The Secret To Chicago Class-A Multifamily Success: Out-Of-State Couples
August 1, 2019 | By Aaron Galvin

Luxury Living Chicago Realty (LLCR) analyzed data from the first and second quarters of the year within its portfolio of 18 Class A rental properties where the brokerage firm is the exclusive leasing provider to better understand the dynamics and demographics driving Chicago’s Class A renters.

The data set included demographic information from 936 Class A renters and revealed that Chicago’s Class A renters are 51.7% male and 48.3% female with an average income of $108,214. The top industries of employment include Financial Services, Healthcare, Management Consulting, Technology and Marketing & Advertising. The average apartment in the portfolio is 856 square feet at an average price-per-square-foot of $3.35, up from $3.14 (on an average 821 square feet) in the same period last year. The data also highlighted unique renter profiles, including those relocating to downtown Chicago for new jobs and how couples moving in together are driving rent growth across the city. In addition, the data showed interesting insights by unit type for various demographics.

Relocating to Chicago

Of the 936 renters, 30.4% were moving into Chicago from one of 36 states. Some of the nation’s largest states, California, New York and Texas, brought the most renters to Chicago followed by neighboring midwest states Indiana and Michigan. The average income for all people relocating to Chicago was $132,372 per year a 22% increase, or $24,215, more than the portfolio at large.

“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.”

Collective thought has always been that “Big 10 graduates” and other Midwestern schools are a large population of renters in Chicago. While that is true, this data shows trends where other large metros such as Los Angeles, San Francisco and New York City are relocating talent to Chicago.

“In comparison, rents are still attainable here compared to the coasts and Chicago has nearly everything you can get in those other major cities,” said Galvin.

Couples Renting Luxury Apartments

Couples occupy 61.1% of the apartments in the data set compared to singles at 26.3% and roommates at 12.6%. More notably, couples also rented 66.5% of all of the one-bedroom units in the 18 properties.

“Couples are driving the rents in Class A apartment buildings as their combined income can afford the largest units with the best views,” said Mark Ziemke, Leasing Strategy Manager at LLCR. “Moving in together is an exciting step for couples coming together. More often than not, they start their search looking for a two bedroom apartment but quickly realize they are not going to save money if they go that route. Instead, selecting a one-bedroom unit with enough living space and storage is the better choice.”

The average rent for a one-bedroom apartment in the LLCR portfolio is $2,587 as compared to a two-bedroom unit at $3,663 per month.

“On average, selecting a one-bedroom apartment saves couples over $1,000 a month. Couples combined incomes average nearly $200,000,” said Ziemke. “They are choosing to live in smaller, brand new units in the most prime location with the best amenities and views.

The LLCR data shows it’s essential for developers to build a healthy mix of unit types. Couple-friendly one-bedroom units featuring walk-in closets and double sinks in the bathroom are vital to attracting the large base of renting couples.

“Combined incomes will allow for higher rent prices and increases upon renewals,” said Galvin. “Couples are also more likely to remain in their unit versus an individual renter.”

Unit Type Demographics

The gender wage gap also plays a part in how Chicago Class A apartments are being rented. While the average income of renters in the data set is $108,214, there is a significant difference between the income of male and female renters. The average male renter earns $125,096 a year, while the average female renter makes $87,948. The income disparity leads to more females leasing studio units (57% female versus 42% male) and more males leasing two-bedrooms (62% male versus 38% female). The data has many implications for how to market specific unit types to the right demographic.

“Understanding who is renting our apartments is crucial to our marketing efforts and helps us inform our developer partners.” said Kaitlin Brewer, LLCR Director of Marketing. “This insight is a key differentiator in our process from the beginning and carries through online with messaging and imagery that speaks directly to our renters’ values”

In 2019, LLCR will help over 3,000 Chicago renters find a new home in the newest Class A apartment buildings, nearly 40% market share of all new construction leasing in downtown Chicago.

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