options and following up with a self-guided or in-person showing. I expect this trend will continue, especially for relocation customers who can be even more efficient in their research when moving to a new city. Brokerages should continue to invest in advanced training for virtual leasing and plan to expand virtual offerings. Virtual leasing creates significant efficiency in apartment leasing.

As we enter the next phase of the new normal, meeting customers where they feel most comfortable will be paramount in providing the highest level of service. Apartment leasing innovation was brought on by the pandemic, but these new variations are here to stay.

The apartment leasing industry is currently in its busy season. This busy season looks very different from last year’s, which is why marketing efforts and website strategy must be designed to convert traffic to leases. My company leased over 3,000 apartments last year, and even though we have converted to an entirely remote leasing experience, we are still leasing over 50 apartments per week right now and on track for similar results in 2020. Here are a few tips on how to increase your website traffic to generate qualified leads and fill apartment units.

Website Philosophy

Marketing typically starts long before pre-leasing and leasing. The marketing team needs to share the overall marketing plan, particularly digital marketing, paid search advertising, email campaigns and social media, with the leasing team so they understand how people are discovering the property and how marketing is driving leads.

I have been in numerous meetings with developers and owners who think a website is “just” a digital brochure. Particularly with new construction apartment buildings, a website is likely the first interaction a prospective renter has with the brand and building. In this instance, first, deliver a pre-launch website before launching a full site. The pre-launch website should not include pricing, availability or all photography, and should be designed to build excitement and generate leads with a simple conversion form. Then, tie the launch of the full website to a large announcement at the property, such as a rendering or photography reveal.

When launching a full website, it is about creating excitement and offering something new for the prospective renter. In today’s sight unseen/remote world, I can see many properties uploading full 3D video tours right onto their site without a gate or barrier to access it. This is a missed opportunity for your leasing team to build rapport with the prospect as well as give your team the ability to share exclusive content. Taking someone on a “remote tour” where you are sharing your screen with a prospect and helping them understand what it feels like in the lobby, hallways and apartments is the remote leasing key to success. In addition, during this time where so many showings are occurring remotely, it is crucial to inform website visitors that you are offering this option. Implement a pop-up on all websites with messaging about “searching for your new home from the comfort of your home.”

Another tip is to focus the website call to action on “schedule a showing” versus “apply now.” The vast majority of websites encourage the user to apply now. But the reality is that people do not come to apartment websites to apply prior to a tour or interaction with the leasing team. People visit apartment websites to see beautiful photography, learn about the property and review pricing and floor plans. When someone is ready to apply, they will let the leasing team know, and you can then direct them to a link on the website or send them a link directly. It does not need to be in the header.

The goal of an apartment website is to have someone schedule a showing to view the property. It’s on the leasing team to help them apply.

Emphasis On Visuals

Photography, videography, renderings, 3D tours and other visual elements are more important than ever to lease apartments. High-quality visuals are the expectation in the marketplace. Visual assets should be shared strategically. Consider that the third most visited page on our apartment websites behind the home page and floor plans page is the gallery page. Be sure to have this and select only the best photos. The user does not want to scroll through 88 photos of every floor plan and stock photos. They want to get a glimpse of the property and schedule a showing. Make it a compelling experience.

Another tip is to not include 3D tours on your site. Rather, include those in personalized email follow-ups. When you have the 3D tours on the site, there is less of a reason for a prospect to schedule a tour, especially in the current environment where digital assets are replacing the in-person tour. You need to keep something for your team to show.

Driving Traffic To Your Website

I am always surprised how many apartment websites do not have the word “apartment” anywhere on the site. Often, marketing teams get caught up in using terms like “residences” or “flats.” This can immediately cause confusion about if the property is condo or apartment, not to mention it is hurting search results. Keywords are one of the pillars of search engine optimization (SEO).

When writing copy for a website, think about how a prospective renter will search for an apartment. As an example, we know people frequently search “downtown apartments for rent.” Location keywords are also very important. Make sure the website names the city and submarket throughout multiple pages. Developing content that highlights the area and its attractions will also help with search results. After a strong SEO foundation has been established, search engine marketing (SEM) such as Google Ad Words campaigns, internet listing service (ILS) postings and social media should complement your website. And, extremely important is that marketing and leasing are on the same page.

Leasing agents will close more virtual showings than ever before during this year’s busy leasing season. I hope you will be able to take a few tips from this article to drive more traffic and conversions to your properties.

Leasing a unit sight unseen was the exception, not the rule until the past couple of weeks. With current events, remote leasing has become the norm. My company, Luxury Living Chicago Realty, has historically only seen 5% of our leasing business from sight unseen clients and today it is 100% of our business.

We have made many pivots over the past several weeks including building a database of video content to enable our leasing professions to continue working. As we enter peak leasing season, here are a few ways to improve your remote leasing efforts with video.

Building a Video Database

Video tours are now the most important leasing tool. If you haven’t already, start building a database of videos for your apartment building. Capture panning shots of everything. You cannot have too much video content on file right now. Footage that we are finding very important to our clients includes walking through the front entry, lobby, hallways, unit and amenity spaces.

There are tools such as Matterport and Realync that provide a realistic idea of what it is like to walk through a unit and a link can be sent to the prospective renter for them to “walk” the space. Make sure to get footage of every vacant unit. Having this footage on hand will empower property managers and leasing agents to lease in remote situations.

Don’t Forget the Basics

How do you lease an apartment unit to someone that has never seen the building and unit? Start with inquiring about the basics such as ideal move date, price range, pets and living arrangement. With the current environment, leasing agents need to be as transparent as possible about the building’s move-in recommendations. If the leasing agent has the ability to live tour the unit over FaceTime or a video conferencing tool, that is even better.

While on a live video tour, remember the internet could lag and that the prospective renter is seeing everything for the first time – and likely from a small screen. Move extra slow in the space and really call out and highlight the features that matter most to the renter in addition to the unit and building amenities.

Harness the Power of Social Media

While our leasing traffic has dipped over the past few weeks, visits to our website are still high. We’ve accomplished this by promoting our “remote leasing” offering as well as frequently sharing video content on the property’s social media accounts in addition to our own channels. Also, encourage your leasing and property management professionals to share the content. Now is not the time to cut marketing. It’s the time to double down.

We are all in this together. I truly believe empathy will go a long way in this crisis and in ensuring apartment leasing continues even when you can’t physically show an apartment. Be kind and understanding with every lead. Business is not as usual but the apartment industry can adapt and continue to help people find a new home.

Leasing an apartment sight unseen to a client happens, but is usually the exception and not the rule. I have mainly seen this type of leasing activity for a person relocating to a new city for work. But in today’s leasing environment, sight unseen is the new reality. I’m aware of numerous apartment buildings that have suspended in-person tours and transitioned to virtual tours due to safety precautions taken to protect public health. I anticipate that most, if not all, apartment buildings across the country will shortly follow suit.

April and May are peak leasing months for most metros across the country. This means a significant number of leases are expiring during this time of great unknown. What options should current landlords offer these tenants? What can other apartments do to attract new renters without being able to show them their potential new home? How can leasing agents rent apartments while working from home?
Flexible Renewals

The reality is a current tenant with a lease expiring in the next 90 days may not have an option to move or may not feel comfortable moving. Property managers and owners should consider offering month-to-month leases or incentives to retain the tenant for another year. Be mindful of the tenant’s personal life. They are living with a lot of uncertainty.

Selling The Dream, Sight Unseen

How do you lease an apartment unit to someone who has never seen the building and unit? Start with inquiring about the basics such as ideal move date, price range, pets and living arrangement. With the current environment, leasing agents need to be as transparent as possible about the building’s move-in recommendations. We’ve seen many apartments encouraging renters to move in very quickly, while some are pausing all move-ins for the next few weeks. During times of uncertainty, the client’s price range may be impacted. Leasing agents should also share any resources available to renters that may protect them from unexpected financial hardship. Then, understand what is most important to them. Is it location? Is it being in the newest building?

Having leased so many units sight unseen over the years, my firm has learned how to sell the dream from a distance. Video tours are now the most important leasing tool. If you haven’t already, start building a database of videos for your apartment building now. Leasing agents need to capture not only panning shots of each space, but also walkthroughs of the front entry, lobby, hallways, unit and amenity spaces.

Luxury Living Chicago Realty (LLCR) analyzed data from 1,708 renters across the company’s 2019 exclusive leasing portfolio to better understand who the renters are, what they do for a living and where they are coming from.

Who Are Chicago’s Luxury Renters?

The 2019 data revealed 869 (50.9%) of the renters were male and 839 (49.1%) were female. Throughout the exclusive portfolio, 53.7% of the renters were couples, 32.4% of the renters were single and 13.9% were roommates.

What Do Class A Renters Do For A Living?

The top Industries of employment were Financial Services, Healthcare, Management Consulting, Technology and Marketing & Advertising, respectively. The average income of a male renter was $124,924 and the average income of a female renter was $86,078.

Couples had the greatest buying power with an average combined income of $213,420, followed by roommates with a combined income of $162,428 and singles ($116,863).

“Two of the biggest factors driving rents in Class A buildings are high-income couples with disposable income and singles relocating to Chicago for high-paying jobs,” said Mark Ziemke, Leasing Strategy Manager at LLCR. “”Both high-earning couples and relocating singles were consistent trends throughout 2019

Where Are Luxury Renters Coming From?

Of the 1,708 renters, 39.3% of the total portfolio were moving into Chicago. New York, Michigan, California, Texas and Indiana were the top five states renters were relocating from. In the portfolio, renters came from 37 different states in 2019.

“We are frequently asked about who is renting these luxury units and how they can afford them. People moving to Chicago for high paying jobs in the urban core are driving this absorption,” said Aaron Galvin, Founder/CEO of Luxury Living Chicago Realty. “As long as jobs continue to abound in Chicago and companies keep investing in this world-class city, we are going to continue to absorb the Class A apartment inventory.”

How has Downtown Chicago’s luxury market changed since you founded the brokerage in 2007?

It has changed dramatically in the fact that the stigma behind apartments has been entirely removed as it relates to when we started. Apartments and rentals and multifamily are certainly seen as the darling of the industry much more so than condos.

Is there a particular neighborhood in which Luxury Living is most active?

We are most active where there is the most new apartment inventory, and that ebbs and flows depending on the development cycle. There have been other times where Lincoln Park can be our top neighborhood. Consistently, River North has always been at the top. I do anticipate that we will probably transition to the West Loop being the top or certainly in the top two neighborhoods that we will be working on in 2020. Quite honestly, it’s one of the most exciting neighborhoods not just in Chicago but in the country. Ultimately, properties, like Wolf Point East, that we’re leasing up are the confluence of River North and West Loop, which is exactly where people want to be.

Are you worried about saturation in the luxury apartment market?

There’s not an overabundance of supply of new luxury apartments in Chicago right now. If you look at the inventory that’s been delivered to this point, the vast majority of that inventory has been absorbed and even rerented at higher prices. The variance of apartment offerings has ensured that we do not have an oversupply of apartments in Chicago, and in fact, we’re anticipating there could be a shortage of apartments by 2021 or 2022.

Why are you predicting a shortage?

What it comes down to is that there is a level of uncertainty that exists right now as it relates to the tax assessments in Cook County and the affordable requirements ordinance. Both of those things are really putting a pause on a lot of new developments, and that does give a little bit of concern that there’s not going to be quite as much new apartments or new condos for that matter a couple years from now. I think that time will tell, but as long as we continue to have the job growth in Chicago, which does not seem to be slowing down anytime soon based on the number of cranes you see in the West Loop and Fulton Market, we will have the demand for both apartments and condos.

Which trends are you seeing in the condo market?

Condos are another story, right? I mean, everybody knows that. The condo market has not been quite as strong as apartments over the last five years, but there is a segment of the condo market that is very strong and it’s a segment that we do focus on. The resale condos that are about $600,000 or less, that a buyer doesn’t have to put hundreds and hundreds of thousands of dollars into, those condos are still selling. While new construction remains a challenge, people do still want to purchase in Chicago, and we really recognize that and want to be able to help those renters convert to condo buyers.”

Aaron Galvin, Founder & CEO of Luxury Living Chicago Realty (LLCR) joins the Real Estate Addicts Podcast to discuss how LLCR is transforming the way luxury apartments are being leased.

Read some of the highlights from the transcript:

HOST(S): So tell us about your firm, ya know, who you are, how you got into real estate, kind of the general background.AARON: Sure. So the name of our firm is called Luxury Living Chicago Realty. We are what I would refer to as a development-focused brokerage working with really two different audiences of people in the multifamily apartment space: so that first audience is people who are looking for apartments in downtown Chicago. So downtown Chicago has a tremendous number of brand new full-amenity high-rise buildings and really has in the entire part of the 12-year history of LLCR and my 16-year career. The other piece of what we do is we work directly with developers to plan and execute marketing and leasing strategy. So that’s become the bigger part of our business over the last 6 years with the proliferation of brand new buildings that have hit downtown Chicago and really hit all the different parts of the country.We get the true renters perspective that we’re able to layer into the development work that we do, you know, we work with people very early on in the cycle of when they’re looking at development deals, looking at pieces of land, and trying to decide if an apartment building or a condo building will work there, and what kind of units they want to put in there. We’re talking about, you know, studios, one-bedrooms, two-bedrooms, what’s going to be the best fit for that demographic. We do a lot with marketing, so we have a fully comprehensive digital and full-service marketing portion of the business where we will do branding and creative services, we create logos, we do identity suites, we build websites, and then that all translates into planning and executing lease-up strategies wherein a typical world, within the apartments space, you’ve seen that people hire a property management property. Typically in some of the larger-scale buildings, you’ll have a property management company on-site, and they’ll have a team of people that are managing the property, and then they’re also leasing the property. In our world, what we do is we work with developers, we work with capital partners, and we partner with property management companies where the property management companies are handling day-to-day operations, so they’re handling tenant requests, they’re coordinating move-ins, they’re working on long term profitability if you will for those assets, and we’re charged with creating a marketing strategy and actually staffing the buildings to be able to lease up those apartments. It’s a very different kind of model, one of the only other places that it actually exists is in New York City. We started this part of the model about 6 years ago and have been able to establish about 40% market share of all the new construction leasing that’s happening in Chicago, so we’ve really carved out a niche within this space.Wwe think it provides incremental value to developers, especially in lease-up, and we’re looking to continue to grow that certainly in Chicago and on a national basis.

HOST(S): What’s the smallest building you will take on or do you typically work in?

AARON: So you know, we have done everything from a nine-unit building, and we’re about to launch a 698 unit building, so it really spans the gamut. Our sweet spot up to this point was really that we’ll call 100-250 unit buildings, in large part because there really wasn’t anyone else who was providing the highest level of service in that asset class. It’s really challenging from a budget standpoint to have enough staff, enough people to handle the amount of demand that comes with what is oftentimes new construction, especially in that lease-up world, when that building is first coming online. So that’s really where we’ve been able to carve out that niche and provide that higher level of service, which is really the foundation of what LLCR was built on. When we started this it was about providing a higher level of service experience for those who were seeking luxury apartments, because it just didn’t exist in the marketplace, and I think you know going all the way back to 2007 and even 2003 when I started in the business, it was all condos, all sales, all the time. Because if you remember the mid-2000s before the world changed in 2008, this was a condo purchase world, and apartments were second fiddle. That is no longer the case, that cache, that stigma, if you will, from renting, is long gone and we’ve been fortunate to be in the right place at the right time. I believe wholeheartedly that luck is where preparation meets opportunity, and that’s how we’ve been able to carve out this niche.

HOST(S): One question – a big feature of a pro forma or underwriting a rental deal is lease-up, so assumptions run about how long we’re gonna hold it for before we reach full occupancy. Can you talk about those timelines, maybe when you start marketing ah as the new construction is evolving, and how long you usually figure before you have the building stabilized?

AARON: That’s a great question. That’s where we provide the most value. It’s about the strategic way in which we’re going to lease-up that building when marketing starts, and when can ultimately plan for stabilization. my sense is that it starts the moment you are thinking about building an apartment building, so so the sooner we can get involved the better, so we can identify things that developers and architects aren’t necessarily thinking about as they’re planning those buildings but pragmatically speaking what we find is that as soon as a building starts construction, and you’re actually moving dirt and you know, for the most part, inconveniencing people around the area, it’s really important to start that messaging so that the neighborhood can become an advocate in what you’re actually building to better that neighborhood, so we believe that as soon as you start construction, the ideal setup is that you actually have signage on the property that’s driving to a what we refer to as a pre launch page or a splash page to gather information on interested stakeholders in that deal because there’s a number of different audiences that are interested when you start building an apartment building, certainly perspective renters are one of them, the neighborhoods another, the media’s yet another, and then there are people who are just interested in real estate that are going to become again social media advocates evangelizing what you are building there. so we have a pretty structured program in the way that we roll out that part of it, we refer to it as our awareness phase, and then the nurturing campaigns that go on throughout that you know we’ll call it 6 months to a year ideally 2 year period to get to where what we call the pre-launch phase. that pre-launch phase is equally as important, you know hopefully you’ve been having conversations with the interested parties and stakeholders along the way and you are now able to create some kind of environment where you’re gonna give VIP access to people who want to actually engage in that apartment. people love behind the scenes looks, they love seeing construction happening, you know we live in this HGTV million dollar listing world where there is a real interest in residential real estate and when you can help people be a part of that story that’s gonna become their story early on, you’re gonna get them very early and that’s really important in a compelling way. so we will create the right kind of questions within that VIP form, we’ve created many different programs for how we can execute that VIP launch strategy to the extent that our goal is to be able to pre-release at least 25% of a building before it opens, and we’ve been able to achieve upwards of 100% of preleasing if executed the right way and done in a line strategy. and you know from a stabilization standpoint, it’s gonna depend on the goals of the developer. it’s one of the most important things that we look at and it’s one of the first things that I mention when first talking to developers is that we’re trying to align renter insights to maximize your goals and understanding your clients goals when looking at these properties is of the utmost importance because this is gonna ebb and flow throughout different cycles. you have merchant builders who want to lease up as fast as possible and offer max concessions and get out, you have longtime holders whose speed is not as important but they want to maximize those rents and manage concessions really well and make sure they have the right tenants who are going to stay and that’s going to dictate unit mix, so understanding those developer goals is really really crucial and we’ve been able to adapt our business to have different kinds of lease-up services to match the goals of our developer clients.

HOST(S): one other question that I would have, you’ve kind of mentioned it already is the stigma of an apartment is past us. it’s the late 90s early 2000s, oh you don’t wanna rent, but obviously through both market changes and things getting better just in general with construction, do you think that, and because housing affordability is obviously an option, do you think that the demand has shifted, and I guess another aspect of it is people just don’t want to own things because they want to be more mobile talking about this whole attention lack of attention to anything, people don’t want to settle down anywhere, so do you think that apartments will continue to be dominant and that’ll just continue to grow?

AARON: yes. you nailed it. people want that mobility. nobody who is certainly in that younger generation wants to own anything. they want to rent their clothing, they don’t want to own a car, so that renter mindset is very much here and I think that there is a place for homeownership in this country, no doubt about it, I own my home, I own investment property. I think there’s definitely a place for that and I think that homeownership will continue to ebb and flow as different economic cycles happen, but that’s still the American dream and I think people really want to work towards that, and there’s a real value in homeownership. I think that what renting does is it allows us to have that mobility, it allows you to try different things, and allows us to have different dynamic life experiences. back when I was a broker, and that was my roots, and I was starting this business, i would say “”listen, if you have an opportunity to move to a major metropolitan city and experience what’s it like to live in a full amenity building and have everything that comes along with that in the apartment, in the building, right outside your door, you have to do that at least once in your life”” and that really resonated with people, and i think what you’re seeing now is because there are not so many condo options and the kind of options at least in Chicago are uber-expensive options or they are 15 years old and need a lot of work, so we used to get the person at the end of their rental cycle and their rental cycle has continued on and on and they’re moving into newer and nicer building in multiple neighborhoods around Chicago. and I think that’s happening from what I understand around the country as well, that as the apartment market continues to grow, there are so many neighborhoods that are coming, giving people the opportunity to live in different neighborhoods if you will.

HOST(S): so you seem to primarily work with class A buildings. if for our listeners out there who invest in real estate, rentals, etc, that might have class B or class C building that they’re looking to make upgrades to either get them up to that next level, push their rent, etc. what are some of the things that you know a developer an investor can do to significantly create value in their building and maybe bring them to the next level that’s not going to cost an arm and a leg and they’re not going to have to gut the units etc?

AARON: that’s where service comes in. let’s talk about the units first right, you have to get the units to a place where they’re going to compete with the class a market. it’s not tremendously expensive, I mean it’s definitely a capital improvement, don’t get me wrong, but it is not tremendously expensive these days to put LVP flooring instead of carpet, put a quartz countertop in, and do some stainless steel and refinished cabinets. those costs have come down so dramatically lately, we see it in the condo deconversion space, there are ways you can do that where you can at least play ball and if you’re not doing that right now, you’re going to get stuck being the sea and never come back. so you have to be willing to do that within a certain subset of units and be able to invest that kind of capital. when it comes to the amenities, that’s really about service and technology, because again those are things that are we’ll call them aspirational for that demographic that wants to rent those kinds of apartments, so they can live in a building that has a nice kitchen, a decent bathroom, but has all the same kinds of tech that a brand new class a does, because that’s not hardware, that’s software, that’s app, that’s you know, can be keyless entry, nest thermostats, if you’re able to make those kinds of changes, they’ll go a long way. and we talked about 1g internet before, you know to upgrade the internet, those are the things that are most important to people when it comes to the aspirational renter who isn’t going to you know to afford the full class a and spend that kind of money but they do want to live in a prime location and have a nice apartment to call home and feel like they have the latest and greatest when it comes to technology.

In luxury apartment buildings, each floor plan attracts a different renter. Whether it’s budget, storage space, household size or current living environment, I have found each unit type needs at least one specific feature to maximize rents. Developers who think about the renter’s perspective when designing floor plans will achieve the most success and the highest rents. Here are the essential features by unit type in luxury apartments:

Studio: Closet Space

Studios are typically rented by single individuals who don’t require a lot of living space. However, their need for storage is critical. A walk-in closet in a studio apartment is the key feature that commands rent premiums. The luxury studio renter is likely budget-conscious and aspirational. This often translates to lots of clothes, shoes and storage needs. If a developer is deciding between a larger kitchen or closet in a studio, opt for the closet every time.

Convertible/Junior One-Bedroom: Separation Of Space

A convertible or junior one-bedroom unit has a definitive separation between sleeping and living space. This renter often seeks a one-bedroom home, but the budget does not allow for a true one-bedroom. When developers creatively make the separation, it helps that aspiring one-bedroom renter appreciate the value of a convertible/junior one-bedroom. Some of the more popular convertible/junior one-bedrooms feature sliding barn-style doors or modular space makers that allow for ample natural light during the day but a good sleeping environment at night. This hybrid unit type often commands high price-per-square-foot rents and leases very quickly. It should also be noted that convertibles and junior one-bedrooms are used interchangeably to describe this type of apartment.

One-Bedroom: Design For Couples

According to comprehensive data on over 1,000 Class A renters in downtown Chicago analyzed by my firm, couples lease over 60% of one-bedroom rentals. These are often couples who start their search seeking a two-bedroom but quickly realize a large one-bedroom to be a better value. While willing to sacrifice the extra bedroom, they will not sacrifice living space or closet space. Thoughtful design is key for appealing to couples when it comes to a one-bedroom floor plan. Corner one-bedrooms are most well-received. Typically reserved for two-bedrooms in most high-rise buildings, corner units can command rent premiums.

Another variation of the one-bedroom is the one-bedroom plus den. A large portion of renters are working from home and appreciate a workspace that provides a separate work area and privacy when taking phone calls or working odd hours.