5 Chicago Players Making Multifamily Housing a Bull Market
Five Chicago companies have made the NMHC’s annual list of the top players in the country driving the multifamily boom. With rent growth at historic highs and demand continuing to outpace supply, NMHC chief economist and SVP Mark Obrinsky says the national housing market is likely to remain strong for years to come.
The key trend Mark is seeing nationwide is management firms getting bigger, with 2014 seeing record levels of transactions and investment. More good news for the market, according to Mark: a historically low vacancy rate and an increasing interest in renting, particularly among people who live alone and recent US immigrants.
But one area without growth is ownership, where some owners are even choosing to reduce their inventory. Chicago-based Heitman's inventory reduced from 36,111 units last year to 34,111 this year, according to NMHC, but the company moved up three slots on the list of top owners to No. 31. Hetiman, led by Maury Tognarelli (pictured at a Bisnow panel), made record-setting moves last year, including paying a record $33M for OneEleven, a 504-unit apartment tower on West Wacker Drive in December—a deal that comes out to $661k per unit.
Higher up the list, the REIT Equity Residential holds the No. 6 slot, with 110,063 units, up from 109,465 last year. EQR, led by David J. Neithercut (pictured), also happens to be the top REIT owner, both in Chicago and nationally. EQR, which manages its own units, also moved up in the ranking of the 50 largest apartment managers, from No. 5 last year to No. 4. Only two other Midwestern companies made the list of top owners: Des Moines-based BH Equities, ranked No. 18, and Cleveland-based Forest City Residential Group, ranked No. 23.
Chicago’s AMLI Residential ranked No. 20 on the list of the largest residential developers. CEO Greg Mutz (pictured) has said that skyrocketing construction costs are slowing development in Chicago and other markets, and making developing look less attractive than buying to some. AMLI had started more than 5,000 units by the end of 2013, and began 1,525 units last year. AMLI owns about 3,300 apartment units in Chicagoland. Earlier this year it moved its HQ to the Board of Trade Building in hopes that the bigger space with high ceilings and an atrium would aid in recruiting efforts. EQR ranked No. 13 with 2,267 units begun in 2014.
Ralph Pickett's LivCor joined the list of top managers for the first time this year at No. 46 with 29,000 units. That number is up from 26,000 last year, which had put it just out of the top 50. LivCor, a portfolio company of Blackstone Asset Management formed in 2013 to manage multifamily housing, is relatively new to the scene. The company, formed in a $2.3B deal, could soon be adding tens of thousands more apartments to its portfolio this year through recent Blackstone acquisitions.
Higher up on the list of managers, the Michigan-based Village Green, which is led by Jonathan Holtzman (pictured at a Bisnow panel) and has offices in both Detroit and Chicago, moved to the No. 32 slot in the rankings, down from 28 last year. The number of units Village Green manages shrunk from 42,500 last year to 38,669 this year. Village Green also ranked No. 10 on the new list of the nation's top apartment contractors, after starting 1,360 new units last year.
