An out-of-state investor bought an 81-unit apartment building on Chicago’s South Side for $5.5 million as demand rises for properties that yield higher capitalization rates, a measure of return on assets, compared with the rest of the nation.
Chicago’s Essex Realty Group facilitated the sale of the property at 6720 South Jeffery Boulevard in Jackson Park Highlands neighborhood, according to Connect CRE. The buyer and seller weren’t disclosed. The property received seven offers, said Essex Realty director Brain Mond.
Located in an inexpensive, developing area, South Side’s affordable multifamily rentals yield higher cap rates are becoming an appealing investment option for investors who aren’t based in Chicago.
“We’ve seen a huge push from people around the country kind of flocking to Chicago because of the high cap rates that you see here versus New York,” Noah Birk of Kiser Group told The Real Deal in a recent interview.
While cap rates for multifamily properties across the nation were an average 5 percent last year, the number for South Side apartments were in the mid-8 percent range, according to Marcus & Millichap’s latest report.
“A lot of these people have been priced out of their local markets in New York, Los Angeles, San Francisco and Miami,” Birk said. “Because of that they’re venturing outside of the cities that they’ve been playing in for a while.”
A 100-unit apartment complex on Chicago’s South Side is on the market for $6.6 million as Axonas Realty is seeking a buyer for a three-building property at 7800, 7806 and 7822 South Laflin. Last year, the highest price paid for a multifamily property was $175 million for a 1,061-unit apartment complex in McClurg Court Center, in Streeterville.
[Connect CBRE] – Connie Kim