Chicago’s housing recovery has been lagging behind other U.S. metro areas, but the market is primed for growth, as investors are moving on Chicago investment properties. In the last three years, institutional buyers snapped up nearly 10,000 properties in the Chicago area, the Chicago Tribune reported. These organizations hope to capitalize on the enormous renter’s market that expanded across the country in the wake of the financial crisis.
The investments paid off well for buyers, as home prices in Chicago shot up 13 percent between 2012 and 2014, according to data collected by S&P/Case-Shiller. Improved employment and economic growth in the area will drive property values even higher and increase demand in the rental market. Investors will benefit from higher rental rates as housing demand continues its rise. Two powerhouse Chicago industries are particularly poised to expand: freight and manufacturing, as well as technology.
Freight and manufacturing
Over 50 percent of the nation’s rail movement passes through Chicago, according to The Brookings Institution. The city’s easy access to freight transportation fuels a manufacturing industry that has contributed to the nation’s economic recovery. The manufacturing economy added jobs at double the Chicago economy’s average rate between 2010 and 2013, according to Crain’s Chicago Business, and these gains are likely to continue as the entire U.S. manufacturing sector grows.
The manufacturing economy experienced rapid improvement over the past several years. Bloomberg reported on the strong U.S. dollar and improving consumer goods demand, and these factors will likely push manufacturing production and freight use higher in the future. This should promote job growth in the Chicago area and increase the need for rental properties to house the newly employed.
Technology-related positions are a growth area for the Chicago economy as well, and the city has already become one of the biggest tech hubs in the U.S. This creates a high demand for commercial rental properties for tech firms. River North, one of Chicago’s neighborhoods, was the third-largest market for tech-related rental growth during the past two years, and the area trailed only Redwood City in the San Francisco area and Manhattan’s Midtown South in terms of growth potential, according to research firm CBRE.
This is relevant for investors because home prices and the value of rental properties will rise as a wealth of tech positions bring people to the Chicago area, and the tech boom is only beginning. In addition to gains made by private tech companies, the city government has instituted the Chicago Tech Plan to modernize the area’s infrastructure. This will require a massive investment that will create jobs in both the public and private sector.
These are just two of the industries that make up Chicago’s economy, but their growth is indicative of the city’s overall economic health. Investors who are interested in the Chicago investment market should register with HomeUnion to browse our database of pre-vetted investment properties.