Suburban Chicago Apartments hit Market Amid High Rental Demand

A pair of west suburban apartment properties are up for grabs, testing how investors will navigate a high interest-rate environment in a strong multifamily market.

Los Angeles-based Broadshore Capital Partners has hired Berkadia to sell the 400-unit Ascend St. Charles at 100 Lakeside Drive in St. Charles, and a Blackstone affiliate is looking to offload the 256-unit Martin’s Point, at 2101 South Finley Road in Lombard, with CBRE handling marketing, Crain’s reported.

Despite spiked interest rates, which have depressed property values and hindered sales since last year, strong rental demand coupled with a dry development pipeline in the western suburbs could defy trends and cause sale prices to swell.

Berkadia’s Pete Evans expects Ascend St. Charles to fetch a significantly higher price than its 2017 trade of $81.5 million, a little under $204,000 per unit, with estimates suggesting it could sell for about $100 million, or $250,000 per unit.

The submarket’s supply is falling rapidly, Evans told the outlet.

“The west suburban market has been under-supplied for over a decade, which will continue to lead to pervasive inflationary pressure in housing costs, especially rental housing,” he said.

Suburban Chicago’s multifamily market neared full capacity by the end of last year, with an occupancy rate of 97.3 percent, according to appraisal and consulting firm Integra Realty Resources. Suburban rents rose 5.4 percent year-over-year in the fourth quarter, outpacing downtown Chicago, where rents were up 2 percent from a year prior.

Meanwhile, Blackstone Real Estate Income Trust previously listed Martin’s Point for sale in 2022 but failed to land a buyer. Blackstone acquired it as part of its $3.7 billion acquisition of Philadelphia-based Resource REIT in May 2022.

While Blackstone’s reasons for relisting the complex two years later remain unclear, CBRE’s John Jaeger expressed confidence in the strength of the suburban rental market, particularly in DuPage County.

—Quinn Donoghue