When it comes to investing in multifamily real estate, one of the most crucial factors to consider is location. In a bustling and diverse city like Chicago, where the real estate market is as dynamic as it gets, understanding the significance of location can make or break your investment. In this blog post, we will delve into the key role that location plays in multifamily building sales in Chicago, and how it can impact your investment strategy.

1. Neighborhood Dynamics:

Chicago is a city of neighborhoods, each with its own unique character and charm. When considering a purchase, multifamily investors must carefully evaluate the dynamics of the neighborhood in which the property is located. Factors such as school quality, access to public transportation and proximity to amenities like parks, shopping centers, health care and restaurants all need to be taken into account. A neighborhood’s appeal can greatly influence the rental demand and property values in the area.

2. Employment Centers and Public Transportation:

The location of a multifamily property relative to major employment centers and public transportation in Chicago is a critical factor. Proximity to business districts, medical centers, universities, and other job hubs can significantly impact tenant demand. Investors often target areas with strong job growth prospects, as this can lead to increased rental income and property appreciation.

Chicagoans also rely heavily on public transit, and properties with easy access to these bus and train systems are often in high demand. Proximity to transportation hubs can attract a wider range of tenants and contribute to the property’s overall desirability by making their commute to work as easy as possible. Many multifamily properties do not feature parking as an amenity which makes access to public transportation a key factor in the renter decision-making process.

3. Market Trends and Economic Stability:

Chicago’s real estate market is subject to trends and cycles that vary from one neighborhood to another. Stay informed about the latest market trends, including vacancy rates, rental rates, and property appreciation rates in different areas of the city. These trends can help you identify emerging opportunities or areas where caution is warranted. The economic stability of a neighborhood is another critical factor in multifamily real estate investments. Analyze the historical performance of the local economy and the resilience of the area during economic downturns. Investing in neighborhoods with a strong economic foundation can provide more stability and long-term potential for your investment.

4. Future Development:

Keep an eye on future development projects and infrastructure improvements in the area. New developments can impact property values and rental demand positively or negatively. Being aware of upcoming changes can help you make informed decisions about your investment’s potential for growth. One such example is the Bronzeville Lakefront Development, a 100+ acre redevelopment of the former Michael Reese site that will serve as a global hub for innovation and wellness. The development aims to help regenerate the local economy by creating up to 75,000 jobs and incorporate 9+ acres of green space, the result is a lifestyle centered around sustainability, health, and well-being. This investment into the community will spur demand to the area and should have a positive affect on the multifamily stock.

5. Regulatory Environment:

Chicago has its own set of zoning laws and regulations that can vary from one neighborhood to another. Understanding the local regulatory environment is crucial, as it can affect your ability to make renovations, change property use, or increase the number of units in a building. One way of of doing such is by taking advantage of the additional dwelling units (ADU) ordinance that was approved in 2020. This ordinance allows for the creation of new units to help combat the need for affordable housing. ADUs, additional improvements and change of property use can all be beneficial to a property’s value, but you must ensure compliance with all relevant zoning and building codes to avoid potential legal issues.

Conclusion:

In the multifamily real estate market in Chicago, location is paramount. The choice of neighborhood and its accessibility to public transportation can significantly influence the success of your investment. By carefully considering factors such as neighborhood dynamics, proximity to employment centers, market trends, public transportation accessibility, tenant demographics, and economic stability, you can make well-informed decisions that lead to successful multifamily building sales in the Windy City. As the market continues to evolve, staying informed and adaptable will be key to achieving your investment goals in Chicago’s multifamily real estate sector.

Mark Dykstra is a Director at Interra Realty and graduated from Indiana University. He is a licensed real estate broker in the State of Illinois.