While certain types of development, which had been solely hampered by hesitancy in the economy, is increasing in various markets throughout Midwest, one market is really seeing construction go upwards. Developers of multifamily high-rises in Chicago are stacking floor upon floor for residents who want to make their home in part of the city’s skyline.

“We believe the Chicago market has quite a bit of depth,” says Nicholas Gouletas, president of sales and field operations with American Invsco. The company previously focused on converting high-rise rental to condominiums and is now involved with new construction. One of the company’s projects is the Millennium Centre, located at 33 W. Ontario Street. The building will stretch to just under 600 feet, making it slightly smaller than the former world’s tallest residential building, Lake Point Tower. While Lake Point has 879 living units, Millennium Centre will only hold between 365 and 370 units due to a ceiling height of 9 feet. The 45th floor was recently poured and American Invsco expects to deliver the building next fall.

Millennium Centre is one of a number of for-sale luxury projects being built. MCL Companies is currently under construction on Phase II of Riverview, located on McClurg and the Chicago River. This is a 32-story tower, complementing Phase I’s 27-story tower and bringing the total square footage to 1.11 million, which will house 148 units. Currently, MCL has already sold 102 of them. The company has utilized several tactics to set themselves apart from other high-rise developments: larger floor plans and customization.

“Our purchasers want customization,” says Tamara Laber, senior vice president of sales and marketing for MCL Companies. “Not floor after floor of the exact same floor design.” MCL has a design center with an inhouse architect and four interior coordinators dedicated to customizing units for buyers. Most of MCL’s clients are people who moved to the suburbs to raise a family but are now returning to the city once the house has emptied. “They want the larger living space they are used to,” Laber says. The company is accommodating them with their floor plans, which range from the 2,000-square-foot, two-bedroom unit to the 5,200-square-foot, single unit.

“There is a lot of competition here,” Gouletas says. “You will find more for-sale buildings than rental buildings being constructed.” Which is evidence of the expanding population of the 45 to 64 age bracket who is much more likely to buy than rent a home. McKim Barnes, vice president of research and analysis for Draper & Kramer, recently completed research on national renter patterns with some projections for the future. In 2000, 54 percent of households ages 25 to 34 rented. Only 23.1 percent of households 45 to 64 rented. While percentages will remain constant, the number of people in the primary-owning age bracket will increase.

Approximately 31.8 percent of the population was the primary-owning age in 1980. The number decreased slightly in 1990 and rose 4.7 percentage points throughout the nineties with another expected gain of 4.8 percentage points by 2010. “Combine that with very low interest rates, which encourage people to buy, and you are going to see an impact on the high-rise market,” Barnes says. The report forecasts renter growth of 150,000 renters a year over the coming decade, about half the pace of recent years.

“There are going to be new renters,” Barnes says, “just not enough to sustain the industry’s current growth rates.” While this trend will affect the Chicago market, it will not be too detrimental because developers are already taking steps to prevent it.

“What you don’t see is since 1993, 8,000 luxury rental units have converted to condominium units,” says Gouletas, whose company converted approximately half of that number. “There are less renters, but there are less units. Because of that you have a variety of rental buildings being built.”

Examples of this are projects like Archstone Smith’s approximately 700,000-square-foot Park Millennium. The 480-unit apartment project, located at the corner of South Water and Columbus, is the first new residential high-rise in the area in 20 years. Amenities include a business center, health center, conference room and high-speed Internet access. Jim Loewenberg, president of Near North Properties, Park Millennium’s developer, cites a factor that may prevent the decreasing rate of new renters from becoming a problem. “There are really a very limited number of projects being started in the high-end rental market,” Loewenberg says. “They are very tough to make work because of the large magnitude of developing 500 plus apartments.”

With the balanced number of projects in the market, developers have one more amenity to attract residents and boost absorption rates: Chicago. People are finding many reasons to live in the city, such as its vibrant social and nightlife or easy access to work. Vacationers often keep a second home in Chicago along with their boats on Lake Michigan. But Gouletas sees the biggest draw as the city’s park system. “If you have a condominium four blocks from the lake,” Gouletas says, “all you have in front of you is rolling hills, trees and ponds. Your foreground is second to none.”

With encouraging absorption rates and a lively city to draw residents, developers do not anticipate stopping soon. American Invsco is in the planning stages of a major residential development in Lincoln Park. MCL Companies is only in the fifth year of a 12-year plan, with buyers on waiting lists for projects further down the timeline. “We have some projects on the drawing board,” Laber says. Near North Properties and Magellan Development Group have purchased 26 acres directly east of Park Millennium that they plan to develop.

“Chicago is a healthy market.” Gouletas says. “People really want to live in the downtown area.”

©2002 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.