Jun 8, 2016 - City of Highwood

Transcription

AGENDA
MEETING
OF THE HIGHWOOD
PLANNING AND ZONING COMMISSION
Wednesday, June 8, 2016
6:30 p.m. Meeting
Meeting will be held at Highwood City Hall
17 Highwood Avenue - Highwood, Illinois
I.
CALL TO ORDER
II.
ROLL CALL
III.
APPROVAL OF MINUTES
i. February 24, 2016
IV.
SCHEDULED BUSINESS
i. 440 Green Bay Road – Planned Unit Development
ii. 546 Green Bay Road – Planned Unit Development
V.
ADJOURNMENT
City of Highwood
Minutes of the Planning and Zoning Commission
February 24, 2016
The Meeting was called to order by Chairman Ferguson Mills at 6:30 pm. Committee members Roman Beluch, Peter Biagi,
Anthony Bilotti, Frank Campareale, Sonja Feddermann, Chris Meyer and Ferguson Mills were also present. Paul Fabbri
and Paul Martinez was absent. Also present was City Manager Scott Coren.
Approval of Minutes
Commissioner Feddermann made a motion to approve the minutes of the November 11, 2016 meeting with a second
from Roman Beluch. The vote was 7-0 in favor.
502 Sheridan Road
The Public Hearing was opened at 6:32 PM. Tang Wong, the petitioner, explained the business of Vape312, a shop that
sells electronic cigarettes and e-liquids. The main purpose is to allow smokers to switch or quit. He said they currently
have 10,000 customers and many of those customers are from this area with limited competition in this area. The
petitioner said they would bring many customers and revenue to Highwood.
Roman Beluch mentioned that these types of uses do not typically bring in a significant amount of revenue to the
community.
Sonja Feddermann asked if this space was the normal size of one of their stores, as it was very large. The petitioner
answered that this would be their headquarters as well as store, and there would be inventory and offices in back.
Peter Biaggi asked about the cost of the products, and the petitioner said the average sale was between $40 - $50.
Chairman Mills asked if there would be a ventilation system in the building. The petitioner said the vape dissipates quickly
and that only ceiling fans were needed, with nothing required.
The petitioner said they have a license in Chicago to smoke indoors. This is the only place with those requirements. There
are no other requirements in Highwood, which has not evaluated different standards for allowing Vape shops.
Roman Beluch asked if having two vape shops in the community was too extensive and if both shops could survive. The
petitioner said this is not a very competitive environment and many of these types of businesses work together.
Peter Biaggi asked about the number of parking spots necessary. The petitioner said the majority of customers were
finished with their purchases in fifteen minutes. He said parking was often sufficient in the time they were busy, often
during the day.
Roman Beluch made a motion to close the public hearing, Sonja Feddermann seconded. The public hearing was closed.
The Chairman asked for comments from the public, but none were present.
Commissioner Beluch made a motion to approve the special use; Commissioner Biagi seconded the motion. The motion
passed 7-0.
Commissioner Feddermann made a motion to approve the parking variance; Commissioner Meyers seconded the motion.
The motion passed 7-0.
Adjournment
There being no further business Commissioner Meyer made a motion to adjourn, with a second by Feddermann. The
motion carried at 7:11 pm.
CITY OF HIGHWOOD
PLANNING & ZONING COMMISSION
Public Hearing
Wednesday, June 8, 2016 6:30 PM
Request:
Property in
Question
440 Green Bay Road
16-15-213-012
16-15-213-013
16-15-213-014
Owner:
City of Highwood
Applicant:
440 GBR, LLC
Zoning District
B-1 Retail Business District
Petition for a Planned Unit Development
Summary: The Petitioner, 440 GBR, LLC has submitted a petition for a planned unit development.
The development is a five story mixed-use development consisting of 2,812 square feet of commercial
space and 52 total residential units. The residential units break down into 16 two bedroom units, 8
one bedroom units with a den, and 28 one bedroom units. The site plan demonstrates the
development utilizing 82 onsite parking spaces entirely within the building.
Staff Review and Comment: In the Downtown Projects Guidebook recently approved by the City of
Highwood, these parcels fall within the Green Bay Road District. This district states that “Well
established and successful existing businesses should remain, but other uses, such as office and
residential buildings, should be considered.” Further in the report, mixed use buildings are
recommended for heights of four to seven stories to generate viable development economics. The
larger buildings are recommended to be designed in a certain fashion to insure these developments
do not overwhelm adjacent properties. The design of the building has been reviewed by a consultant
in a separate report.
This development assists with multiple goals in the business district, including investment in a vacant
lot, adding commercial or office space and providing additional residential density in the downtown
core. The added density of 83 units per acre may serve to create additional support to fill these
vacancies and increase the feasibility of other sites closer to the train station and downtown core.
The greatest challenge with this particular development is the configuration of the existing lot and the
current utilities. ComEd has constructed utility poles on the property and the City and developer are
working on a plan with them to have them removed or relocated.
The site has a unique shape. The lot itself features 200 feet of frontage on Green Bay Road that is
attractive for a commercial or office tenant. The lot depth is minimally 132.42 feet on the North and is
181.06 feet deep on the South end, which is sufficient to include 82 parking spaces within the
building. The City wants to encourage the developer to maximize parking on the site because of the
difficulty of parking in the surrounding area, which requires them to use the entire lot.
The consultant hired by the City has recommended that the developer review the possibility of
creating an access off the frontage of the property for parking, looking at adding setbacks or reducing
parking. Staff believes maximizing parking within the structure is more important than these items.
1
The neighboring Recreation Center already has overflow parking on the property currently and Staff
has requested the developer review the possibility of dedicating fifteen parking spaces for the users of
the Recreation Center to offset this loss of parking. Alternatively, Staff and the developer have
discussed the possibility of allowing an easement on the five foot setback of the property to allow the
parking for the Recreation Center to move North, potentially allowing for additional parking near the
face of the Recreation Center building.
Public Comments Received: No written comments have been received regarding this petition.
If the Planning & Zoning Commission considers recommending the granting of a variance the
following minimum conditions would be recommended:
Conditions:
1. The utility poles must be removed from the property.
2. Engineering plans must be reviewed and approved by the City’s engineer to appropriately
address any stormwater concerns on the property.
3. This project must be reviewed by the Appearance Review Committee to ensure compliance
with the Appearance Review Code.
4. That the Petitioner shall comply with such other or appropriate requirements imposed by the
City for the proposed improvements including but not limited to recommendations of the
Appearance Review Committee, City Engineer, City Planner, City Building Consultant and/or
City Staff for the construction and maintenance of the proposed improvements on the
premises.
5. That the Petitioner pays all costs incurred by the City of Highwood for the zoning proceedings
and any costs incurred by the City of Highwood related to the processing, review and
enforcement of this proposal.
Submitted by Scott Coren, City Manager
2
440 Green Bay Road
PETITION for PLANNED UNIT DEVELOPMENT
04 / 26 / 2016
440 GBR, LLC
index
1
PLAT OF SURVEY
2
SITE PHOTOS
3
SITE PLAN
4
GROUND FLOOR PLAN
5
SECOND FLOOR PLAN
6
THIRD TO FIFTH FLOOR PLAN
7
EAST & SOUTH ELEVATIONS
8
WEST & NORTH ELEVATIONS
9
RENDERINGS
PLAT OF SURVEY
440 Green Bay Road
Highwood, Illinois
Date: April 26, 2016
SITE PHOTOS
440 Green Bay Road
Highwood, Illinois
FIVE-STORY
MULTI-FAMILY
5' 0 5' 10' 20'
35'
(IN FEET)
70'
SITE PLAN
440 Green Bay Road
Highwood, Illinois
PROJECT SUMMARY
UNIT BREAKDOWN
No. of Bedroom
Per Floor
Total Units
1 Bed
7 Units
28 Units
1 Bed / 1 Den
2 Units
8 Units
2 Bed
4 Units
16 Units
total
52 Units
COMMERCIAL SPACE
2,812 SQ. FT.
No. of PARKING SPACES
82 Total
incld'g 4 Handicap
5' 0 5' 10'
20'
35'
(IN FEET)
GROUND FLOOR PLAN
440 Green Bay Road
Highwood, Illinois
UNIT DATA
F
UNIT
NUMBER OF
BEDROOMS
UNIT AREA
A
2 BED
1244 SQ. FT.
B
1 BED/1 DEN
1020 SQ. FT.
C
1 BED/1 DEN
1028 SQ. FT.
D
1 BED
799 SQ. FT.
E
1 BED
697 SQ. FT.
F
1 BED
707 SQ. FT.
G1
2 BED
987 SQ. FT.
H
1 BED
698 SQ. FT.
I
1 BED
799 SQ. FT.
J
1 BED
799 SQ. FT.
K
1 BED
828 SQ. FT.
L
2 BED
1035 SQ. FT.
M
2 BED
1079 SQ. FT.
G1
E
H
I
D
J
C
K
B
A
M
L
5' 0 5' 10'
20'
35'
(IN FEET)
SECOND FLOOR PLAN
440 Green Bay Road
Highwood, Illinois
UNIT DATA
F
UNIT
NUMBER OF
BEDROOMS
UNIT AREA
A
2 BED
1244 SQ. FT.
B
1 BED/1 DEN
1020 SQ. FT.
C
1 BED/1 DEN
1028 SQ. FT.
D
1 BED
799 SQ. FT.
E
1 BED
697 SQ. FT.
F
1 BED
707 SQ. FT.
G
2 BED
1148 SQ. FT.
H
1 BED
698 SQ. FT.
I
1 BED
799 SQ. FT.
J
1 BED
799 SQ. FT.
K
1 BED
828 SQ. FT.
L
2 BED
1035 SQ. FT.
M
2 BED
1079 SQ. FT.
G
E
H
I
D
J
C
K
B
A
M
L
5' 0 5' 10'
20'
35'
(IN FEET)
THIRD TO FIFTH FLOOR PLAN
440 Green Bay Road
Highwood, Illinois
EAST ELEVATION
5'
0
5'
10'
20'
(IN FEET)
SOUTH ELEVATION
35'
ELEVATIONS
440 Green Bay Road
Highwood, Illinois
WEST ELEVATION
5'
0
5'
10'
20'
(IN FEET)
NORTH ELEVATION
35'
ELEVATIONS
440 Green Bay Road
Highwood, Illinois
440 Green Bay Road
Highwood, Illinois
440 Green Bay Road
Highwood, Illinois
440 Green Bay Road
Highwood, Illinois
May 15, 2016
Scott Coren
City Manager
Highwood, Illinois
delivery: [email protected]
RE: Project Review - 440 Green Bay Road
Dear Scott,
Attached please find a project review for the above named project, reviewed first based
upon the existing code, then reviewed based upon the current draft regulations for the
downtown district.
In terms of meeting the EXISTING CODE regulations, I found that, in general, the existing
regulations do not support this type of development, except under the umbrella of the more
general "Findings of Fact" (section 11-10-14). The development is, however, fairly consistent
with the general statements regarding downtown development in the comprehensive plan.
Based upon the existing code, the main concerns for the project are as follows:
1. Compatibility. The uses are compatible with the surroundings; however, the location
of the uses on the site are less compatible with adjacent lots. First, the proposed
development includes no rear setback at all, adjacent to the single and 4 unit buildings
behind the parcel. The parking structure would be constructed right at the rear lot line.
Second, the scale of the ground story is quite tall, and is not compatible iwth the
surrounding scale of Green Bay Road commercial and residnetial buildings. Note
the adjacent building to the north shown in the rendering on page 11 of the PUD
application PDF document.
2. Density, Lot Coverage. The current code does not specifically allow for such significant
increases in density and lot coverage, except to state in the findings of fact for a PUD to
allow developments consistent with the general statements of the comprehensive plan.
3. Building Design. Many aspects of the building design, while consistent with the draft
downtown code under development, are not required specifically by the existing code.
The applicant has included many design details that increase the compatibility, quality
of design, pedestrian orientation, and appearance of the building.
The only element that impedes pedestrian orientation of the building is the location of
the garage entrance. The current code does not define the location of access, though
it does address ingress and egress from the property generally. An alternative solution
(side or rear access) to the location of the garage entrance would help to enhance the
pedestrian comfort and safety in this location so close to the station. See review based
upon the draft code regulations below.
www.codametrics.com
This is an excellent project, meeting many of the current DRAFT CODE regulations. The main
items for discussion include the following:
1. General Building Type. I reviewed this project as if the regulating map were correct,
meaning the district would be RX 1, requiring mainly residential uses and not permitting
many retail uses.
2. Rear Setback. This design does not utilize any rear setback. Given that there are
single family residences behind and that this project's parking garage extends up to the
lot line, I would recommend some level of setback.
3. Garage Entrance. Ideally, the entrance to the garage would not be off Green Bay
Road, but off a newly developed alley through the block. This alley could serve other
redevelopment projects along the block as well as creating a buffer with the rear
properties.
4. Parking Requirements. The relocation of the garage and the rear setback would
directly impact the amount of parking the garage could provide. If the applicant were
to utilize the current code (assuming the working group and council agrees), they could
reduce the number of spaces and provide a bit more space for the devleopment onsite.
5. Impervious Cover. The project as drawn is very close to 100% impervious with the
exception of the 5' side yards. For a residential building, I think it makes sense to
provide a bit more landscape area, even in a more urban situation. The dog park could
provide the semi-pervous coverage amount, if expanded.
Thank you for the opportunity to review the projects. I look forward to our discussions.
Leslie Oberholtzer, AICP, RLA, LEED AP
Principal
w w w . c o d a m e t r i c s . c o m
EXISTING CODE REVIEW
Business (B-1) District & PUD Zoning
The site is currently designated for B-1 zoning
and the applicant is requesting a Planned Unit
Development designation.
Uses: The uses are consistent with the B-1 zoning,
including multifamily uses on the upper floors, and
business uses on the ground floor.
Lot Area: The minimum lot area for multifamily
uses in B-1 is 10,000 sf. For PUD zoning, the
minimum required area is double that, 20,000 sf
(11-10-2). The lot is 27,278 sf.
Building Height: The maximum height of a B-1
building is 35 feet and no more than 3 stories. The
height of the proposed development is 5 stories,
not consistent with the base district. Though not
specifically stated, the PUD may be utilized for
increased height, in the form of density.
Lot Coverage & Density: The density of the
development is approximately 83 units/acre (52
units on .63 acres). There is no base density for
the B-1 district, but a limit is placed on multiplefamily uses. The limit requires the development
not to exceed a floor area ratio of 100% of the lot
area (this project is close to 400%), lot coverage
of 33.3 % (this project is close to 100%), and
impervious surface of 60% (this project is close to
96%).
Setbacks: The PUD standards say the yards shall
be at least equal in width or depth to that of the
adjacent zoning district. The zoning districts to
either side of the parcel are B-1, which has no
setback requirements; for hotels, motels, and
multiple-family uses, however, a front setback of
30 feet and a side setback of 5' is required. The
project includes 5' side setbacks per the multiplefamily requirements, but a zero front yard setback.
The PUD standards also state that buildings over
Project Review City of Highwood
24 feet in height are required to set the building
back from any property line equal to the height
of the building. With the zero rear and front
lot line setback of this proposal and the 5' side
yard setbacks, this project does not meet those
requirements. [Note: These requirements are
inappropriate for a mixed use downtown and
more in line with a larger scale development of
multiple buildings on several acres.]
Consistency with Comprehensive Plan:
Currently, the comprehensive plan map designates
this parcel as public/semi-public. However, the
comprehensive plan states that new higher
density development can "complement the built
form, scale, and character of existing commercial,
while respecting the surrounding residnetial
neighborhoods."
Consistent with the comprehensive plan, this
proposed development uses brick and stone and
includes a level of ground story detail, consistent
with many existing Green Bay Road buildings.
The scale of the ground story is somewhat
higher than existing floor to floor heights in the
downtown. The overall height, while inconsistent
with existing buildings, is consistent with the
goal of providing higher density residential in the
downtown, supporting transit, and increasing the
vibrancy of the downtown.
Compatibility with Surrounding Sites: The
uses of this development are consistent with the
surrounding sites (residential and ground floor
commercial).
Need: No need has been stated in the application;
however, the project would provide a significant
number of residential units in close proximity
to both the train station and the heart of the
downtown. Further, the structured parking
provided frees up other parking in the area to
serve existing businesses and commuters.
3
Project Review: 440 Green Bay Road
PROJECT REVIEW: 440 GREEN BAY ROAD
Purpose & Intent of the Planned Unit
Development: This development provides
a development type that fulfills a key
recommendation of the comprehensive plan for
the downtown: higher density, pedestrian oriented
development, utlizing existing infrastructure and
providing significant parking.
Parking
The B-1 off-street parking required for the number
of units and the commercial space would be
140 spaces, while the proposal includes a total
of 82 spaces, all in an internal structured garage
screened from the street, one story partially
below grade. The provision of fewer spaces is
consistent with the transit-oriented development
recommendation of 1.2 spaces per unit, especially
in terms of the currently required 2.5 spaces per
residential unit.
Appearance Review
Parkways and Public Ways: The application
does not include information related to installation
of street trees as required in 10-3-7-5.
Trash Enclosures: Trash dumpsters are located
within the parking structure, just inside the garage
door. The elevation shows the garage door closed,
screening the dumpsters from the sidewalk and
street view, except when open.
PROPOSED CODE REVIEW
This review follows the current draft requirements
of the downtown districts, dated April 28, 2016.
At the time of this project review, the working
committee for the code has just begun review of
the code. Staff has reviewed a preliminary version.
REGULATING PLAN
District
The regulating plan currently denotes the 440
Green Bay lot as RX 1: Residential Mix, the highest
intensity multi-unit residential district.
Uses: The district would allow 5 story residential
uses. The use of the ground story for the
fitness center and lobby is desirable, creating a
public face for the ground story, and would be
permitted.
Commercial Uses: The portions of the ground
story noted "commercial" would be limited to a
day care facility, library, museum, or community
room, as written. Neighborhood service uses, such
as a barber/beauty shop, eating & drinking place,
gym, or spa, could be permitted with a special use
permit, as currently drafted. Neighborhood uses
are limited to less than 5000 sf. Residential or livework units (allowing home occupation uses) would
be permitted by right.
The goal of limiting commercial in this area
is to consolidate retail and service uses in the
downtown to create distinct and more vibrant
nodes or areas of activity. Currently, the B-1
zoning in the downtown covers a very large area
and the vacancy rates are relatively high. With
somewhat less business zoning, those areas of
existing storefronts could fill up and increase
activity. New residential and potentially offices in
the surrounding areas would provide customers
for those areas.
Primary Street
The regulating plan designates Green Bay Road
as a primary street for this lot. Primary frontage
designation requires certain build-to requirements
4
The current draft would not allow a drive entrance
off a primary facade, but would require it to be
located on the side facade. This would limit the
coverage of this lot further (see building type
notes for coverage below).
Ideally, with anticipated redevelopment of several
parcels along this block face (and others), an
overall access plan to implement alleys would
be ideal. Additionally, an alley would provide
additional buffer to residential parcels behind the
property.
BUILDING TYPE
Assuming this lot is zoned RX 1, the permitted
building types are the General Building, the Row
Building, and the Civic Building. The height and
use distribution is most similar to the General
Building; therefore, this review will use the General
building type requirements.
Building Siting
Following the requirements of the building type
regulation tables in the draft document, this
building is generally sited with some exceptions.
Minimum Primary Frontage Coverage: The
building meets the minimum 80% required
primary frontage coverage, extending fully
between the two 5' side yards.
Build-to Zone: The build-to zone of the building
type is set to be between 12 and 25 feet to give
a mainly residential building a small front yard
or landscape area. This building appears to be
designed to be built close to the property line
with an estimated variability between 0 and 15
feet. The conflict here is that the building is really
designed as a mixed use storefront building type,
not permitted in this district. Further, the sidewalk
area between the right-of-way and curb appears
to be less than 10 feet, so an additional couple
of feet will be required to provide an enhanced
streetscape
Side & Rear Setbacks: Additionally, the minimum
side setbacks are not met for the general building,
required to be a minimum 10 feet and 5 feet is
provided. Rear yard with no alley for the general
building is set to be 30 feet adjacent to single
family uses (Funston uses appear to be two single
family and one multi-unit building). If all multi-unit,
the setback would be 10 feet with the current
draft code. This plan shows no rear setback.
A rear setback would be desirable, considering
the properties on the other side of the rear lot
line. This would potentially reduce the footprint
of the parking structure; however, with the
proposed reduction in required parking, the
number of spaces provide may be more than
necessary.
Site Coverage: The total coverage permitted with
the current draft code is 85% of the lot, though
25% of that coverage would be required to be
semi-pervious. The semi-pervious cover could
be handled through the dog park noted for the
garage roof deck or additional green roof. The
required setbacks, if met, could also provide
additional semi-pervious and/or pervious areas.
Parking: Parking for this building is located fully
within the building. See below. The location of
the dumpster would not meet the requirements
of being located in the rear of the building,
though with the garage door closed it would
not be visible. Additionally, see requirements for
occupied building space below.
Building Height
The building appears to meet the requirements of
building height, currently set to be a minimum of
2 stories and a maximum of 5.5 stories (6 stories
is also being considered).
Floor to floor heights for the upper residential
stories are 12 feet, within the range of the current
draft (9' to 14'). The ground story commercial
height is 17 feet, which would not be permitted by
this building height. Again, this buillding is utilizing
the storefront building requirements which would
allow a taller storefront space on the ground story
5
for the building types and limits drive and garage
access.
(though this is taller than the neighborhood Mixed
Use district would currently allow.
Use within the Building
Overall uses were discussed above under the
District section. The parking located within
the building is ideal, with the exception of the
entrance location already noted. The parking is
located in the rear of the lot, screened fully by the
building.
Parking is not visible from the street, located
behind generally occupied space. The occupied
space regulation requires 20 feet depth of space
along the primary frontage for all stories that
must be regularly occupied by people. The would
apply to all primary frontage. The utilities area
adjacent to the garage entrance on Green Bay
would not qualify as occupied space. These uses
in this location provide further dead space along
the garage. The electrical room may be located
beyond the 20 foot requirement.
Facade & Cap Requirements
The building appears to meet the facade
requirements, including a minimum of 15%
tranparency for all stories (the storefronts would
not be required for the general building type)
and the number of entrances along the ground
story. Entrance configurations and elevations are
currently designed for storefronts, but would meet
the stoop requirements.
Blank Wall Limitations: The blank facades
associated with the utility areas adjacent to the
garage entrance, as well as the garage entrance
would not meet the blank wall requirements,
appearing to extend more than 15 feet and
possibly occupying 30 percent of the facade.
Expression Lines: The facade design would
meet the requirements for horizontal expression
line at the ground story, but does not include
the required line at the bottom of the 5th story.
Vertical divisions between the storefront windows
meets that requirement.
Cap Type: The cap type requirements are not
met for this building. The building permits a
parapet, pitched or flat roof. The design illustrated
appears to use a parapet, but does not meet the
expression line requirements associated with this
roof type, especially on the composite rainscreen
facades.
A consistent complaint during image preference
survey discussions is that contemporary buildings
are not capped, the facade material just ends.
Survey participants state that the buildings look
boxy and unfinished. The cap types defined are
intended to finish off the building, providing
either a pitched roof, a parapet defined with
expression and shadow lines, and a visibly flat
roof with a substantial overhanging eave.
MATERIALS & COLOR
Major Materials: The building uses brick. a
rainscreen of composite panels, and some
limestone veneer as the major facade finish
materials. The brick is defined as a permitted
major material. Composite siding is typically a
less expensive type of architectural metal panel
system, currently permitted. No prohibited
materials are utilized.
Simplicity of Major Materials: The code
currently requires one material to be used for 60
percent of the facade. This is meant to reduce
the complexity of facade designs seen in many
contemporary buildings. This building may not
meet this requirement, with each major material
occupying what looks like 50 percent of the
facade.
Limited Use Major Material: Concrete block
used on side and rear facades is permitted in the
draft as a limited facade material. The elevation
states that the block is painted, while the code
draft requires the block to be burnished, glazed,
or honed.
Minor Materials. No minor materials are called
out on this submittal with the exception of the
limestone veneer and cap on the rear parking
deck, which is an acceptable major or minor
6
LANDSCAPE REQUIREMENTS
Roof Materials: Roof materials include metal
standing seam as called out for the principal
entrance bay.
Frontage buffers and interior parking lot
landscape is not required for this design, as no
exterior parking or loading areas are provided.
BUILDING FACADE ELEMENTS
STREETSCAPE REQUIREMENTS
Windows: The windows on all facades appear
to be vertically oriented, operable, clear, and
recessed, though additional information is
required in terms of glass specifications,
operability, and depth of window detail.
The general building would qualify as a nonstorefront development, with the minimum 12
front landscape area planted with planting beds.
Additionally, non-storefront developments are
required to install a landscape parkway and street
trees.
Lintels: The only window requirement that is not
met is a requirement for delineation of window
lintels. Similar to the capping of the building, the
visibility of lintels over windows provides a sense
of structure for the window opening as well as a
level of detail around the windows, often lacking
on contemporary facades. The working group will
discuss this requirement.
Awnings: Awnings appear to meet the
requirements of the draft code.
Balconies: The balconies on the submittal appear
to meet all of the requirements of the draft code.
The balconies are integrated with the design of
the facade (and not tacked on), and do not share
supports among multiple balconies. The size of
the balconies may be shallower than the required
minimum 4 feet, but appear to meet the minimum
5 foot width. Further, the balconies do not appear
to cover more than 40 percent of the primary
facade, but further measuring would be required.
Principal Entryway: The principal entry, in this
case the entrance into the lobby, is defined by a
separate material, sidelights and transom, and
separate building bay with a pitched cap. This
design utilized four of the outlined design options,
while only two are required.
OFF-STREET PARKING
REQUIREMENTS
With 52 units, the minimum number of spaces
required by the draft code would be 63 spaces,
not including spaces for the commercial use.
Commercial uses would be required to meet the
existing code. With the exception of restaurants,
generally the space would require an additional
10 spaces. Further, however, the total number of
spaces could be reduced due to proximity to the
station (15%), on-street spaces, public parking
associated with the station area (?), provision of
long-term bicycle parking, and motorcycle parking.
73 spaces required
- 11 spaces for transit credit
- 3 on-street spaces across the street
- 6 spaces for potential motorcycle/scooter
parking
- 8 spaces if a long-term bicycle space is
provided for each unit
Total of 45 spaces required. The applicant may
choose to provide additional spaces.
OTHER DESIGN ELEMENTS
None of the other design requirements are
applicable: rear parking facade treatment, parking
structure, fuel stations, and drive-throughs.
7
material.
CITY OF HIGHWOOD
PLANNING & ZONING COMMISSION
Public Hearing
Wednesday, June 8, 2016 6:30 PM
Request:
Property in
Question
546 Green Bay Road
16-15-207-027
16-15-207-011
Owner:
Wintrust Financial Corporation
Applicant:
Highwood Property Investors LLC/FIDES
Capital Partners LLC
Zoning District
B-1 Retail Business District
R-3 Residential Duplex Dwelling
Petition for a Planned Unit Development
Summary: The Petitioner, Highwood Property Investors LLC/FIDES Capital Partners LLC has
submitted a petition for a planned unit development. The development is a four story residential
development of 28 total units consisting of 16 two bedroom units and 12 one bedroom units. The site
plan demonstrates the development utilizing 24 onsite parking spaces in addition to 13 existing onstreet spaces along Washington Avenue adjacent to the development.
Staff Review and Comment: In the Downtown Projects Guidebook recently approved by the City of
Highwood, these parcels fall within the Green Bay Road District. This district states that “Well
established and successful existing businesses should remain, but other uses, such as office and
residential buildings, should be considered.” Further in the report, stand-alone apartment buildings
are recommended for heights up to four stories, which match the existing properties on Lake View
Avenue, with heights of four to seven stories recommended for mixed-use buildings to generate viable
development economics. While the Green Bay parcel is currently in the B-1 district, adding additional
commercial or office space may not be justified due to existing vacancies. The added density of 62.2
units per acre may serve to create additional support to fill these vacancies and increase the feasibility
of other sites closer to the train station and downtown core.
The greatest challenge with this particular development is providing sufficient parking for tenants and
guests.
The Planning & Zoning Commission and City Council recently approved another
development on Webster & Clay with parking sufficient for 1.2 spaces per unit. These reduced
parking requirements were recommended in the Downtown Projects Guidebook for certain sites and it
is common for municipalities to have reduced parking requirements for Transit Oriented
Developments with accessibility to public transportation. This calculation would require 34 spaces on
the property, of which 24 are onsite and 13 are on Washington Avenue. Staff has been informed the
13 spots on Washington Avenue were previously dedicated to Scornavacco’s, the former business
located on site.
Additionally, Staff would recommend modifying the parking restrictions on the East side of Green Bay
Road adjacent to the railroad tracks. Along Lakeview Avenue and Clay Avenue, near development of
a similar scale, the City allows for overnight permitted parking at a rate of $90 per quarter. This
project is not anticipated to generate the need for these additional spots but this would offer an
additional alternative for tenants of this building or other nearby residents while filling underutilized
spaces.
1
Public Comments Received: No written comments have been received regarding this petition.
If the Planning & Zoning Commission considers recommending the granting of a variance the
following minimum conditions would be recommended:
Conditions:
1. Engineering plans must be reviewed and approved by the City’s engineer to appropriately
address any stormwater concerns on the property.
2. This project must be reviewed by the Appearance Review Committee to ensure compliance
with the Appearance Review Code.
3. That the Petitioner shall comply with such other or appropriate requirements imposed by the
City for the proposed improvements including but not limited to recommendations of the
Appearance Review Committee, City Engineer, City Planner, City Building Consultant and/or
City Staff for the construction and maintenance of the proposed improvements on the
premises.
4. That the Petitioner pays all costs incurred by the City of Highwood for the zoning proceedings
and any costs incurred by the City of Highwood related to the processing, review and
enforcement of this proposal.
Submitted by Scott Coren, City Manager
2
Planning Department
PETITION FOR PLANNED UNIT DEVELOPMENT
17 Highwood Avenue, Highwood, IL 60040
(Phone) 847.432.1924 (Fax) 847.432.0735
City of Highwood
SECTION I: DEVELOPMENT INFORMATION
1.
INDEX INFORMATION: (To be completed by City Staff)
Application Number: __________________________________________________
Title: _______________________________________________________________
____________________________________________________________________
Date of Submission: ___________________________________________________
2.
BACKGROUND INFORMATION: (All correspondence will be sent to the petitioner)
a.
Petitioner:
Address:
City:
_Highwood Property Investors LLC / FIDES Capital Partners LLC_
_225 E. Deerpath Road, Suite 134
Lake Forest
Telephone:
Fax Number:
Email Address:
State: _IL
Zip:
60045
847-274-3544
_
______________________________________________________
[email protected]____________
_
b.
Relationship of Petitioner to Property:
Future owner & developer of 542-546 Greenbay Road (parcel under contract)
c.
Current Owner of Property: FCBT Holdings, LLC, Series 546 Green Bay
__
Address: Wintrust Financial Corporation 9700 West Higgins Road, Suite 650
City: _Rosemont
State: IL Zip: 60018__
_
Telephone:
Fax Number:
___Chris Swieca 847-939-9083______________________________
______________________________________________________
3.
APPROVALS REQUESTED
_
Site Plan Approval
_
Rezoning
(1) Parcel A: ____ acres from
____
to _____________
(2) Parcel B: __ __acres from _____________to_______________
_____Special Use
_____Variation(s)
_ X Other:
4.
___PUD___________________________________________________
SUMMARY OF REQUESTED ACTIONS: ______Height variation and inclusion of 13
public street parking spaces as part of the parking space per unit requirement.
__________________________________________________________________________
__________________________________________________________________________
___________________________________________________________________________
5.
PROJECT STAFF:
Developer: _Gregg Handrich (FIDES)
Engineer:
___Pat Bleck___________
Architect:
___Bob Bleck___
Landscape Architect:
6.
Phone:
Phone:
_847-274-3544_
____________
Phone:
____________
Phone:
_
_847-247-0303_
__________________
DESCRITION OF SITE:
a.
Location (address): 542-546 Greenbay Road, Highwood, IL 60018_
b.
Comprehensive Plan Designation:
c.
Existing Zoning:
d.
Existing Land Use:
Vacant Land
e.
Existing Structures:
None _______________________
f.
Significant natural amenities (slope, vegetation, water bodies, rock outcropping, etc.)
___________
_
_______________B-1____
_
_
None
g.
Flood plains and other development restrictions:
_
None
_
_
7.
CHARACTER OF SURROUNDING AREA:
Zoning/Jurisdiction
Land Use
North
R-3
Residential
South
B-1
Residential
East
B-2
Commercial
West
R-3
Residential
8.
PUD INFORMATION:
Land Use breakdown:
Residential Commercial Industrial
No. of
acres
Percentage
of total
Parking/Landscaped
Institutional Other
Area
Total
.17
.28
.45
38%
62%
100%
Residential Density:
Number of
Units
Net Acres
Net Density
Gross Acres
Gross Density
Single-family
Townhome
Condominium
Apartments
28
.45
62.2
.45
62.2
Total
28
.45
62.2
.45
62.2
Type of Unit
Net acres = land development for that land use type not including right-of-way
Net density = number of units/net acres
Gross acres = land designated for that land use type including right-of-way
Gross density = number of units/gross acres
9.
VARIATIONS:
List and justify any requested variation(s) from the (a) Zoning Ordinance and (b) Subdivision
Control Ordinance (attach additional pages if necessary):
________________________________________________________________________
10.
LIST OF REQUIRED EXHIBITS FOR CITY DEPARTMENTAL REVIEW
A. Plat of Survey
____
B. Location Map
____
C. Existing Conditions Exhibit
____
! Existing topography
! Significant environmental features (wetlands, floodplain, streams/creeks, lakes/ponds,
drainage ways, trees and vegetation)
! Existing structures
! Location of existing public and private utilities (overhead or underground)
D. Site Plan, including data table listing the following:
____
! Site Area
! Building Area
! Open Space
! Parking (# of spaces, including accessible spaces)
! Units of Proposed Uses (e.g., # of residential units; # of sq ft of retail or office)
E. Engineering Plans
____
! Grading Plan
! Erosion and Sediment Control Plan (can be combined with Grading Plan)
! Stormwater Drainage and Detention Plan
! Utilities Plan
! Wetland Protection Plan, if applicable
! Floodplain Development and Protection Plan, if applicable
F. Architectural Plans
____
! Building Elevations
! Floor Plans
! Color 3D Architectural Renderings (street level views)
! Materials list and samples
G. Landscape Plan
____
H. Lighting Plan
____
I. Traffic Impact Study
____
J. Market Study
____
K. Fiscal Impact Analysis (impacts on City, schools, taxes, and other taxing districts) ____
L. Schedule (Phasing Plan)
____
M. Covenants, if applicable
____
N. Findings of Fact for PUD and Zoning Variations
____
O. All of the above files shall be provided in 2 full-sized hard copy sets and in PDF format on a
CD or flash drive
____
In consideration of the information contained in this petition as well as all supporting
documentation, it is requested that approval be given to this site plan
Petitioner:
Highwood Property Investors LLC / FIDES Capital Partners LLC
______________.
(Print or type name)
_
_
(Petitioner’s Signature)
Date:
_______4/21/16___________________________________________________________
Current Owner of Property:
________________________________________________________________
(Print or type name)
___________________________________________________________________
(Property Owner’s Signature)
Date:
___________________________________________________________________
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542-546 GREENBAY ROAD, HIGHWOOD, ILLINOIS
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CODAMETRICS
Scott Coren
City Manager
Highwood, Illinois
delivery: [email protected]
RE: Project Review - 546 Green Bay Road
Dear Scott,
Attached please find a project review for the above named project, reviewed first based
upon the existing code, then reviewed based upon the current draft regulations for the
downtown district.
In terms of meeting the EXISTING CODE regulations, the two main concerns for the project
are as follows:
1. Parking Design. The main concern of the development is the side yard parking lot,
which is not permitted per the existing parking regulations. The surface lot occupies
about a third of the Washington frontage, adjacent to the single family home to the
west, and extends into the front yard adjacent to the sidewalk. There is no location for
screening and cars would be visible from all vantage points down Washington, east
and west. Further, the development does not include any structured parking, per the
existing code.
2. Quality of the Project. While not specifically stated in the code, the PUD standards
allude to a higher quality of design. In my opinion, the materials, floor-to-floor heights,
the at-grade, first story (while not required in the proposed code), and the lack of
recessed windows will result in a building that feels lower in quality.
In terms of meeting the PROPOSED CODE, the main items for discussion include the
following:
1. Parking Lot on Primary Frontage. Similar to the existing code review, the parking lot
in the side yard is the biggest issue. The lot should be located in the rear, screened from
the street by the building.
2. Transparency. The other shortcoming is the level of transparency (windows) on the
two end facades. The facade on the parking lot is highly visible from the street, being
setback from the side lot line 66 feet.
3. Facade Material. Additional information is needed (wood, vinyl, hardieboard?), but
siding is not currently included in the major facade materials. If vinyl, the material is
prohibited in the draft.
4. Recessed Window. Recessing windows a minimum of 2 inches from the facade is one
of the best ways to achieve a higher quality facade. The recess adds a layer of depth
www.codametrics.com
and three-dimensions to the facade, even when the facade of a lower quality material.
Thank you for the opportunity to review the projects. I look forward to our discussions.
Leslie Oberholtzer, AICP, RLA, LEED AP
Principal
EXISTING CODE REVIEW
Business (B-1) District & PUD Zoning
The site is currently designated for B-1 zoning
and the applicant is requesting a Planned Unit
Development designation.
Uses: The residential uses permitted are
consistent with the B-1 zoning in the upper floors;
however, B-1 specifically prohibits residential uses
on the ground floor on this section of Green Bay
Road.
Lot Area: The minimum lot area for multifamily
uses in B-1 is 10,000 sf. For PUD zoning, the
minimum required area is double that, 20,000
sf (11-10-2). The lot is less than 20,000 sf per the
submittal information.
Building Height: The maximum height of a B-1
building is 35 feet and no more than 3 stories. The
height of the proposed development is 4 stories,
not consistent with the base district. Though not
specifically stated, the PUD may be utilized for
increased height, in the form of density.
Lot Coverage & Density: The density of the
development is approximately 62 units/acre (28
units on .45 acres). There is no base density for
the B-1 district, but a limit is placed on multiplefamily uses. The limit requires the development
not to exceed a floor area ratio of 100% of the lot
area (this project is close to 150%), lot coverage of
33.3 % (this project is 38% per the submittal), and
impervious surface of 60% (this project is 62% per
the submittal).
Setbacks: The PUD standards say the yards shall
be at least equal in width or depth to that of
the adjacent zoning district. The zoning districts
adjacent to the parcel are B-1 and R-3. B-1 has
no setback requirements; for hotels, motels, and
multiple-family uses (and R-3 districts), however,
a front setback of 30 feet and a side setback of 5'
is required. R-3 requires a minimum 20' rear yard.
The project includes a 17' front setback, 66' side
setback, and 5' rear setback.
The PUD standards also state that buildings over
24 feet in height are required to set the building
back from any property line equal to the height
of the building. This project does not meet those
requirements. [Note: These requirements are
inappropriate for a mixed use downtown and
more in line with a larger scale development of
multiple buildings on several acres.]
Consistency with Comprehensive Plan:
Currently, the comprehensive plan map designates
this parcel as Mixed Use/Downtown Core. Further,
the comprehensive plan states that new higher
density development can "complement the built
form, scale, and character of existing commercial,
while respecting the surrounding residnetial
neighborhoods."
This development is more consistent with the
comprehensive plan language than the existing
code requirements. The surface parking lot in the
side yard and extending into the front yard is not
consistent with the language of the comprehensive
plan, which promotes well-designed, higher
density, pedestrian-oriented development.
Compatibility with Surrounding Sites: The
uses of this development are consistent with the
surrounding sites (residential).
Need: No need has been stated in the application;
however, the project would provide a significant
number of residential units in close proximity
to both the train station and the heart of the
downtown.
Purpose & Intent of the Planned Unit
Development: This development provides
a development type that fulfills a key
recommendation of the comprehensive plan
3
PROJECT REVIEW: 546 GREEN BAY ROAD
for the downtown: higher density development
utlizing existing infrastructure.
Parking
The off-street parking required for the number
of units and the commercial space would be 70
spaces, while the proposal includes a total of 24
on-site spaces plus 13 adjacent head-in, on-street
spaces for a total of 37 spaces. The provision of
fewer spaces is consistent with transit-oriented
development recommendation of 1.2 spaces per
residential unit previously approved by the City.
However, the code also requires that half of all
multifamily parking spaces must be provided
under or within the principal building. And, further,
that no parking shall be permitted in any required
front or side yard setback. This proposal conflicts
with all of these requirements: the surface lot is
located in the side yard and extends into the front
yard beyond the building face.
Appearance Review
Parkways and Public Ways: The application
does not include information related to installation
of street trees as required in 10-3-7-5.
Trash Enclosures: Trash dumpsters are located
would also likely be located in the side yard
parking, visible from the street. Fencing and
screening would help, but the opening would likely
face the street. Additionally, a trash enclosure in
the parking area would be adjacent to the single
family home next door.
PROPOSED CODE REVIEW
This review follows the current draft requirements
of the downtown districts, dated April 28, 2016.
At the time of this project review, the working
committee for the code has just begun review of
the code. Staff has reviewed a preliminary version.
REGULATING PLAN
District
The regulating plan currently denotes the 542-546
Green Bay series of lots as RX 1: Residential Mix,
the highest intensity multi-unit residential district.
Uses: The district would allow a 4 story building
with only residential uses.
Primary Street
The regulating plan designates Green Bay Road
as a primary street for this lot, though it also
contemplates whether Washington should be
considered primary. Because the entrance door
into the building appears to be on the Washington
facade, this review assumes Washington as the
primary frontage. Primary frontage designation
requires certain build-to requirements for the
building types and limits parking frontage and
drive access.
BUILDING TYPE
The permitted building types for RX 1 are the
General Building, the Row Building, and the
Civic Building. The height and use distribution is
most similar to the General Building; therefore,
this review will use the General building type
requirements.
Building Siting
Following the requirements of the building type
regulation tables in the draft document, this
building is generally sited with some exceptions.
Minimum Primary Frontage Coverage:
Estimating the lot length along Washington as
166', deducting the required side yard of 25' (see
4
Build-to Zone: The build-to zone of the building
type is set to be between 12 and 25 feet for the
primary frontage and 12 and 25' for the nonprimary frontage. This building would meet the
requirements of the primary street frontage
(Washington) as it is proposed to be built between
17 and 24 feet, but would not meet the nonprimary build-to zone, being proposed between 5
and 12 feet from the lot line. Additional sidewalk
area would also likely be required along Green Bay
to accommodate a 10 foot streetscape, increasing
the build-to area a couple of feet.
Side & Rear Setbacks: Side setbacks for the
general building are defined as 10', with a
minimum of 25' adjacent to a single family house.
Rear is set at 10, with 5' at an alley and a minimum
of 30' abutting a single family house. In this case,
the single family house to the west would trigger
a 25' side yard setback and the rear yard setback
would be 10' except 5' adjacent to the alley. Also
note that the parking lot would not be permitted
within the 25 foot side yard setback. [working
group to consider reducing it to 15 feet].
Site Coverage: The total coverage permitted with
the current draft code is 85% of the lot, though
25% of that coverage would be required to be
semi-pervious. The approximate combination of
building and parking lot on this lot appears to be
around 88% coverage, so some portion of the
parking lot would need to be semi-pervious or a
portion of the roof green.
Parking: Parking for this building type is required
to be located fully in the rear yard only. Parking for
this building is partially located in a side yard lot.
The dumpster would also likely be located within
this lot, visible from the street. Trash is required to
be located in the rear yard.
Building Height
The building appears to meet the requirements of
building height, currently set to be a minimum of
2 stories and a maximum of 5.5 stories (6 stories
is also being considered).
Floor to floor heights for the upper residential
stories appear to be about 9.5 feet, within the
range of the current draft (9' to 14'), though on
the lower end.
Use within the Building
The proposed building appears to meet the
requirements of this section: residential uses with
no parking within the building. All facades have
occupied spaces located adjacent to them.
Facade & Cap Requirements
The building appears to generally meet the facade
requirements with a few exceptions.
Entrance: The current draft requires an entrance
for every 90 feet of primary frontage facade.
Assuming Washington is the primary frontage,
at least 2 entrances would be required. The
configuration and elevation would meet the
requirements.
Minimum Transparency: A minimum of 15%
tranparency is required for all street facade
stories as well as facades "visible from the street".
The Green Bay Road (east) elevation has less than
5 percent coverage and the west elevation facing
the parking lot (considered visible from the street)
has only 3 percent transparency. The Washington
elevation appears to just meet the minimum
transparency at 16 percent per story.
Blank Wall Limitations: Further, the east and
west elevations would not likely meet the blank
wall limitations. Blank wall limitations limit blank
walls without windows to any overlaid rectangle of
no more than 30% of the story and no 15’ length
of the story without windows. In the draft, this is
explained in 11-6-14.D.2.
Expression Lines: The facade design would meet
the requirements for horizontal expression line
at the ground story on Green Bay, but does not
5
below) and the non-primary minimum frontage
of 12 feet, a 102 foot building (estimated) would
provide a 77 percent coverage, short of the
required 80 percent.
include it on the Washington facade. The recessed
bays would fulfill the vertical division requirement.
Cap Type: The cap type requirements do not
appear to be met for this building. The building
type permits a parapet, pitched or flat roof. The
design illustrated appears to use a parapet, but
does not meet the expression line requirements
associated with this roof type and does not
appear to meet the minimum height for a parapet.
A consistent complaint during image preference
survey discussions is that contemporary buildings
are not capped, the facade material just ends.
Survey participants state that the buildings look
boxy and unfinished. The cap types defined are
intended to finish off the building, providing
either a pitched roof, a parapet defined with
expression and shadow lines, and a visibly flat
roof with a substantial overhanging eave.
be vertically oriented, operable, and clear, though
additional information is required in terms of glass
specifications and operability. The depth of the
window detail is not apparent, though is suspected
to be very shallow, especially on the facades where
siding is specified. Window depth from facade
to glass is required to be 2 inches in the current
draft.
Lintels: Lintels are not expressed on any of the
windows,.
Balconies: There are no balconies currently
shown. [The working group may consider requiring
balconies for some portion of the units.]
Principal Entryway: The principal entry is
defined by a separate material (tile) and separate
building bay with a taller component. This design
utilized two of the outlined design options.
OTHER DESIGN ELEMENTS
MATERIALS & COLOR
Major Materials: The building uses brick and
two sides of "siding". As currently written, no type
of siding is permitted on the general building as a
major material and vinyl siding is prohibited. More
information would be required.
Simplicity of Major Materials: The draft code
also currently requires one major material to be
used for 60 percent of the facade. This is meant to
reduce the complexity of facade designs seen in
many contemporary buildings. This building may
not meet this requirement, with the proportions
of brick to siding shown.
Minor Materials. The tile called for on the
entrance bay is not currently listed as a major
or minor material, but could be considered as
an "other" material for special use approval as
currently written..
BUILDING FACADE ELEMENTS
Windows: The windows on all facades appear to
None of the other design requirements are
applicable: rear parking facade treatment, parking
structure, fuel stations, and drive-throughs.
LANDSCAPE REQUIREMENTS
The side yard parking lot, though not permitted,
would also require a frontage buffer and interior
parking lot landscape.
STREETSCAPE REQUIREMENTS
The general building would qualify as a nonstorefront development, with the minimum 12
front landscape area planted with planting beds.
Additionally, non-storefront developments are
required to install a landscape parkway and street
trees. The on-street parking spaces that currently
exist should be incorporated into the streetscape
design, though the code does not outline
requirements as such.
OFF-STREET PARKING
REQUIREMENTS
With 28 units, the minimum number of spaces
required by the draft code would be 34
spaces, utilizing the previously approved TOD
6
recommendation of 1.2 spaces per unit. The
total number of spaces could be reduced further
due to proximity to the station (15% -- site is just
barely within 1/4 mile), on-street spaces, and
potential provision of long-term bicycle parking
and/or motorcycle/scooter parking.
34 spaces required
- 5 spaces for transit credit
- 22 potential on-street spaces on
Washington and Green Bay (though 2 hour
limit on Green Bay spaces)
- 3 spaces for potential motorcycle/scooter
parking
- 4 spaces if a long-term bicycle space is
provided for each unit
The applicant would likely not choose to utilize
all of these credits, but very few spaces would be
required on site.
7
53 W. Jackson Boulevard
Suite 1326
Chicago, Illinois 60604
www.reci.biz
MARKET FEASIBILITY ANALYSIS:
PROPOSED 28-UNIT
APARTMENT DEVELOPMENT
on a 0.46 Acre Parcel at the Southwest Quadrant of Washington Avenue
and Green Bay Road, Highwood, IL 60040
Prepared for:
Mr. Gregg Handrich
Principal
Fides Capital Partners, LLC
225 E. Deerpath Road
Suite 134
Lake Forest, IL 60045
April 29, 2016
53 W. Jackson Boulevard
Suite 1326
Chicago, Illinois 60604
www.reci.biz
Mr. Gregg Handrich
Principal
Fides Capital Partners, LLC
225 E. Deerpath Road
Suite 134
Re:
April 29, 2016
Market Feasibility Analysis of a Proposed 28-unit Apartment Development on a 0.45 Acre parcel at the
Southwest Quadrant of Washington Avenue and Green Bay Road, Highwood, IL 60040
Dear Mr. Handrich:
At your request, we prepared a market feasibility analysis regarding the feasibility of a proposed 28 unit apartment
development to be constructed adjacent to downtown Highwood, located at the southwest quadrant of Washington
Avenue and Green Bay Road, Highwood, Illinois.
In summary, first, we observed the subject property site, neighborhood and urban environs.
Second, we performed an analysis of the economy of Chicago Metropolitan Statistical Area economy and Lake
County/Kenosha County Metropolitan Division, Illinois/Wisconsin economy.
Third, we researched national apartment demand/supply trends, particularly recent changes in renter demand in the
United States.
Fourth, we prepared an analysis of the demand/supply dynamics of the southeast Lake County apartment submarket.
Fifth, we performed a detailed survey of Class A and Class B/C apartment communities located in southeast Lake
County, Illinois and other nearby submarkets; and a survey of rental condominium units in nearby Highland Park,
Illinois and other North Shore communities.
Sixth, we reviewed the unit mix and unit sizes of recently developed apartments as well as properties currently under
construction.
Seventh, we forecast absorption, established rental rates for each of the subject property’s units for the Primary Market
Area and quantified demand through a capture rate analysis of rental units in the Primary and Secondary Market Area,
as a whole.
Our conclusions are based on the presented facts and rationale, and are subject to the limiting conditions and
assumptions contained in this report. Our conclusions and recommendations appear in Section VIII of this report.
Respectfully submitted,
Real Estate Counselors International, Inc.
Thomas J. Amato, CRE
RECI
REAL ESTATE COUNSELORS INTERNATIONAL, INC.
Mary Claire Sparrow
1
TABLE OF CONTENTS
Preface
Letter of Transmittal
Table of Contents
Executive Summary
Section I
THE ASSIGNMENT
Scope of Work
Objective
Client
Intended Use
Intended Users
Property Identification
Limiting Conditions and Assumptions
Hypothetical Conditions and Extraordinary Assumptions
Professional Competency
1
1
2
2
2
2
2
3
3
3
Section II
THE GEOGRAPHIC ENVIRONMENT
Location
The Highwood Community
Roadways and Access
Highwood Community Amenities
Downtown Highwood /Surrounding Land Uses
4
4
4
6
7
11
Section III
THE PROPERTY
Site Redevelopment
TIF District And Subject Site Redevelopment
19
19
21
Section IV
THE MARKET ENVIRONMENT
Regional Overview
United States Economy
Chicago MSA Economy
Lake County Economy/Employment Trends
23
23
23
24
30
Section V
DRIVERS OF APARTMENT DEMAND
Introduction
The Rentership Rate Increase
The Nation’s Apartment Market
Renters by Age Group
Lake County, IL Population and Employment
Lake County, IL Migration and Commuting Patterns
Major Employment Centers in Lake County, IL
37
37
37
41
43
44
45
46
Section VI
MARKET AREA DEMAND/SUPPLY
Overview of Metro Chicago Apartment Market
Apartment Market Area Definition
Lake County and Market Area Apartment Deliveries
52
52
53
56
Section VII
MARKET AREA APARTMENT DEMAND
Market Area Demographics
Market Area Housing
Primary/Secondary Market Area Renter Demand
Geodemographic Analysis of Market Area Households
Competitive Alignment and Rental Survey
Primary Market Area Demand Outlook/Absorption
Unit Mix and Rental Rates
60
60
61
63
66
68
74
77
Section VIII
FINDINGS/CONCLUSIONS
Findings/Conclusions Summary
82
82
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2
ADDENDA
Subject Property/Neighborhood Photos
Potential Renter Household Targets
Competitive Survey
Limiting Conditions and Assumptions
Certification
Qualifications
RECI
3
EXECUTIVE SUMMARY
Assignment
As determined by the consultant, with input from the client, the assignment
was to prepare a market feasibility analysis for a 28 unit apartment
development located on a site in downtown Highwood, Illinois.
Property Location
The subject development is planned for a 0.45 acre parcel located at the
southwest quadrant of Washington Avenue and Green Bay Road in
Highwood, Illinois. The property is presently vacant after a fire in 2009
destroyed the Victoria of Highwood banquet hall in 2009. According to the
developer, the recognized address for the property is 544-546 Green Bay
Road, Highwood, Illinois 60040 and is located in the Lake
County/Kenosha County Metropolitan Division.
Summary of Findings
Even before the U.S. economy fell into recession a watershed change was
emerging with respect to demand for rental housing in the United States.
The nation's homeownership rate actually began declining in 2005. The
conditions brought about by the Great Recession and post-recession period
prompted a renewed appreciation for the benefits of renting. Nationally,
households of all but the oldest age groups have joined in the shift toward
renting.
Chicago MSA employment is projected to continue to exhibit gains
throughout the forecast period, though growth is forecast to lag somewhat
behind the national average. Meanwhile, Lake County job growth has been
fueling the demand for renter housing for some time. Over the last four
decades, Lake County was transformed into a major employment center of
the region, with most of the development occurring in the southeast portion
of the county. Migration and commuting patterns are also contributing to
the demand for rental housing in the county.
The tightest apartment market conditions in eastern Lake County’s recent
history have been exhibited in recent years. The defined Primary Market
Area has a total inventory of 2,297 apartment units (and 3,939 total rental
units). At the end of the 1st quarter 2016, the vacancy rate in the Primary
Market Area was only 3.5%. The average monthly effective rent was $1,724
or $1.90 per square foot in the 1st quarter. For nearly the past 10 years,
there were very few apartment units delivered in this market area until
recently.
The high apartment occupancy rates and recent strong growth in rents in
the Primary and Secondary Market Areas indicate apartment demand
continues to exceed supply and suggests that rental unit demand is presently
not being met. This view is supported by: (1) the capture rate analysis that
suggests that the subject property needs to capture only about 7% to 13% of
qualified renter demand to be leased–up; and (2) a demand/supply forecast
that suggests the delivery of as many as 363 apartment units (total of all
apartment projects that are under construction or proposed in the Primary
and Secondary Market Areas) will be able to be absorbed after an initial
spike in the vacancy rate in the Primary Market Area.
RECI
4
RECI forecasts that the vacancy rate will rise to between 4% and 6% as a
result of the delivery of units under construction or proposed as of March
2016. If additional units are developed in the Primary Market Area through
2018, the vacancy rate could rise above 6%.
Over the last four years (1st quarter 2012 to 1st quarter 2016), the average
effective rent has increased by nearly 11% in the Primary Market Area,
despite the delivery of two large apartment developments built just outside
the Primary Market Area boundaries. Unit absorption at two of the largest
properties (Woodview Apartments and Amli Deerfield Apartments), have
been strong.
Three potential sources of demand for apartments in downtown Highwood
include: (1) renter households that work in downtown Highwood, downtown
Lake Forest, Downtown Highland Park or other downtowns along the
Metra line in Cook County; (2) renter households presently residing in older
rented condos or apartments in the Highwood, Highland Park and Lake
Forest communities that that may be more suited to newly constructed
apartments; and (3) renter households residing in northern Cook County
who work north of the Northbrook/Deerfield area, who presently commute
by commuter train or vehicle.
Using the PRIZM geodemographic database, we have identified a rather
diverse mix of household types for apartments in downtown Highwood. In
fact, the Primary Market Area contains a very diverse mix of household
types. We have identified 10 household types or market segments that we
believe contain a significant number of households that are either renters or
given the opportunity, would become renters at a future stage in their lives.
The household types include singles and couples, mostly without children.
Potential target households may include 25-35 year olds, singles and couples
in their late 30s and 40s, as well as older folks, including empty nesters.
These households span a range of affluence that may include some
considered to be Lower-Middle income, but mostly Midscale, Upper
Middle, Upscale and some households that may be considered Wealthy.
In view of the targeted demand segments, we believe that one bedroom and
two-bedroom units should represent roughly 40% to 50% and 50% to 60%
of total units, respectively.
Based on the data that we have available to us, we have concluded a
monthly absorption rate range for the subject property to be six to nine units
per month. This absorption rate range implies that a 28 unit apartment
project would be leased to 95% (i.e., 27 units) between three and four
months.
We have concluded that the target weighted average per square foot rental
rate range for the 28 apartment units developed on the subject property
should be in the range of $1,693 to $1,814 in today’s dollars. This equates to
an average monthly rental rate of $1.88 to $2.02 per square foot.
Observation Date:
March 22, 2016, April 6, 2015 and April 12, 2016.
Report Date:
April 29, 2016
RECI
5
SECTION I - THE ASSIGNMENT
SCOPE OF WORK
In preparing this report, we completed the following scope of work plan:

identified the objective of the assignment;

identified assignment elements, including the client, the subject
property, its relevant characteristics, the intended users and the intended
use of our opinions and conclusions;

identified the specific assignment conditions, including any special
assumptions, extraordinary assumptions, hypothetical conditions,
supplemental standards, jurisdictional exceptions, and any other
conditions that affect the scope of work;

identified the property by addresses and described its location and
neighborhood;

observed the subject property and surrounding neighborhood on March
22, 2016, April 6, 2015 and April 12, 2016;

analyzed the economy and employment base of the Lake County,
IL/Kenosha County, WI Metropolitan Division and the Chicago;

identified centers of employment in Lake County using employment
statistics available from the Illinois Department of Employment Security
and concentrations of office, industrial and retail space;

evaluated retail, office and residential development trends in eastern
Lake County, Illinois;

evaluated metro Chicago apartment market statistics, especially those
associated with southeastern Lake County, Illinois, including vacancy,
absorption, deliveries and change in market average rent;

delineated an apartment market area (i.e., a Primary and a Secondary
Market Area); representing the geographic area that contains the
apartment units and broader residential inventory that will most directly
compete with the apartment units developed at the subject property;
and the employment centers that will generate demand for new
apartments developed at the subject property;

reviewed demographic and housing trends for the city of Highwood,
Lake County and the Primary and Secondary Market Areas;

evaluated demand/supply dynamics for apartments in the Chicago
MSA and the Primary and Secondary Market Areas;

surveyed 17 apartment/rental properties located in and around the
Primary and Secondary Market Areas, including five Class B/C
properties, eight Class A apartment communities and four Class A
condo/townhome rental properties;
.
RECI
6

established the “market” rents for the subject property’s three unit types
based on the rents, location and characteristics of the property’s
surveyed;

reviewed the unit mix and unit sizes of recently developed apartments as
well as properties currently under construction;

evaluated average monthly absorption rates of other urban/infill
apartment properties and forecast an absorption rate for the subject
property;

forecast absorption and vacancy the Primary Market Area; and

quantified rental housing unit demand through a capture rate analysis of
rental units in the Primary and Secondary Market Areas.
Market research of national, regional and local economic and market
conditions was prepared from our analysis of public and private data
sources. These sources include demographic and housing data from the
U.S. Census, Neilsen, ERSI, S&P/Case-Shiller Home Price Index;
employment data from the United States Bureau of Labor Statistics,
Moody’s Analytics and the Illinois Department of Employment Security;
apartment market statistics available from CoStar and other sources.
Comparable rental information was gathered from both public and private
sources and local property managers/operators.
OBJECTIVE
As determined by the consultant, with input from the client, the assignment
was to prepare a market feasibility analysis for a 28 unit apartment
development located on a site adjacent to downtown Highwood, Illinois.
The subject property is planned for a 0.46 acre parcel located at the
southwest quadrant of Washington Avenue and Green Bay Road in
Highwood, Illinois. The recognized address for the property is 544-546
Washington Avenue, Highwood, 60040 and is located in the Lake
County/Kenosha County Metropolitan Division.
CLIENT
Fides Capital Partners
INTENDED USE
This report is for use by the client and other specified users to establish
rental apartment absorption and market rent parameters for the subject
property as part of an evaluation of rental apartment demand. This report
is not intended for any other use. The “readdressing” (transfer) of this
report, or the consultant’s opinions and conclusions, to any party, other than
the named client and its intended users, is prohibited. The consultant is not
responsible for the unauthorized use of this report.
INTENDED USERS
Fides Capital Partners, LLC, the City of Highwood and prospective lender,
as determined by the client.
PROPERTY
IDENTIFICATION
The recognized address for the property is 544-546 Washington Avenue,
Highwood, 60040. The Subject Property is designated for tax purposes with
the following Property Identification Numbers (PIN): 15-16-207-027 and 1516-207-011.
RECI
7
LIMITING CONDITIONS
AND ASSUMPTIONS
HYPOTHETICAL
CONDITIONS AND
EXTRAORDINARY
ASSUMPTIONS
PROFESSIONAL
COMPETENCY
This report is subject to the general limiting conditions and the specific
assumptions stated in this report. Please see the list of limiting conditions
and assumptions contained in the Addenda, as they represent an integral
part of the research process and conclusion.
A hypothetical condition is a condition, which is contrary to what exists, but
is supposed for the purpose of analysis, and an extraordinary assumption is
an assumption, directly related to the assignment, which, if found to be false,
could alter the consultant’s opinions or conclusions. In this instance, we
make three extraordinary assumptions. First, we assume that the United
States economy and the Lake County, Illinois/Kenosha County, Wisconsin.
Metropolitan Division continue their recovery from the Great Recession and
overall economic growth mirror’s the economic forecasts as prepared by
Moody’s Analytics in March 2016. Second, we assume that the unit
absorption rates calculated at other similar urban/infill properties located in
the Chicago market are reasonable indicators of the potential lease-up rate
associated with the subject property’s 28 apartment units. Third, we assume
that the number of units presently forecast for delivery in the Primary and
Secondary Markets will not deviate materially for our current estimates.
Our knowledge and previous experience in evaluating this property type
qualifies us to competently complete this assignment. Please see the
consultant’s professional qualifications in the Addenda for additional
information.
RECI
8
SECTION II-THE GEOGRAPHIC ENVIRONMENT
LOCATION
The city Highwood is located approximately 28 miles north of downtown
Chicago in Lake County, Illinois. Incorporated as a city in 1868, Highwood
is part of the Chicago-Naperville-Joliet, IL-IN-WI MSA. The metropolitan
area contained approximately 9.6 million persons in 2015 and had an
employment base of just over 4.6 million workers in the 4th quarter 2015. As
shown in Figure 1, Highwood is positioned roughly in the middle of the
Lake County portion of the “North Shore”, the suburban communities
which extend northward along Lake Michigan from the city of Chicago.
FIGURE 1: LOCATION OF CITY OF HIGHWOOD, IL
Source: DeLorme Street Atlas USA
THE HIGHWOOD
COMMUNITY
Highwood sits at a one of the highest elevation points between Chicago and
Milwaukee, and was named for this high elevation and towering trees.
Highwood is a small city, covering less than one square mile of land.
Highwood was incorporated at the same time as the former Fort Sheridan
Army Post, which was situated just east of Highwood, along the shores of
Lake Michigan. Highwood’s identity as a hub for entertainment and dining
pre-dates the establishment of Fort Sheridan, but its proximity to this
military installation served to solidify this local function, as the presence of
the USO in Highwood during World War II brought thousands of
servicemen to the community. The image of the community as a focal point
for entertainment and dining continues today, due to its geographical
position at the center of the North Shore’s most affluent communities.
While Fort Sheridan’s function as Highwood’s closest neighbor changed
drastically when the main fort was officially closed in the early 1990’s, a
small military presence remains, as approximately 90 acres of the southern
portion of the site was retained by the military. Military functions remain
through the current Sheridan Reserve Center complex, and new
construction is ongoing with attractive office structures replacing antiquated,
obsolete remnants of the base.
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9
Open lands and forest preserves took other portions of the Fort Sheridan
land, while historically and architecturally significant barracks and
residences were renovated, redeveloped and now serve as condominium,
townhome and single-family residences owned or rented by civilians.
Since the closing of Fort Sheridan Army Post, annexation agreements
between the military and the neighboring cities of Highwood, Highland
Park and Lake Forest increased the municipal boundaries of Highwood and
Highland Park.
Highland Park now almost completely surrounds
Highwood, bordering the city on the north, south and west, and most
portions of its eastern city limits as well. The affluent suburb of Lake Forest
is situated nearby to the north, and other neighboring communities include
Bannockburn, Deerfield and Northbrook.
Highwood’s municipal
boundaries are shown in Figure 2.
FIGURE 2: CITY OF HIGHWOOD MUNICIPAL BOUNDARIES
Source: Google maps
In addition to its identity as an entertainment and dining hub, Highwood
grew as a working class suburb, chosen by waves of first Italian and later
Hispanic immigrants seeking affordable residential choices within the
affluent north shore enclave. In part due to the annexation of portions of
Fort Sheridan, wherein residents with higher incomes moved into the new
residences created when the area was redeveloped, Highwood now displays
what real estate developers and commercial enterprises consider as “strong
demographics.” Highwood’s 2015 average household income, at $98,577,
while lower than that of its elite suburban neighbors, is over 25% higher
than the state average, and 32% higher than the national average household
income.
Population density is high, at 5,680 persons per square mile. As Figure 3
below shows, Highwood’s population density is well above that of its
neighbors or any other north shore community. Aside from the blighted
community of North Chicago, Highwood also has the highest percentage of
renter-occupied units, at 60.2%.
RECI
10
In addition to the older one and two- story single-family residences which
dominate Highwood’s residential neighborhoods, there are also many areas
developed with two-to four-unit multi-family dwellings, mostly dating to the
1960’s through 1980’s, as well as one large garden apartment property,
known as Fort Sheridan Place, which is located just northeast of the subject
property, along Sheridan Road.
FIGURE 3: DEMOGRAPHIC TRENDS AND CRIME STATISTICS FOR NORTH
SHORE COMMUNITIES
Area
Highwood
Highland Park
Lake Forest
2015
Population
5,680
29,880
19,505
2015
2015 - 2020
2015
Percentage
Annual
Average
of RenterPopulation Household
Occupied
Change
Income
Units
0.59%
$98,577
60.2%
0.09%
$174,019
19.3%
0.20%
$219,068
14.7%
2015
Population
Per Square
Mile
5,680
2,490
1,135
2013/2014
Average
Crime Rate
Per 100,000
918
1,174
807
North Chicago
30,503
-0.18%
$59,376
64.4%
3,861
2,194
Lake Bluff
5,746
0.04%
$202,550
12.6%
1,419
833
Knollwood
1,580
-0.38%
$90,796
34.7%
2,376
N/A
Green Oaks
3,873
0.09%
$173,361
4.9%
963
N/A
Libertyville
20,446
0.21%
$146,183
22.2%
2,321
1,256
Vernon Hills
25,858
0.04%
$127,109
27.9%
3,354
1,999
Deerfield
18,271
0.07%
$191,691
12.8%
3,274
698
Northbrook
33,431
0.21%
$162,407
14.0%
2,535
1,273
Glencoe
8,746
0.09%
$267,952
8.9%
2,351
953
Winnetka
12,270
0.18%
$262,449
12.2%
3,220
964
Kenilworth
2,567
0.35%
$306,327
7.0%
4,208
1,273
Total North Shore
428,850
0.25%
$145,594
24.5%
-N/A
State of Illinois
12,917,613
0.21%
$78,861
34.9%
223
N/A
United States
318,536,439
0.75%
$74,699
37.0%
32
N/A
Source: ESRI, 2015 Illinois Uniform Crime Report and Real Estate Counselors, International
Note: Communities shown are part of the North Shore as defined by the MLS. Not all North Shore communities are included.
Anticipated growth in population is slightly higher in Highwood than
surrounding communities. Highwood’s population is projected to grow at
0.59% annually between 2015 and 2020. This projected annual growth rate
is more typical of the United States as a whole, which is projected to grow
0.75% annually through 2020, than the North Shore, which is projected to
grow 0.25% annually over the same time period, approximately one-half
Highwood’s projection.
ROADWAYS AND
ACCESS
Highwood is bisected by the Metra’s North Line railroad, as well as by both
Sheridan Road and Green Bay Road. The presence of the Metra North
Line, which provides direct access to downtown Chicago, is viewed as a
significant benefit to residents seeking transit-oriented residential options.
Sheridan Road and Green Bay Road are significant north-south
thoroughfares throughout the North Shore, but in Highwood, they form the
framework of commercial development, and define the downtown area.
U.S. Route 41 is located just over a mile west of downtown Highwood, and
Interstate 94 is accessible just over four miles west, via Half Day Road,
which is known as Prairie Avenue throughout most of Highwood. This
arterial is located in the southern portion of the city, and provides
convenient access to U.S Route 41.
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Despite Highwood’s identity as an entertainment and restaurant destination,
traffic and congestion are fairly limited within the area. Figure 4 below
shows traffic volumes in Highwood and the surrounding communities.
FIGURE 4: HIGHWOOD ACCESSIBILITY AND TRAFFIC VOLUME COUNTS
Source: IDOT and Real Estate Counselors International, Inc.
The lack of traffic congestion contributes to Highwood’s appeal for
residential uses, and to its continued choice as a location for restaurant and
entertainment venues. Parking is generally adequate, although at peak
demand periods, can be lacking, and city officials are addressing this deficit
as part of their on-going planning efforts. Just as importantly, the lack of
congestion and high traffic volumes, but also owing to its compact built
environment, allow for and encourage easy pedestrian access. Two Metra
stops, one located in the center of the downtown district, enhance the
pedestrian access, as well as overall access to the community for both
residents and patrons of the dining and entertainment opportunities.
HIGHWOOD
COMMUNITY
AMENITIES
Analysis of the community amenities located in and around Highwood
confirms the city’s standing as a resource for the North Shore for dining and
entertainment options. Figure 5 below lists by category the local offerings of
community amenities.
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FIGURE 5: COMMUNITY AMENITIES
Map # Category and Name
Location
Recreation, Dining and Entertainment
Miramar Bistro
Froggy's French Café
210 Restaurant
Del Rio Restaurant
Wooden Nickel
Teddy O'Brian's
Cellar Gate Wine Market & Bistro
The Art of Beer
Curry Hut Alex's Washington Gardens
Longitud315
Isaac & Moishe Restaurant & Grocery
La Casa De Isaac
Nieto's
Nite N' Gale
Mean Wiener
Clucker's Charcoal Chicken
Tacos El Norte
Buffo's
Jay Lovell's
Barrel Crossing Tap & Grill
Improv Playhouse
Ravinia Festival
Highwood Bocce Courts
School of Rock
Highwood Recreation Center
Highwood Public Library
Everts Park
Exmoor Country Club
Highland Park Country Club
Sanctuary Yoga
Fort Sheridan Forest Preserve
301 Waukegan Avenue
306 Green Bay Road
210 Green Bay Road
228 Green Bay Road
444 Lakeview Avenue
432 Sheridan Road
524 Sheridan Road
552 Sheridan Road
410 Sheridan Road
256 Green Bay Road
315 Waukegan Avenue
311 Waukegan Avenue
413 Temple Avenue
429 Temple Avenue
346 Sheridan Road
532 Sheridan Road
760 Sheridan Road
110 Washington Avenue
431 Sheridan Road
766 Sheridan Road
260 Green Bay Road
1991 Sheridan Road
418 Sheridan Road
440 Bank Lane
9 Prairie Avenue
428 Green Bay Road
102 Highwood Avenue
111 North Avenue
700 Vine Avenue
1201 Park Avenue West
502 Sheridan Road
Old Elm & Simmonds Way
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highland Park
Highland Park
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
Highland Park
Highland Park
Highwood
Highwood
Highwood
Highwood
Highwood
Highland Park
Highland Park
Highwood
Fort Sheridan
240 Prairie Avenue
720 Elder Lane
945 North Avenue
433 Vine Avenue
432 Green Bay Road
878 Lyster Road
523 Bank Lane
760 E. Westleigh Road
1500 West Kennedy Road
555 N. Sheridan Road
Highwood
Deerfield
Highland Park
Highland Park
Highwood
Highwood
Highwood
Lake Forest
Lake Forest
Lake Forest
1025 W. Everett Road
777 Park Avenue West
50 Pleasant Avenue
660 N. Westmoreland Road
Lake Forest
Highland Park
Highwood
Lake Forest
520 Green Bay Road
485 Sheridan Road
320 Waukegan Avenue
2503 Waukegan Road
1812 Green Bay Road
4 Deerfield Road
25901 Riverwoods Road
445 Sheridan Road
531 Bank Lane
43 Highwood Avenue
259 Waukegan Avenue
9 Highwood Avenue
433 Waukegan Avenue
Highwood
Highwood
Highwood
Bannockburn
Highland Park
Highland Park
Lake Forest
Highwood
Highwood
Highwood
Highwood
Highwood
Highwood
NEC Green Bay & North Avenue
461 W. Old Elm Road
Highwood
Highwood
Education
Oak Terrace Elementary School
Holy Cross School
Northwood Junior High School
Highland Park High School
The Performer's School
Midwest Young Artists (MYA)
Vitrychenko Academy
Woodland Academy of the Sacred Heart
Lake Forest Academy
Lake Forest College
Health Care
Lake Forest Acute Care
Highland Park Hospital
Aperion Care Highwood
Northwestern Lake Forest Hospital
Shopping and Services
Poeta's Food Market
La Union Supermarket
Walgreens
Heinen's
Sunset Foods
Jewel‐Osco Costco
The Viti Companies
Anna's Mostly Mahogany
Gallery KL
Consignments, Etc
The Find
Bent Fork Bankery
Transportation
Metra ‐ North Line Highwood Station
Metra ‐ North Line Fort Sheridan Station
North Shore Bike Path
Sources: Real Estate Counselors International, Inc. Field Survey, April 2016
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The amenity mix includes a substantial number of restaurants and
entertainment options, a testament to the prominence Highwood has
continued to serve as a dining and entertainment draw from neighboring
suburbs and beyond. Figure 6, below, shows the tight clustering of the
recreation and entertainment offerings in Highwood’s downtown district.
FIGURE 6: COMMUNITY AMENITIES
Source: Real Estate Counselors International, Inc.
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Restaurants and venues continue to open in the city, either re-purposing
existing structures, or demolishing them and building new from the ground
up. A new music venue has just broken ground at the former Bertucci’s
restaurant site, at 246 Green Bay Road, which will feature musical
entertainment, as well as secondary events like live band karaoke or sportsviewing events. The former bowling alley at 210 Green Bay Road is being
redeveloped as a restaurant and comedy club. These new venues add to the
draw already spurred by the School of Rock, on the south side of Prairie
Avenue, just west of Green Bay Road, as well as Highwood’s myriad local
outdoor festivals. Highwood’s Evening Markets are unique on the North
Shore, drawing residents from neighboring communities every Wednesday
evening throughout the summer months for dinner, cocktails, and live
music.
Highwood’s complement of grocery and other neighborhood service
offerings is fairly limited. Large format retail shopping areas are situated at
positions outside of Highwood, in the neighboring communities of Highland
Park and Deerfield, although their distance is not as substantial as to serve as
a deterrent to residential development in Highwood.
A new grocery amenity is expected to open with the completion of the Hotel
Moraine redevelopment. The new project will include 104 independent
living units and is expected to be completed in the fall of 2016.
DOWNTOWN HIGHWOOD
AND SURROUNDING
LAND USES
Highwood’s core of downtown commercial development is centered
between Sheridan Road on the east and Green Bay Road on the west, a one
block wide sliver of property which extends approximately six blocks long,
from Washington Avenue on the north, to Prairie Avenue on the south.
Development is marked by mostly two and three-story brick buildings, some
historic, with store-front retail offerings on the first floor, and office and
apartments above. Downtown parking is located primarily at the rear of the
retail storefronts, with alleyways facilitating access. Figure 7 below shows
the outlines of structures in light gray, with parking highlighted in darker
gray, and the boundaries of the subject property outlined in yellow. The
Metra station is located three blocks south.
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FIGURE 7: DOWNTOWN HIGHWOOD
Source: Lake County GIS Maps and Real Estate Counselors International, Inc.
The subject property is currently vacant land, situated at the southwest
corner of Green Bay Road and Washington Avenue, and as such is situated
just outside the core downtown district. The site was previously improved
with a restaurant known as Scornavacco’s which was destroyed by fire and
subsequently demolished.
This area, while located in proximate to downtown Highwood, is more
residential in nature than the core downtown district and is largely
developed by a mixture of single-family and multi-family homes. These are
mostly mid-century construction. Along Green Bay Road, some service uses
are situated in a mixture of commercial and residential properties. Further
to the east, a variety of commercial and restaurant uses are situated in a
small strip center and older two-story structures. The Fort Sheridan Place
apartments, a mid-rise apartment complex, is located caty corner to the
northeast, from the subject property, but is accessible from Sheridan Road,
approximately one block north. A variety of older one and two story
buildings line the opposite, eastern side of the Metra rail line, and while this
area has been the subject of redevelopment efforts, these efforts were
recently thwarted, due to the difficulty of assembling all necessary parcels.
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The subject property, situated as it is along Green Bay Road, one of
Highwood’s main thoroughfares, has good local access. Green Bay Road a
two-lane road which flows north and south, and has parallel street parking
on both sides of the street beginning approximately two blocks south of the
subject property. Due to the previous use of the subject property as a
restaurant site, approximately 20 angled parking spaces have been demised
on a paved area between Green Bay Road and the Metra line. Green Bay
Road is curbed, with a sidewalk along the western side of the road.
Green Bay Road terminates three blocks north of the subject property,
which serves to limit traffic volumes in this area, and contributes to the
desirability of the location for residential use.
The subject property also borders on Washington Avenue, a two-lane, eastwest curbed thoroughfare, which becomes known as Old Trail Road as it
extends into Highland Park, approximately three blocks west of the subject
property. Old Trail Road terminates another six blocks beyond this to the
west, where it would run into the Old Elm Country Club, a male-only
private golf club, located in Lake Forest. This further serves to limit traffic
volumes, as travel along this east west route does not permit access to
Highway 41 or any other major thoroughfares.
Visibility of the site is favorable from both Green Bay Road and Washington
Avenue, owing in part to a slightly higher elevation at this intersection, than
the immediately surrounding area. However, Washington Avenue does
provide crossing over the Metra Line, just across the street from the subject
property, and this is only one of two crossings in Highwood.
Opportunity for Growth
in Downtown Highwood
According to CoStar, the city of Highwood contains an inventory of
approximately 425,000 square feet of retail, office and industrial buildings.
The vast majority of this space (estimated at about 80%) is accounted for by
retail/eating and drinking establishments. The city has historically been a
draw for dining and entertainment on the North Shore and is located along
a heavily traveled Metra line, though the housing inventory, especially the
inventory of rental units has not kept pace with trends exhibited in many
suburban downtowns in the metro Chicago area. Since the 1990s, many
suburban municipalities in the metro area have created incentives for
developers to build retail/eating and drinking establishments facilities and
residential units (i.e., mostly residential condominium units in the 1990s
through 2008, and only recently rental apartments.) The objectives of most
of these redevelopment initiatives have typically centered around transit
oriented development and creation of 24/7 neighborhoods.
Over the last 30 years, RECI has consulted on such initiatives with
municipal officials in many suburban downtowns, including St. Charles,
Oak Park, Wilmette, and Joliet. Our experience has been that the most
challenging element of the desired mix of residential and retail/eating and
drinking establishments has been the latter. The city of Highwood already
has a critical mass of these businesses, which will be enhanced with new
residential development. Judging from the experience of many
municipalities in the metro area, eventually an increase in the number of
residents living in downtown housing supports the expansion of the
retail/restaurant base.
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The city of Highwood contained 1,097 occupied rental units in 2015
according to ESRI. Costar Group, Inc. reports on approximately 322 of
the total rental units, as indicated in Figure 8. Clearly this table does not
represent the lion’s share of rental units in the city. However, the properties
listed in the table suggest that the rental units in Highwood are older and
smaller in size than institutionally-owned (i.e., owned by REITs, pension
funds and insurance companies) in Lake County. Data from the 2010-2014
American Community Survey for the city of Highwood tells us that the
majority of rental units fall into the size category of two unit buildings to 19
unit buildings.
FIGURE 8: REPRESENTATIVE RENTAL PROPERTIES IN HIGHWOOD
#
B ui l d i ng A d d re s s
1
6 3 4 Sherid an Rd (Fo rt Sherid an Place)
2
13 1 Pleas ant Ave
C o S t ar
B ui l d i ng
C l a s s R a t i ng
N umb e r O f
U ni t s
19 70
B
2 52
NA
B
12
Y e a r B ui l t
3
54 8 -552 Sherid an Rd
NA
C
12
4
17-2 1 Web s t er Ave
19 55
C
12
5
74 0 Sherid an Rd
NA
C
9
6
13 -15 Web s t er Ave
19 54
C
9
7
11 Walker Ave
19 4 7
C
7
8
2 0 Web s t er Ave
19 2 3
C
5
9
8 Walker Ave
19 10
C
To t a l
4
322
So even though the city of Highwood has approximately 60% of its occupied
units classified as rental units, this inventory is void of any significant
number of modern dwelling units that represent a true complement to both
the cluster of commercial activity and the Metra commuter line.
In summary, downtown Highwood represents a “frontier” of sorts, a
commercial district that is ripe for new rental residential units.
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SECTION III - THE PROPERTY
SITE
REDEVELOPMENT
The subject property is currently vacant land, situated at the southwest
corner of Green Bay Road and Washington Avenue, as shown in the map
below, and is being considered for redevelopment into multi-family
residential apartment use with 28 dwelling units. Figure 9 below shows the
location of the redevelopment site.
FIGURE 9: LOCATION OF REDEVELOPMENT SITE
Source: Lake County and Real Estate Counselors International, Inc.
The site is currently zoned B-1, Retail Business, by the city of Highwood, as
shown in Figure 10. This zoning classification allows for a wide variety of
retail and other business uses. According to the existing zoning code,
residential use would not permitted on the first floor of structures located
within a business district along Green Bay Road from Burtis Avenue to
Washington Avenue, which includes the subject property. However,
according to the City Manager, Scott Coren, the subject property, like other
sites within the Highwood TIF Area 1, would be considered for a PUD that
would allow for development of a multi-family project.
In September, 2014, the Highwood City Council adopted The Highwood
Downtown Projects Guidebook as an addendum to the 2012 Official
Comprehensive Plan of the City of Highwood.
The Guidebook included a Land Use Framework plan for central portions
of Highwood. Three main districts were delineated in this plan, and are
outlined on the map on the next page, in Figure 11.
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FIGURE 10: ZONING
NEIGHBORHOOD
CLASSIFICATIONS
IN
SUBJECT
PROPERTY
Subject Property
Sources: City of Highwood Zoning Map and Real Estate Counselors International, Inc.
FIGURE 11: LAND USE FRAMEWORK PLAN – DOWNTOWN DISTRICTS
Sources: City of Highwood Downtown Projects Guidebook and Real Estate Counselors
International, Inc.
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20
The overarching theme of this plan was to leverage Highwood’s identity as
an entertainment and dining destination, and make it a desirable residential
choice, especially for younger people, and thereby strengthen Highwood’s
image, and improve its neighborhoods.
The subject property is situated within the Green Bay Road District. This
area, situated on the western edge of Highwood’s downtown area, provides a
supporting role to the core commercial function of downtown Highwood.
The Land Use Framework Plan called for the addition of office and
residential buildings to this district. Mixed use buildings, with apartments
above ground floor office or retail, are suggested by the Guidebook, for uses
along Sheridan Road and Green Bay Road, with heights to vary from three
to four stories. Three stories are suggested for Green Bay Road sites.
TIF
DISTRICT AND
SUBJECT SITE
REDEVELOPMENT
PLAN
The subject property is situated within the boundaries of Highwood’s Tax
Increment Finance Area 1, or TIF district. The boundaries of the TIF
district are shown in Figure 12 below.
FIGURE 12: HIGHWOOD TAX INCREMENT FINANCE AREA 1
Source: Lake County
The Highwood TIF district was established in 2002 and is set to expire in
2025, although an extension of this time frame may be allowed through
legislation.
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Typically, during the life of the TIF district, property values are frozen for
the purposes of distributing tax dollars to schools and other governments.
Several properties have been constructed within the Highwood TIF district
since its establishment, including the Walgreens and neighboring U.S. Bank
building, located at the northwest corner of Highwood Avenue and
Sheridan Road, as well as the two-story Viti Insurance Building, located at
the northwest corner of Webster Avenue and Sheridan Road. Developers
seeking TIF monies must prove that if not for the TIF assistance, the
development would not be financially feasible. According the Scott Coren,
a 52-unit apartment building was recently approved in Highwood for 440
Green Bay Road, and this site would fall within the TIF District.
A major mixed-use development on land situated south of Washington
Avenue between the Metra line and Sheridan Road was proposed to include
about 200 units. However, according to Scott Coren, the project, which was
to be part of the TIF District, has been scrapped, a result of the developer’s
inability to assemble all of the necessary parcels.
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SECTION IV - THE MARKET ENVIRONMENT
REGIONAL OVERVIEW
The subject property is located in the city Highwood, Lake County, Illinois
in the Lake County, Illinois/Kenosha County, Wisconsin Metropolitan
Division, which is part of the Chicago Metropolitan Statistical Area (MSA).
The Chicago-Naperville-Joliet, IL-IN-WI Metropolitan Statistical Area
(MSA),contained nearly 9.6 million persons in 2015, and makes it the third
largest metropolitan economy in the United States. The Chicago MSA
consists of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake,
McHenry and Will counties in Illinois; Jasper, Lake, Porter and Newton
counties in Indiana; and Kenosha County in Wisconsin.
The Lake County, Illinois and Kenosha County, Wisconsin Metropolitan
Division, contained over 703,000 persons and 419,000 jobs in 2015 and
consists of Lake County, IL and Kenosha, WI.
UNITED STATES
ECONOMY
The Great Recession ended in June 2009 and this past July 2015, was the
6th anniversary of the beginning of the U.S. economic expansion. Moody's
Analytics points out that this national expansion is already longer than the
average expansion since World War II. They contend that prospects are
good that this will be one of the longer expansions in the nation's history.
GDP is forecast to increase to have increased at 2.4% in 2015, 2.3% in 2016
and 3.1% in 2017.
FIGURE 13: HISTORICAL AND FORECAST QUARTERLY CHANGE IN
UNITED STATES GROSS DOMESTIC PRODUCT
8.0%
GDP Annualized Percentage Change 6.0%
4.0%
2.0%
0.0%
‐2.0%
‐4.0%
‐6.0%
‐8.0%
‐10.0%
Year/Quarter
Sources: United States Bureau of Economic Analysis, Moody’s Analytics and Real Estate Counselors
International, Inc.
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According to the U.S. Bureau of labor Statistics, the U.S. economy created
over 2.7 million jobs in 2015. The private sector has consistently added to
payrolls for nearly six years, the longest string of consecutive gains on
record. According to Moody's Analytics, if the recent pace of growth is
sustained, the economy will be back to full employment by mid-2016.
Moody's Analytics believes that even after wage growth revives, it will be
some time before this translates into a significant increase in inflation. The
remaining slack in the labor market is already quickly being absorbed, as the
economy continues to grow. The estimated underemployment gap - the
percent of the labor force that is underemployed - has fallen below 1%.
Wage gains are finally accelerating, consistent with the fast-tightening job
market. Both average hourly earnings and wages as measured by the
employment cost index have accelerated noticeably over the past year or
more. The wage pickup is especially strong in industries and regions of the
country that have already returned to full employment.
Full employment and stronger wage growth will induce an increase in
household formations. Household formations slowed sharply during the
Great Recession. According to Moody's, between mid-2007 and mid-2012,
formations were running near 500,000 per year. They forecast that in a
typical year given the growth in the population and the population's age and
ethnic distribution, formations should be closer to 1.15 million per annum.
The stronger U.S. dollar, which, according to Moody's, is up about 15% on
real broad trade-weighted basis over the past year, is indeed a drag on
growth. Acknowledging that the nation's manufacturing base is taking the
brunt of the weaker trade balance, industrial production continues to
increase and manufacturing employment continues to remain stable.
According to Moody's, record vehicle sales and production and stronger
construction-related manufacturing have offset the negative fallout of the
stronger dollar on manufacturing and the broader economy. Finally, despite
the dollar's strength, it remains close to its average value since the collapse of
the Bretton Woods agreement and the broad adoption of flexible exchange
rates in the early 1970s.
CHICAGO MSA
ECONOMY
Chicago is fueling the state economy as strong growth in service industries
(e.g., Professional & Business Services) compensates for sluggishness in the
goods-producing arena. Faster job growth in Chicago’s urban core is
encouraging. In addition to many established large employers, Chicago’s
cluster of high-tech startups continues to expand. Most venture capital
funding in Illinois gets funneled into Chicago, and the value of investments is
the highest since the dot-com bust. The total amount of downtown office
space occupied by tech companies is growing rapidly. According to
Moody’s Analytics, even though growth in Chicago will keep the state
economy moving in the right direction, the city’s financial woes threaten to
curtail the Chicago metro division’s momentum. Chicago has done more
than the state to get its fiscal house in order, but significant challenges
remain. Driven by rising pension costs and declining state aid, Chicago’s
fiscal problems are among the most severe nationally.
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The City Council approved Mayor Rahm Emanuel's 2016 budget that will
hit Chicagoans with more than $755 million in tax and fee increases to plug
the budget shortfall. However, without some help from leaders in
Springfield, Chicago officials will be unable to make much headway toward
a long-term solution, particularly regarding its unfunded pension liabilities.
The state of Illinois longer-term outlook is tarnished primarily by its budget
woes and weak population trends, not its high costs relative to nearby states.
According to Moody’s Analytics, business costs in the state are slightly lower
than they are nationally. Costs are lower than those in Wisconsin and
Michigan but higher than those in neighboring Missouri and Indiana. Firms
in Illinois tend to pay less in taxes and their utility costs are below average,
but labor is somewhat expensive.
The Chicago MSA contains approximately 4.6 million payroll jobs. The
area has a well-educated workforce that garners high per capita incomes.
Chicago has dominated North American transportation and distribution
since the 1850s. Over the past 20 years, it has become the major crossroads
of America's burgeoning global trade.
The Chicago metro area is a world-class business center and the primary
business center of the Midwest region of the United States. Chicago's office
market is the third largest office market in the nation, eclipsed only by the
total inventory of office space in the New York/New Jersey metropolitan
region and the Washington, D.C. region.
Long recognized for being a transportation hub, Chicago has also evolved as
one of the nation's primary distribution centers and is the largest industrial
space market in the nation.
Chicago is located at the center of one of the largest trading areas in the
world - the east-west nexus joining the markets of Europe and Asia and the
north-south nexus of NAFTA. Metro Chicago has two ports capable of
handling ocean-going ships/barges, and is linked to the Atlantic via the St.
Lawrence Seaway and to the Gulf of Mexico via the Mississippi River.
However, in the short-term, weaker foreign demand, associated with the
strengthening of the U.S. dollar, will slow the rate of growth in
transportation warehousing. Moody's Analytics reports that cargo traffic
through Midway and O'Hare Airports softened at the end of 2014.
Chicago remains one of the top cities for both conventions and
domestic/foreign tourism, but the strengthening dollar will also put some of
the growth in tourism at risk since it will be more expensive for foreigners to
visit the city.
Primary drivers of the economy within the Chicago metro area include most
office-using industries, which are typically comprised of the
professional/business services firms. This sector is comprised of firms such as
computer systems design, management/scientific consulting and other
financial services-related industries.
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Employment in both Financial Services and Professional and Business
Services sector is concentrated in the Central Business District (CBD) of the
city of Chicago, though much of the metro area's employment is
concentrated in the manufacturing, retail and broader services sector
dispersed throughout the region.
The bulk of new jobs being created in Chicago are business and professional
services jobs. There has been a rapid increase in tech-related hiring in
Chicago's urban core which has been enticing workers to move downtown.
In 2014, over $1.0 billion in venture capital was invested in tech related
firms in downtown Chicago, the most since the dot.com bust, according to
Moody's Analytics. This capital infusion will result in startups being able to
more aggressively hire, and this hiring will support the downtown apartment
market. Developers have completed construction on 2,042 apartment units
in the CBD and 3,795 units in the city of Chicago in 2015, as a whole,
according to data available from CoStar.
The other major employment centers are located in the O'Hare Airport
area, northwest Cook County, central DuPage County (East/West Corridor)
and eastern Lake County, Illinois.
As shown in Figure 15, the metro area's largest employers include the U.S.
Government, Chicago Public Schools, the City of Chicago, Cook County
Government, Advocate Health Care, University of Chicago, J.P. Morgan
Chase & Co., State of Illinois, Northwestern Memorial Hospital, and
United Continental Holdings, Inc.
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Figure 14:
CHICAGO METRO AREA MAJOR EMPLOYERS
#
Largest Employers
Number of Employees
1
U.S. Government
42,887
2
Chicago Public Schools
37,406
3
City of Chicago
30,276
4
Cook County
21,795
5
Advocate Health Care
18,308
6
University of Chicago
16,197
7
Northwestern Memorial Healthcare
15,317
8
State of Illinois
15,136
9
J.P. Morgan Chase & Co.
14,158
10 United Continental Holdings Inc.
14,000
11 Walgreen Co.
13,006
12 Health Care Service Corp.
13,006
13 Presence Health
10,500
14 Abbott Laboratories
10,000
15 Northwestern University
9,708
16 Jewel-Osco
9,660
17 Chicago Transit Authority
9,510
18 University of Illinois at Chicago
9,212
19
American Airlines
0
8,900
20 Rush University Medical Center
8,273
21 AT&T
8,000
22 Wal-Mart Stores Inc.
6,981
23 Employco USA Inc.
7,409
24 AON PLC
7,335
25 Archdiocese of Chicago
2,283
Source: Crains Chicago Business, December 2015
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27
Chicago MSA
Employment Trends
As shown in Figure 15, the metro area exhibited positive job growth in all 12
quarters of 2012, 2013 and 2014, with growth continuing this upward trend
throughout most of 2015. Employment is forecast to attain pre-recession
levels by the end of the 1st quarter of 2016.
MSA employment is projected to continue to exhibit gains throughout the
forecast period, though the rate of growth is forecast to lag somewhat behind
the national average. The recent poor performance of the metro area's very
large Manufacturing and Financial Activities sectors is anticipated to be a
drag on overall job growth.
As shown in Figure 16, the Chicago metro area's unemployment rate was
5.4% in November 2015, on par with pre-recession rates of the early to mid2000s, and significantly below the peak unemployment rates of 10.4%, 9.6%
and 9.1% in 2009, 2010 and 2011, respectively, in the midst of, or just after
the Great Recession.
The unemployment rates for the United States and Illinois were 4.8% and
5.8%, respectively, in November 2015, while Cook, DuPage, Kane, Lake,
McHenry, and Will Counties exhibited unemployment rates ranging from
4.3% (DuPage County) to 6.1% (Kane County) for the same time period.
Moody's forecast models suggest that job growth in metro Chicago is
unlikely to return to its pre-recession trend in the near term. Some sectors of
the economy, such as housing and banking, are still struggling with the
residual effects of the downturn, and others, such as transportation and
distribution, face a more difficult outlook because of slower global
expansion. Downstream industries to manufacturing, which have been
prominent growth drivers during the recovery, will now face slowing foreign
demand and lower shipping volumes. Meanwhile, financial services have
suffered a setback as banks struggle to overcome various challenges.
Notwithstanding, there are several positive trends that indicate growth in
Chicago will accelerate in 2016, according to Moody's Analytics. First,
deleveraging seems to have run its course, and delinquency rates are at a sixyear low and not far from the national average. Second, households are also
enjoying a significant gain in wealth. Although still half the national
average, home equity per household has doubled from its low in metro
Chicago. Third, weaker inventory building will hurt manufacturing and the
auto industry, but slowing will be quicker to subside given that factories
export a below average share of what they produce. Fourth, a revival in the
downtown real estate market will also aid growth. A better job market and
drop in housing affordability will help extend the apartment boom, and the
first wave of new office development since the crash should give way to a
second as vacancies fall to multi-year lows and rents move higher.
Over the long-term, the Chicago MSA will benefit from: (1) major business,
distribution, transportation and financial center; (2) a huge talent pool and a
strong roster of well-respected educational institutions; and (3) a budding
high tech center in the River North area, located north of the Chicago CBD.
Moody's is forecasting manufacturing job growth to accelerate through
2016. The Construction and Professional and Business Services sectors are
projected to continue to exhibit strong growth through 2016.
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28
FIGURE 15: QUARTERLY CHANGE IN JOBS FOR THE CHICAGO MSA AND
THE UNITED STATES: 1990-2017
6%
5%
4%
Annualized Quarterly % Change
3%
2%
1%
0%
‐1%
‐2%
‐3%
‐4%
‐5%
‐6%
‐7%
‐8%
1990Q1 1992Q1 1994Q1 1996Q1 1998Q1 2000Q1 2002Q1 2004Q1 2006Q1 2008Q1 2010Q1 2012Q1 2014Q1 2016Q1
Year/Quarter
United States
Chicago‐Naperville‐Elgin, IL‐IN‐WI Metropolitan Statistical Area
Sources: United States Bureau of Labor Statistics, Moody’s Analytics, and Real Estate Counselors
International, Inc.
FIGURE 16: HISTORICAL NOVEMBER UNEMPLOYMENT RATES FOR THE UNITED
STATES, THE STATE OF ILLINOIS, THE CHICAGO MSA, COOK, DUPAGE, KANE,
LAKE, MCHENRY, AND WILL COUNTIES
12.0%
11.0%
10.0%
Unemployment Rate
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
U.S.
State of Illinois
Chicago MSA
Cook County
Kane County
Lake County
McHenry County
Will County
2013
2014
2015
Dupage County
Sources: Illinois Department of Employment Security and Real Estate Counselors International, Inc.
Note: These are non-seasonally unadjusted unemployment rates and are by place of residence.
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29
Lake County, IL/
Kenosha County, WI
Metro Division
Economy and
Employment Trends
The Lake County, Illinois/Kenosha County Metropolitan Division contains
approximately 417,000 payroll jobs. Although employment growth in the
Lake County, IL/Kenosha County, WI Metropolitan Division has been
slow so far this year, stronger rates of employment growth are forecast to
return in 2016. The employment recovery since 2010 has been uneven and
has not been on par with the United States nor the Chicago MSA, as a
whole. Nevetheless, Moody's Analytics is predicting that the metro division
will replace all the jobs lost during the Great Recession by early 2016.
Relative to the nation, four industries in this metro division - Wholesale
Trade, Manufacturing, and Professional & Business Services and Retail
Trade - exhibit higher than average shares of total payroll employment. Of
these sectors, Moody's is forecasting significant growth in the first three.
For some time, weak U.S. export demand associated with the rising value of
the U.S. dollar has been forcing manufacturing firms to downsize, which has
pushed employment growth well below the state and national average
growth rates. In addition, the drop in oil production in the U.S. and Canada
has reduced demand for heavy machinery which, in concert with the higher
U.S. dollar, has adversely impacted exports to Canada.
The uneven recovery of the Lake County, IL/Kenosha County, WI
Metropolitan Division is shown in Figure 17.
Annualized Quarterly % Change
FIGURE 17: RECENT RECESSION AND RECOVERY IMPACT ON JOB
GROWTH FOR THE CHICAGO MSA, THE LAKE COUNTY, IL/KENOSHA
COUNTY, WI METRO DIVISION AND THE UNITED STATES: 1Q2008- 4Q2016
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
‐1%
‐2%
‐3%
‐4%
‐5%
‐6%
‐7%
‐8%
‐9%
‐10%
‐11%
‐12%
Year/Quarter
United States
Lake County‐Kenosha County, IL‐WI Metropolitan Division
Sources: United States Bureau of Labor Statistics, Moody’s Analytics, and Real Estate Counselors
International, Inc.
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30
LAKE COUNTY, IL/
ECONOMY AND
EMPLOYMENT TRENDS
Lake County, Illinois was estimated to contain a total of 280,000 private
sector jobs in early 2015. Relative to the Chicago metro area, as a whole,
four private sector industries in the county – Manufacturing, Wholesale
Trade, Retail Trade and Utilities - exhibit higher than average shares of
total private sector employment. These sectors each exhibit high “Location
Quotients” in the county’s employment base.
The most dominant manufacturing industries include textiles, leather &
allied products, chemical (pharmaceuticals), plastics & rubber products,
fabricated metal products and computer & electronics. With a location
Quotient of 1.75, the Lake County manufacturing sector is 75% more
concentrated than the manufacturing sector in the broader Chicago metro
area. This usually results in county jobs being hit fairly hard during national
recessions. The Great Recession was no exception.
As shown in Figure 18, between 2008 and 2010, five employment sectors
lost the largest number of jobs in Lake County – Construction,
Manufacturing, Retail Trade, Finance & Insurance and Business &
Professional Services. Nevertheless, since 2010 and as the U.S. and regional
economies recovered, some of these Lake County sectors have exhibited
strong growth.
The sectors that have exhibited the greatest increase in jobs since 2010 (i.e.,
the bottom of recessionary trends in metro Chicago) include Construction,
Manufacturing, Retail Trade, Business & Professional Services and
Accommodations & Food Services.
FIGURE 18: RECENT JOB GROWTH TRENDS FOR THE LAKE COUNTY
ECONOMY EMPLOYMENT SECTORS: 2008 TO 2015
UNCLASSIFIED (99)
OTHER SERVICES (except PUBLIC ADMIN.) (81)
ACCOMMODATIONS & FOOD SERVICES (72)
ARTS, ENTERTAINMENT & RECREATION (71)
HEALTH CARE & SOCIAL ASSISTANCE (62)
EDUCATIONAL SERVICES (61)
ADMIN. & SUP. & WASTE MGMT. & REMED. SVCS. (56)
MNGMT. OF COMPANIES & ENTERPRISES (55)
PROFESSIONAL, SCIENTIFIC & TECH. SVCS. (54)
REAL ESTATE & RENTAL & LEASING (53)
FINANCE & INSURANCE (52)
INFORMATION (51)
TRANSPORTATION & WAREHOUSING (48‐49)
RETAIL TRADE (44‐45)
WHOLESALE TRADE (42)
MANUFACTURING (31‐33)
CONSTRUCTION (23)
UTILITIES (22)
MINING, QUARRYING, & OIL AND GAS EXTRACTION (21)
AGRICULTURE, FORESTRY, FISHING, & HUNTING (11)
‐8,000
‐6,000
‐4,000
‐2,000
0
Recovery: Change 2010‐2015
2,000
4,000
6,000
8,000
10,000
Recession: Change 2008‐2010
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31
12,000
In 2015, Lake County, Illinois jobs remain slightly behind the pre-recession
peak (2008) number of total private sector jobs. However, by mid-2016, we
expect total jobs to equal or exceed the number of jobs reported in 2008 for
the county.
As shown in Figure 19, the longer-term trend of job growth in Lake County
has been stronger than the rate of growth in the six Illinois counties that makeup the Chicago MSA. By the late 1990s and early 2000s, Lake County was
exhibiting job decentralization and growth characteristic of Du Page County
in the 1970s and 1980s.
Job growth merely flattened out in Lake County during the 2001 recession.
However, as shown, because the Great Recession was much deeper and
broader than the early 2000s recession, Lake County jobs exhibited a sharp
decline between 2008 and 2010.
Figure 20 shows that the recovery in Lake County following the Great
Recession has been slightly weaker than the recovery in the broader Chicago
MSA. This is, in part, a result of the concentration of manufacturing
employment in Lake County.
FIGURE 19: LONGER-TERM JOB GROWTH TRENDS FOR LAKE COUNTY AND
CHICAGO MSA: 1996 TO 2015
130.0
128.0
126.0
124.0
122.0
Employment Growth Index (1996 = 100.0)
120.0
118.0
116.0
114.0
112.0
110.0
108.0
106.0
104.0
102.0
100.0
98.0
96.0
94.0
92.0
90.0
Lake County
Illinois Portion of Chicago MSA
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32
FIGURE 20: RECESSION IMPACT AND RECOVERY IMPACT ON LAKE
COUNTY AND CHICAGO MSA JOBS: 2008 TO 2015
101.0
Employment Growth Index (2008 = 100.0)
100.0
99.0
98.0
97.0
96.0
95.0
94.0
93.0
92.0
91.0
90.0
2008
2009
2010
Lake County
2011
2012
2013
2014
2015p
Illinois Portion of Chicago MSA
Chicago MSA Housing
Market Conditions
During most economic recoveries since the Great Depression, an improving
housing market has led recovery of the broader economy. Not so during the
early part of this recovery. In fact, as recent as 2012, the nation's housing
market continued to place downward pressure on the recovery from the
Great Recession. According to Moody's Analytics, the decline in home
prices has impeded recovery by slowing home sales, reducing gross
metropolitan product and inhibiting labor mobility. They believe that
declines in home equity will affect critical aspects of the economy from
education to entrepreneurship and may remain a drag on U.S. growth over
the next decade.
Throughout the early to mid-2000s, annual home sales increased across the
United States at a rapid pace. According to the National Association of
Realtors, total U.S. annual volume of sales peaked in 2005 at over 7.0
million transactions of existing homes. Existing home sales fell to 6.5 million
in 2006, then to 5.0 million in 2007, continued declining in 2008 to 4.1
million. Though total sales increased slightly in 2009 to approximately 4.3
million, home sales decreased again in 2010 to 4.2 million and 2011 existing
sales equaled 2009 sales of approximately 4.3 million. The National
Association of Realtors reported 4.7 million existing home sales in 2012,
5.09 million in 2013, 4.94 million in 2014 and 5.25 million in 2015.
The home price trends shown below in Figures 10 and 11 are based upon
movement in the S&P/Case-Shiller Home Price data series. The S&P/CaseShiller Home Price Indices are designed to measure the growth in value of
residential real estate in various regions across the United States. This index
family includes 21 indices - 20 metropolitan regional indices, and one
composite index (the 20 metro areas).
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33
The index, based on initial research undertaken in the 1980s by Karl E.
Case and Robert J. Shiller, uses a repeat sales pricing technique, still
considered the most accurate way to measure prices of residential real estate.
As shown in Figure 21, home prices in many metropolitan areas began
escalating at an especially rapid pace during the 2003 to 2006 period and
prices across the composite cities peaked in July 2006. Home prices began
falling in the various cities as early as November 2005 (in Boston) through
October 2007 (in Charlotte) and plummeted in 2009. Recovery began as
early as 2009 - in March 2009 in Denver, in May 2009, in Washington, DC
and Boston, and in June 2009 in Los Angeles, San Diego and San Francisco.
However, price declines continued for many cities through early 2012, with
recovery beginning in February 2012 in Charlotte and Las Vegas, in March
2012 in Cleveland, in April 2012 in Atlanta, New York and Cleveland, and
in May 2012 in Chicago. In all cities, home prices have risen since 2012
with two cities, Denver and Dallas, exceeding pre-recession peaks as of May
2013.
FIGURE 21: SINGLE FAMILY HOME PRICE INDEX FOR THE CHICAGO MSA
AND OTHER SELECTED METRO AREAS: DECEMBER 2000 TO DECEMBER
2015
Home Price Index (January 2000 = 100.0)
295.0
280.0
265.0
250.0
235.0
220.0
205.0
190.0
175.0
160.0
145.0
130.0
115.0
100.0
85.0
70.0
55.0
AZ‐Phoenix
CA‐San Francisco
FL‐Miami
IL‐Chicago
MN‐Minneapolis
NY‐New York
TX‐Dallas
CA‐Los Angeles
CO‐Denver
FL‐Tampa
MA‐Boston
NC‐Charlotte
OH‐Cleveland
WA‐Seattle
CA‐San Diego
DC‐Washington
GA‐Atlanta
MI‐Detroit
NV‐Las Vegas
OR‐Portland
Metro Area Composite
Sources: S&P/Case Shiller Home Price Indices and Real Estate Counselors International, Inc
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34
Figure 22:
SINGLE FAMILY HOME PRICE INDEX FOR THE CHICAGO MSA AND
OTHER SELECTED METRO AREAS: DECEMBER 2014 TO DECEMBER 2015
9.6%
10.0%
9.0%
8.0%
7.1%
Percent Change in Home Price: December 2014 to December 2015
7.1%
7.0%
6.3%
6.1%
6.0%
5.7%
5.5% 5.8%
5.5%
4.7%
5.0%
4.5%
4.0%
3.1%
3.0%
2.0%
2.3%
1.7%
1.0%
0.0%
Sources: S&P/Case Shriller Home Price Indices and Real Estate Counselors International, Inc.
As shown in Figure 22, from December 2014 to December 2015, home
prices in Chicago increased 2.3%, on par with Washington, DC, and New
York, but well below the 5.7% rate of gain exhibited across the composite
index of 20 metro areas. Though the period from 2009 to 2012 will be
considered part of one of the worst housing construction cycles in 40 years,
the authors of "The State of The Nation's Housing 2013" point to the fact
that minorities and seniors will drive demand fundamentals for housing
demand over the next decade.
But while the overall pace may be similar to the past, the composition of
household growth is changing - and with it, the direction of housing
demand. Over the next decade, the number of households aged 65 and over
is projected to increase by 9.8 million. Most of these households will opt to
age in place and may therefore need to modify their homes to accommodate
their changing needs. But a large number will look for different housing
opportunities, creating demand for new types of units in communities where
they currently live as well as in areas that traditionally attract retirees.
Minorities - and particularly younger adults - will also contribute
significantly to household growth from 2013 to 2023, accounting for seven
out of ten net new households.
An important implication of this trend is that minorities will make up an
ever-larger share of potential first-time home buyers. But these households
have relatively few resources to draw on to make down payments. Proposed
limits on low down payment mortgages would thus pose a substantial
obstacle for many of tomorrow's potential home buyers.
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Despite the slow economic recovery, the rental apartment market, both
nationally and across the Chicago MSA, exhibited a strong recovery each
year from 2010 through the 4th quarter 2015. The 4th quarter 2015
apartment vacancy in metro Chicago was 4.1%, despite the delivery of
5,659 units in 2013, 5,920 units in 2014 and 5,853 units in 2015.
While economic conditions drive household growth in the short run, the size
and age structure of the adult population are more important factors in the
long run. Based on the Census Bureau's latest population projections and
recent estimates of headship rates, demographic drivers support household
growth of approximately 1.2 million a year over the remainder of the decade
- similar to the rates in the 1990s as well as in the years preceding the Great
Recession.
Although the overall pace may be similar to the past, the composition of
household growth is changing - and with it, the direction of housing
demand. Over the next decade, the number of households for those aged 65
and over is projected to increase by 9.8 million. Most of these households
will opt to age in place and may therefore need to modify their homes to
accommodate their changing needs. But a large number will look for
different housing opportunities, creating demand for new types of units in
communities where they currently live as well as in areas that traditionally
attract retirees.
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SECTION V – DRIVERS OF APARTMENT DEMAND
INTRODUCTION
In this section of the report we address seven fundamental factors that we
believe are driving apartment demand in Lake County, Illinois:
1.
2.
3.
4.
5.
6.
7.
THE RENTERSHIP
RATE INCREASE
A watershed change in how Americans are making housing
decisions, fueled by the shifting view of owner-occupied housing and
the perceived economic safety of rental housing.
Renter-occupied housing units in Lake County among all age
groups, make up a smaller share than these age groups, nationally
and therefore there is greater potential that rental units are
underrepresented in the county.
Since the 1980s Lake County’s growth in office, industrial, retail and
other business establishments has been strong, fueling job growth.
Lake County and north suburban Cook County contained
approximately 466,000 jobs in 2015, representing about 12% of
Chicago MSA private sector jobs.
The I-94 and Route 41 corridors in eastern Lake County are
proximate to major concentrations of corporate office and industrial
space and healthcare facilities; commuting patterns imply that major
centers of employment in eastern Lake County and northern Cook
County generate significant demand for housing, including rental
housing.
Although though DuPage County job growth produced over 59,500
jobs between 2010 and 2015, Lake County and northern Cook
County produced 34,000 jobs during this same period.
Lake County employment growth over the last 40 years has
exceeded the rate of population growth in the county.
Even before the U.S. economy fell into recession, a watershed change was
emerging. The nation’s homeownership rate began to decline in 2005.
Both the number and share of U.S. households paying more than 30% of
income for housing were on the rise, as home values and mortgage debt was
on the rise. Certainly the enormous wave of foreclosures that swept the
nation after 2008 played a role in this trend, displacing millions of
homeowners. More broadly, the Great Recession brought high rates of
sustained unemployment that strained household budgets which prevented
would-be buyers from purchasing homes. Meanwhile, the experience of
2008 to 2012 highlighted the many risks of homeownership, including the
potential loss of wealth from falling home values, the high costs of relocating,
and the financial and the personal havoc caused by foreclosure. The
conditions brought about by the Great Recession and post-recession period
prompted a renewed appreciation for the benefits of renting, including the
greater ease of moving, the ability to choose housing that better fits the
family budget, the lack of unnecessary exposure to market volatility and the
freedom that this brings.
According to a report from the Joint Center for Housing Studies of Harvard
University sometime after the recovery began:
The housing market crash and Great Recession took a toll on rental markets,
pushing up vacancy rates and pushing down rents and property values in
many areas.
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37
While many measures indicate that rental markets remain under stress, other
evidence points to the beginnings of a turnaround. Vacancy rates have
retreated as the troubled homeowner market has spurred strong growth in
renter households. And with limited new supply in the pipeline, the
ingredients may be in place for rents to rise quickly when the economic
recovery strengthens.
The dramatic decline in home prices across the nation and in the metro
Chicago market between 2006 and 2011, coupled with steep job losses, had
underscored the true financial risks of homeownership. Of course, renters
face the risk of rent inflation and the loss of their security deposits.
However, rental housing does provide a safe haven during times of falling
and/or stagnant home prices or job insecurity as detailed below:
(1) moving to and from rental housing involves much lower transaction
costs than homeownership. (i.e., the last month’s rent plus a security
deposit are smaller than the fees associated with buying and selling
homes);
(2) renting transfers primary responsibility for upkeep and maintenance
to a landlord; and
(3) renting does not tie up funds in the form of a down payment, nor
does it expose households to the risk of loss of that investment.
Since the single family housing market recovered in 2012, there have been
other factors at work that have fueled the decline in home ownership and
the growth of apartment demand. The increase in the nation’s rentership
rate between 2005 and 2014 is shown in Figure 23, below.
FIGURE 23: RENTERSHIP RATES FOR UNITED STATES: 1995 TO 2014
36.0%
35.5%
35.0%
34.5%
34.0%
% of All U.S. Households
33.5%
33.0%
32.5%
32.0%
31.5%
31.0%
30.5%
30.0%
29.5%
29.0%
28.5%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sources: US Census Bureau, Housing Vacancy Survey. Joint Center for Housing Studies of Harvard
University and Real Estate Counselors International, Inc.
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38
While economic conditions drove household growth in the short run, the
size and age structure of the adult population are more important factors in
the long run. The Joint Center for Housing Studies of Harvard University in
their 2015 publication, “State of the Nation’s Housing” explained the
decline in homeownership in this way:
The downtrend (in homeownership) continued in early 2015 with a firstquarter reading of just 63.7 percent—the lowest quarterly rate since early
1993. The 233,000 drop in homeowner households last year brought the
total decline since the 2006 peak to 1.7 million. The weakness in
homeownership extends across all regions of the country and nearly all
metropolitan areas, including inner cities, suburbs, and non-metro areas.
And while recent estimates suggest that homeownership rates may be firming
in some areas, there is no evidence so far of a significant rebound. With the
exception of Detroit, major metros with the largest declines in
homeownership are all within the Sunbelt states, where high foreclosure rates
amplified the impacts of the Great Recession. At the top of the list are Las
Vegas and New Orleans (both with an 8.5 percentage-point drop in
homeownership), and Bakersfield (with an 8.3 percentage-point drop). The
worst hit markets generally experienced a much sharper cycle in home prices
and incomes than metros that were more sheltered from the housing boom
and bust from responsibility for home maintenance.
Households of all but the oldest age groups have joined in the shift
toward renting. The largest share increase is among households in their
30s, up by at least 900 basis points over an eight-year span. But shares of
households across all five-year age groups between 25 and 54 also rose by
at least 600 basis points.
According to the Joint Center for Housing Studies of Harvard
University, with these widespread increases in rentership rates, the 2000s
marked the strongest decade of growth in renter households over the past
half-century, as shown in Figure 24.
FIGURE 24: INCREASE IN APARTMENT RENTING AGE COHORTS
Sources: U.S. Census Bureau, Moody’s Analytics and CoStar Portfolio Strategy
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39
As shown, after a modest rise early in the decade, the number of renter
households soared after 2005, boosting average annual growth to more
than 500,000 households. Again, according to the Joint Center for
Housing Studies of Harvard University, future demand for apartments
will be favorably influenced by demographic trends of the next 10 years:
Over the next decade, two broad demographic trends—the aging of the
population and the increasing importance of minorities for household
growth—will drive significant changes in rental demand. Assuming
current rentership rates, the aging of the baby-boom generation will lift
the number of renters over age 65 by 2.2 million in the ten years to 2023,
generating roughly half of overall renter growth. The older profile of
renters means much of the increase will be among single persons and
married couples without children, each group accounting for about 30
percent of growth. Many of these older households are already renters,
but will be aging into the next phase of life. This trend suggests growing
demand for smaller rentals, with good access to transportation and
located near communities where households in their 50s and 60s are
currently living.
A future increase in renters is also implied by the uncoupling of 20 to 34
year old householders. The recent historical average household size for
this age cohort (i.e., primary renter-age group) has ranged between 2.40
and 2.45. Between 2008 and 2014 (i.e., recession and post-recession
period), the average household size increased to between 2.55 and 2.60
persons per household, a result of the doubling-up of households within
this age cohort. According to CoStar Portfolio Strategy and as indicated
in Figure 25, a return to the recent average household size for this age
cohort of 2.40 to 2.45 equates to 1.9 million more households, with the
vast majority of these adding to the pool of renter households.
FIGURE 25: POTENTIAL RETURN TO RECENT HISTORICAL AVERAGE
HOUSEHOLD SIZE FOR APARTMENT RENTING AGE COHORT
Sources: U.S. Census Bureau, Moody’s Analytics and CoStar Portfolio Strategy
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40
As shown in Figure 26, the Joint Center for Housing Studies of Harvard
University is forecasting growth in most of the young adult age cohorts (i.e.,
30 to 34, 35 to 39 and 40 to 44) between 2010 and 2030 that have a high
propensity to rent. This is in contrast to the growth in older, middle-age
cohorts that was exhibited between 1990 and 2010.
FIGURE 26: FORECAST GROWTH IN HOUSEHOLDS BY AGE COHORT FOR
THE UNITED STATES
Sources: U.S. Census Bureau and Joint Center for Housing Studies of Harvard University
THE NATION’S
APARTMENT MARKET
According to data available from Costar, demand for apartments remains
strong nearly six years after the recovery of the apartment market began,
even as construction activity has accelerated, as indicated in Figure 27.
Nationally CoStar reports that the apartment vacancy rate ended the year at
3.9%. According to the Costar data, vacancy rates have been fluctuating
somewhat over the last two years – declining when deliveries fall and
increasing slightly as deliveries accelerate in any particular quarter.
Actually, U.S. apartment rents posted one of the weakest 4th quarters since
the end of the most recent recession. In the first six months of 2015, U.S.
apartment rents grew at an annualized rate of 9.4%, according to CoStar’s
same-store analysis of more than 50 million rent observations. The growth
rate slowed to just 2.7% in the second half of 2015, and turned negative over
the final three months of the year. Taken together, U.S. apartment rents
grew by an average of 6% in 2015.
Construction of a large number of apartments continued in 2015, with
214,000 new units added across the 54 largest U.S. markets, reflecting an
8% increase in new supply over the previous year, which was also a record.
Absorption held steady for the year at around 210,000 units rented, and the
average vacancy rate ended the year at a cyclical low of 3.9%, virtually
unchanged from the end of 2014.
RECI
41
FIGURE 27: UNITED STATES APARTMENT DEMAND/SUPPLY: 2000-2015
Source: CoStar Group, Inc.
New apartment construction is causing vacancy among Class A apartments
(i.e., CoStar’s designation of 4 & 5 Star properties) to increase, as shown in
Figure 28.
FIGURE 28: UNITED STATES APARTMENT VACANCY BY CLASS 2007-2015
Source: CoStar Group, Inc.
Note: For all intents and purposes 4 & 5 Star properties are Class A properties.
Nationally, CoStar is forecasting rent growth to slow in 2016 to 3% to 4%
range, rather than 6% as was exhibited in 2015.
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42
RENTERS BY AGE
GROUP
Who are renters? According to the Joint Center for Housing Studies of
Harvard University, nationally, single persons (i.e., those households with
more limited incomes and need for less living space) make up nearly two out
of every five renters.
The balance of the renter population is divided among married couples with
and without children, single-parent households, and other related and
unrelated groups of people. Though younger age groups are much more
likely to rent, more heads of renter households are 35 to 64 years old, than
under 35. Elderly households account for the remaining renter households.
In fact, the United States’ share of households that are renters varies
according to the age of householder. As households are formed in the late
teen years through the mid-20s, the vast majority of these households are
renters. Renting is a common choice for young adults since they face
frequent moves as family, work, school, and living arrangements change; not
to mention wealth and income constraints that prevent them from becoming
homeowners.
As wealth is accumulated by the mid-30s, an increasing share of households
choose to purchase homes or condos. Figure 29 shows the percentage of
householders that were renters in 2000 for the United States and Lake
County, Illinois. As shown, Lake County, Illinois exhibits a considerably
lower share of households from each age group that are renters and
therefore there is greater potential that rental units are underrepresented in
the county, overall.
Other factors that can impact these shares within individual counties or
overall metro areas include local area commuting patterns, local land use
regulations (especially those which favor single family detached residential
units versus multifamily), housing market and investment market conditions.
FIGURE 29: PERCENT OF RENTERS AMONG HOUSEHOLDER AGE
COHORTS IN THE UNITED STATES AND LAKE COUNTY: 2010
90.0%
83.9%
81.7%
80.0%
% of Age Cohort That Are Renters
70.0%
60.0%
50.0%
40.0%
58.0%
47.6%
37.7%
28.5%
30.0%
24.0%
20.0%
22.7%
22.5%
17.6%
16.6%
13.6%
22.1%
19.8%
18.5%
13.0%
10.0%
0.0%
Householder 15 Householder 25 Householder 35 Householder 45 Householder 55 Householder 65 Householder 75 Householder 85
to 24 years
to 34 years
to 44 years
to 54 years
to 64 years
to 74 years
to 84 years years and over
United States
Lake County, IL
Sources: U.S. Census and Real Estate Counselors International, Inc.
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43
LAKE COUNTY, IL
POPULATION AND
EMPLOYMENT
Prior to 1970, Lake County was primarily a bedroom community within the
metro Chicago region. Since the 1970s, employment growth in Lake
County has exceeded population growth in county. In 1970, Lake County,
Illinois had a total population of 382,638 persons and total employment of
only 89,665. As shown in Figure 30, in 2010, according to the 2010 U.S.
Census, the total population had increased to 703,462 persons and total jobs
had increased to 324,805 jobs.
FIGURE 30: EMPLOYMENT AND POPULATION ESTIMATES FOR
LAKE COUNTY, ILLINOIS
380.0
360.0
Growth Index (1970 = 100.0)
340.0
320.0
300.0
280.0
260.0
240.0
220.0
200.0
180.0
160.0
140.0
120.0
100.0
1970
1980
1990
Population
2000
2010
Employment
Sources: Lake County, U.S. Census County Business Patterns and Real Estate Counselors International,
Inc.
As shown, Lake County population increased by 15% during the 1970s,
though employment increased by about 51%; during the 1980s, population
increased by about 17%, though total jobs increased by about 53%; and
during the 1990s, population increased by about 25%, though total jobs
increased by about 49%. Though employment growth was strong prior to
the 2008 recession, between 2000 and 2010, job growth grew only slightly
faster than population growth. The growth in the number of jobs in Lake
County is directly related to the surge in commercial real estate development
during the 1970s, 1980s, 1990s and 2000s.
Over these four decades, Lake County was transformed into a major
employment center of the region, with most of the development occurring in
the southeast portion of the county. From the CoStar office building
database, we estimate that approximately 18 million square feet of office,
retail and industrial space was built in Lake County during the 1970s; more
than 26 million square feet was built in the 1980s; more than 32 million
square feet was built in the 1990s and nearly 24 million square feet was built
between 2000 and 2009. Only approximately 3.1 million square feet was
built since 2010, as construction came to a virtual halt during and
immediately after the Great Recession.
RECI
44
More rapid growth in employment compared to population often suggests
that housing construction may lag commercial/industrial development in a
particular market. In the next section we consider the implications of
commuting patterns on Lake County apartment demand.
LAKE COUNTY, IL
MIGRATION AND
COMMUTING PATTERNS Our analysis of 2009-2013 migration data available from the U.S. Census
Bureau indicates there are large numbers of in-migrants to Lake County
from nearby counties, including Cook County, Kenosha County, McHenry
County, Kane County, DuPage County and Will County. By far the county
that produces the greatest number of in-migrants is Cook County, as shown
in Figure 31.
FIGURE 31: ORIGIN OF MIGRANTS TO LAKE COUNTY, IL: 2009-2013
10,000
9,251
9,000
8,000
Number of Migrants
7,000
6,000
5,000
4,000
3,000
2,000
1,162
1,124
1,000
716
648
409
0
Cook County
Kenosha County
McHenry County
Kane County
DuPage County
Will County
Source: U.S. Census Bureau, 2009-2013 5-year American Community Survey
There are other metropolitan regions of the U.S. that produce measurable
numbers of migrants to Lake County, IL. These areas include Champaign,
IL, Phoenix, AZ, Southern California, Northern California, Hawaii, Detroit,
MI and Minneapolis, MN.
Another dynamic that we researched was commuting patterns among
residents of Lake County and Cook County. Data from the U.S. Census
Bureau, 2009-2013 American Community Survey provide a good picture of
commuting patterns among residents/workers of Lake County and
surrounding counties. The relationship is strongest between Lake County
and Cook County residents/workers. The data indicate that 64,036
residents of Lake County work in Cook County and 78,045 residents of
Cook County work in Lake County. Since Northern Cook County
(Interstate 94/294 corridor) and Northwest Cook County (Interstate 90
corridor) contain both major employment centers in addition to large and
fairly dense residential communities, it is no surprise that Lake County
commuting patterns are dominated by both commuters to Lake County
from Cook County as well as commuters to Cook County from Lake
County.
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45
As shown in Figure 32, the origin of Lake County workers includes those
living in Lake County (66%), those that commute from other Illinois
counties (27%), workers that commute from the State of Wisconsin (6%) and
from other states (1%).
As alluded to above and shown in the figure below, Figure 32, the
commuting data show that 78,045 workers commute from a residence in
Cook County to a job in Lake County. Not only does this trend favor
residential demand in Lake County, but the estimated 64,036 workers that
commute from Lake County to jobs in Cook County also illustrates that
Lake County housing (especially a location in eastern Lake County) is
accessible to workers in Cook County.
FIGURE 32: ORIGIN OF LAKE COUNTY WORKERS: RESIDENTS OF
ILLINOIS COUNTIES AND WISCONSIN COUNTIES FOR 2009-2013
Source: U.S. Census Bureau, 2009-2013 5-year American Community Survey
MAJOR EMPLOYMENT
CENTERS IN LAKE
COUNTY, IL
Proximity of apartments to major centers of employment is an important
factor associated with the location decisions of most renters. The subject
property is located in eastern Lake County, roughly in the middle of the
communities considered to be the North Shore. Using data available from
the Illinois Department of Employment Security, we estimate that there are
approximately 174,000 private sector jobs located within a 15-20 minute
drive-time from downtown Highwood. Somewhat less than 50,000 of these
jobs are manufacturing, wholesale trade and transportation/warehousing
(i.e., industrial) jobs. Approximately 35,000 jobs are traditionally officeusing jobs; just over 20,000 jobs are in the retail sector and nearly 14,000
jobs are in the healthcare sector. As shown in Figure 33, office development,
in particular, has followed the path of primary high speed access highways
(i.e., interstate highways) in Lake County, north Cook County and northwest
Cook County. These three areas contain nearly 138.0 million square feet of
office space and over 300.0 million square feet of industrial space.
RECI
46
The city of Highwood is located immediately east of the Interstate 94
corridor and is easily accessible to the Interstate 94/294 corridor in Lake
County and northern Cook County. This corridor contains a total of 55.0
million square feet of office space and 90.0 million square feet of industrial
space, as shown in Figure 33.
FIGURE 33: LAKE COUNTY, NORTH COOK COUNTY AND NORTHWEST
COOK COUNTY OFFICE AND INDUSTRIAL BUILDINGS: 2015
Sources: Costar and Real Estate Counselors International, Inc.
As shown in Figures 34 and 35, the county’s largest employers include
AbbVie/Abbott, Walgreens Boots Alliance Inc., Medline Industries Inc.,
Aon Corp, Baxter Healthcare Corp, Dayton Electric Manufacturing Co, Six
Flags, Discover Financial Services, Hospira Inc., Naval Station Great Lakes
and several others. Many of the county’s largest companies are located
within 10 miles or a 15 to 20 minute drive-time of downtown Highwood.
The Veterans Administration Medical Center-North Chicago (Captain
James A. Lovell Federal Health Care Center), Northwestern Lake Forest
Hospital, Advocate Good Shepard Hospital, Vista Health System and Vista
Medical Center East represent the primary healthcare employers in Lake
County. Healthcare employment in Lake County includes the hospital
campuses as well as the rapidly growing number of outpatient healthcare
facilities being developed across the county.
Lake County had
approximately 30,000 private sector healthcare jobs in early 2015. This
represents a slight increase in healthcare jobs since 2008.
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47
FIGURE 34: LARGEST EMPLOYERS LOCATED IN LAKE COUNTY
E s t im a t e d
num be r o f
e m p lo ye e s
C o m pa ny N a m e
P a rt ia l A d d re s s
C it y
Abbo tt La bo ra to rie s /AbbVie *
Abbo tt P a rk R d
No rth C hic a go /M e tta wa
Wa lgre e ns B o o ts Allia nc e Inc
Wilm o t R d
De e rfie ld
6,100
M e dline Indus trie s Inc
M e dline P l
M unde le in
5,000
Abbo tt La bo ra to rie s /AbbVie *
S he rida n R d
No rth C hic a go
4,000
Ao n C o rp
Ove rlo o k P t
Linc o lns hire
4,000
B a xte r Inte rna tio na l Inc
B a xte r P kwy
De e rfie ld
4,000
Da yto n Ele c tric M fg C o
W Il R o ute 60
La ke F o re s t
3,000
S ix F la gs
Gre a t Am e ric a n P kwy
C a pta in J a m e s A. Lo ve ll F e de ra l
He a lth C a re C e nte r
Gre e n B a y R d
Gurne e
3,000
No rth C hic a go
3,000
Dis c o ve r F ina nc ia l S vc
R ive rwo o ds
3,000
La ke C o o k R d
12,000
Ho s pira Inc
N F ie ld Dr
La ke F o re s t
3,000
Na va l S ta tio n Gre a t La ke s
P a ul J o ne s S t # 1-A
Gre a t La ke s
2,500
No rthwe s te rn La ke F o re s t Ho s p
N We s tm o re la nd R d
La ke F o re s t
1,800
C dvo
DW cCaoterpGo o d S e pa d
Hoke
s pita
Ta
da lP ha rm a c e utic a ls US A
Inc
N M ilwa uke e Ave
Ve rno n Hills
1,800
W Il R o ute 22
B a rringto n
1,710
Ta ke da P kwy
De e rfie ld
1,700
Trus tm a rk Ins ura nc e C o
N F ie ld Dr
La ke F o re s t
1,700
La c o s ta Inc
W B o nne r R d
Wa uc o nda
1,600
La ke F o re s t C o lle ge
N S he rida n R d
La ke F o re s t
1,400
R e xa m Inc
C o rpo ra te Gro ve Dr
B uffa lo Gro ve
1,400
S ie m e ns Indus try Inc
De e rfie ld P kwy
B uffa lo Gro ve
1,300
M o nde le z Inte rna tio na l Inc
P a rkwa y N # 300
De e rfie ld
1,200
B lic k Art M a te ria ls
Gre e n B a y R d
Highla nd P a rk
1,001
Vis ta He a lth S ys te m
Wa s hingto n S t
Wa uke ga n
1,000
Am e ric a n Ta xi & De live ry
N Il R o ute 59
La ke Villa
1,000
Vis ta M e dic a l C tr Ea s t
N S he rida n R d
Wa uke ga n
1,000
Kle in To o ls Inc
B o nd S t
Linc o lns hire
1,000
La ke C o unty Ta xi
Gra nd Ave
F o x La ke
1,000
We s tm o re la nd
N We s tm o re la nd R d
La ke F o re s t
1,000
Quill C o rp
S c he lte r R d
Linc o lns hire
1,000
B a nne r Da y C a m p
R ive rwo o ds R d
La ke F o re s t
1,000
1,000
P a c ka ging C o rp o f Am e ric a
W F ie ld C t
La ke F o re s t
Intre n
S Il R o ute 83
Gra ys la ke
937
La ke C o unty He a lth De pt
Gra nd Ave
Wa uke ga n
900
F re s e nius Ka bi US A LLC
C o rpo ra te Dr # 300
La ke Zuric h
800
Am e ric a n Ho te l R e gis te r C o
S M ilwa uke e Ave # 100
Ve rno n Hills
800
M idwe s te rn M e dic a l C tr
Elis ha Ave
Zio n
800
C a nc e r Tre a tm e nt C tr o f Am e r
S he rida n R d
Zio n
800
C a rdina l He a lth
S Wa uke ga n R d
Wa uke ga n
750
Ze bra Te c hno lo gie s C o rp
Ove rlo o k P t
Linc o lns hire
740
Wo lte rs Kluwe r Ta x & Ac c tg
La ke C o o k R d
R ive rwo o ds
700
EC HO Inc
Oa kwo o d R d
La ke Zuric h
700
Ea s t We s t Dis tributing C o
Wilm o t R d
De e rfie ld
700
Es s e nda nt Inc
P a rkwa y N # 100
De e rfie ld
600
Aldridge Ele c tric Inc
E R o c kla nd R d
Libe rtyville
600
R o s a lind F ra nklin Unive rs ity
Gre e n B a y R d
No rth C hic a go
600
*Note: Employment at Abbott/AbbVie may not reflect current totals. The spin-off of AbbVie from Abbott and
relocation of some employees to Mettawa may result in current totals that deviate from the totals that were reported
to us.
RECI
48
FIGURE 35: LAKE COUNTY MAJOR EMPLOYERS: 2015
Downtown Chicago, containing nearly 560,000 jobs, is the single largest
employment center of the region and is approximately an hour commute
(approximately 25 miles) on the Union Pacific North Metra commuter train
from Highwood.
Commuter Rail Road
Trends and Employment
Data from the U.S. Census tells us that approximately 70% of Highwood
residents commute less than 30 minutes to their place of work. This is in
contrast to Highland Park residents which have longer commute times, in
part, due to residents commuting to downtown Chicago. Only about 56% of
Highland Park residents have commute times less than 30 minutes.
The commute time from the Highwood station to downtown Chicago is a
little over one hour. As shown in Figure 36, the average number of
passengers boarding inbound (southbound) trains during morning peak
hours at the Highwood stations totaled 99 in 2014. A slightly larger number
of commuters (165) board inbound morning trains at the Fort Sheridan
station, located approximately one and one-half miles to the north.
The number of commuters boarding morning inbound trains in Highwood
is slightly less than one-fifth of the number of passengers boarding inbound
trains in Highland Park and well below the number of passengers boarding
southbound trains in Lake Forest (281), Wilmette (806) or Evanston (2,625).
Our experience in researching Metra ridership trends in metro Chicago
suggests that ridership of passengers commuting to downtown Chicago
declines as one moves further out from downtown Chicago.
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49
For example, Wilmette, in northern Cook County is only a 35 minute
commute to downtown Chicago (about one-half of the commute time from
Highwood to downtown Chicago) and the number of morning inbound
passengers is more than eight times the number of inbound passengers
boarding in Highwood.
FIGURE 36: PASSENGERS GETTING ON METRA MORNING PEAK INBOUND
TRAINS
1,400
1,290
Number of Morning Peak Inbound ON Passengers
1,300
1,200
1,100
1,041
969
1,000
863
900
806
793
800
700
600
492
500
478
400
300
265
252
237
165
200
123
178
151 132
99
86
63
100
322
295
281
157
141
31
0
0
Sources: Metra and Real Estate Counselors International, Inc.
The number of morning outbound passengers getting off the trains at the
Fort Sheridan and Highwood stations is also relatively small, as shown in
Figure 37.
Number of Morning Peak Outbound OFF Passengers
FIGURE 37: PASSENGERS GETTING OFF METRA MORNING PEAK
OUTBOUND TRAINS
520
500
480
460
440
420
400
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
492
342
270
194
177
146
96
133
82
79
68
61
47
2
15
30
43
26
18
19
9
14
26
36
23
0
Sources: Metra and Real Estate Counselors International, Inc.
RECI
50
Although there is currently not a significant trend of commuters boarding
trains in Highwood for a downtown Chicago commute, the potential is there
for Highwood to become a more dominant point of origin and destination.
Not only is downtown Chicago accessible by commuter train, so are other
employment centers along the North Shore, such as downtown Lake Forest,
downtown Highland Park, downtown Wilmette and downtown Evanston.
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51
SECTION VI – MARKET AREA DEMAND/SUPPLY
OVERVIEW OF METRO
CHICAGO APARTMENT
MARKET
The Chicago MSA market contains a total inventory of approximately
543,000 apartment units, according to CoStar. At the end of the 1st quarter
2016, the vacancy rate in the metro area was 4.4%. The average monthly
effective rent was $1,195 or $1.48 per square foot at that time.
In the 3rd quarter 2010, the vacancy rate was much higher – at 8.2%. By
the 2nd quarter 2012, the vacancy rate had fallen to about 4%, fluctuating
between 4% and 5% over the previous three years.
Between the 4th quarter 2010 and the 2nd quarter 2012, there were very few
apartment units delivered, as shown in Figure 38. However, beginning in
the 3rd quarter 2012, deliveries accelerated as the vacancy rate fell below 5%
and rent growth spiked. Between the 3rd quarter 2012 and the end of the 1st
quarter of 2016, just over 19,000 units were delivered. Over this same time
period total net absorption approximated about 15,000 units.
Evidence suggested the same factors which were discussed in the previous
section of this report that fueled apartment market demand nationally were
fueling demand in the Chicago MSA apartment market.
12.00%
11.00%
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
‐1.00%
‐2.00%
‐3.00%
‐4.00%
‐5.00%
‐6.00%
‐7.00%
‐8.00%
‐9.00%
‐10.00%
‐11.00%
‐12.00%
Units (Absorption and Deliveries)
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
‐500
‐1,000
‐1,500
‐2,000
‐2,500
‐3,000
‐3,500
‐4,000
‐4,500
‐5,000
Deliveries
Net Absorption
Vacancy Percent
Effective Rent Growth/Yr
Sources: CoStar and Real Estate Counselors International, Inc.
RECI
52
Percent (Vacancy Rate and Annualized Average Rent Change)
FIGURE 38: CHICAGO MSA APARTMENT MARKET DELIVERIES,
ABSORPTION, VACANCY AND RENT CHANGE: Q1 2006 to Q3 2015
APARTMENT
MARKET AREA
DEFINITION
The subject property is located in the southeastern portion of Lake County,
Illinois. RECI delineated a market area based on several factors. In fact,
seven factors were utilized to delineate a market area for upscale apartments
developed at the subject site in southeast/central Lake County. These
factors included:
1. Location and accessibility of major roads/highways.
2. Historical cross-sectional analyses of apartment residents’ distances
3.
4.
5.
6.
7.
Primary Market Area
to places of work in Chicago and other metropolitan markets.
Distances and drive times to major concentrations of employment.
Demographic/geodemographic
profiles
of
Lake
County
neighborhoods.
Distance and drive times to competitive apartment developments
located in Lake County and the broader Chicago metropolitan
market.
Physical and perceptional barriers such as dramatic changes in land
use, freeways and the like.
Regional residential and commercial development patterns.
The Primary Market Area is shown in Figure 39. The approximate
boundaries include Lake Michigan on the east, State Route 21 (Milwaukee
Avenue) on the west, the city of Deerfield Road on the south and State
Route 60 (Town Line Road) on the north. The northern boundary extends
approximately 10-15 minutes to the north, the western boundaries of the
Primary Market Area extend 15-20 minutes from downtown Highwood.
The southern boundary extends only 5-10 minutes to the south due largely
to the strong north-south access. The Primary Market Area contains 40.8
square miles and has a total inventory of 4,944 rental units of all types,
according to the U.S. Census data. However, the CoStar database reports
that there are about 2,300 apartment units (i.e., the larger properties among
the total inventory of rental units).
FIGURE 39: PRIMARY MARKET AREA
Sources: ESRI, CoStar and Real Estate Counselors International, Inc.
RECI
53
The apartment properties located in the Primary Market Area exhibited a
1st Quarter 2016 occupancy rate of 96.5%, which is just above the metro
area average of 95.3%. The Secondary Market Area exhibited a mid-1st
quarter vacancy rate of 95.50%. By themselves, strong growth in rents and
an average occupancy above 95% would indicate demand already exceeds
supply, suggesting that the market has rental unit demand that is presently
not being met. Over the last four years (1st quarter 2012 to 1st quarter
2016), the average asking rent has increased by nearly 11% in the Primary
Market Area. The submarket average effective rent has increased despite a
surge in apartment unit construction located to south of Primary Market
Area boundary. (Note: quarter to quarter changes in the average rent do
indicate quarterly declines as well as increases.) A total of 488 apartment
units were delivered in 2015 at two properties – Amli Deerfield and
Woodview.
At the end of the 1st quarter 2016, the vacancy rate in the Primary Market
Area was 3.5%, as shown in Figure 40. There are two large properties
(Woodview Apartments in Deerfield and Amli Deerfield) that delivered units
to market. (Both of these properties are actually located just outside the
Primary Market Area.) These two properties are seven to nine miles
southwest of the subject property. However, if these two properties are
included in the Primary Market Area inventory, the Primary Market Area
vacancy rate averages 13.4%. Though the vacancy rate is high, absorption
is quite strong, causing a rapid decline in the vacancy rate.
The Primary Market Area average monthly effective rent was $1,724 or
$1.90 per square foot at the end of the 1st quarter. The average monthly
effective rent is 45% above the MSA average effective per unit rent.
FIGURE 40: PRIMARY MARKET AREA DELIVERIES,
VACANCY AND RENT CHANGE: Q1 2006 to Q1 2016
150
ABSORPTION,
36.00%
125
32.00%
28.00%
100
24.00%
20.00%
75
16.00%
50
12.00%
8.00%
25
4.00%
0.00%
0
‐4.00%
‐25
‐8.00%
‐12.00%
‐50
‐16.00%
‐20.00%
‐75
Deliveries Units
Net Absorption Units
Vacancy Percent
RECI
54
40.00%
In the 2nd quarter 2010 the vacancy rate had spiked to over 8%. However,
by the 4th quarter 2011, the vacancy rate had fallen to less than 4%,
fluctuating between 2% and 4% over the past three to four years.
For nearly the entire period (Q1 2006 to Q2 2015), there were very few
apartment units delivered in this market area, as indicated in Figure 40.
There were 240 units delivered between 2006 and 2010. Between the 1st
quarter 2010 and the 1st quarter 2015, net absorption was relatively flat
(slightly positive or slightly negative) as the vacancy rate had declined to
below 3%. In a market like this, when the vacancy rate drops below 4%,
rents often spike, even though net absorption is low. Rents had begun to
spike in the 3rd quarter 2014. Even as new projects were delivered in 2015
the Primary Market Area average effective rent continued to increase at a
strong rate. CoStar reports that concession levels have remained low in the
Primary market Area.
Secondary Market Area
The Secondary Market Area is shown in Figure 41. The Secondary Market
Area contains 33.96 square miles and a total inventory of 4,123 rental units
according to ESRI and 1,162 apartment units.
FIGURE 41: SECONDARY MARKET AREA
Sources: ESRI, CoStar and Real Estate Counselors International, Inc.
At the end of the 1st quarter 2016, the vacancy rate in the Secondary Market
Area was 2.5%, as shown in Figure 42. The average monthly effective rent
was $1,198 or $1.39 per square foot in the 1st quarter. The average monthly
effective rent is about 31% below the Primary Market Area average effective
rent.
In the 3rd quarter 2010 the vacancy rate had spiked to 7.9%. However, by
the 4th quarter 2011, the vacancy rate had fallen to 2.9%, fluctuating
between 1% and 5% over the past three to four years. For nearly the entire
post-construction boom period (i.e., Q1 2008 to Q1 2016), there were no
apartment units delivered in this market area, as shown in Figure 42.
During this period, quarterly absorption remained relatively flat (slightly
positive or slightly negative) and rent growth remained marginal. Strong rent
growth has also been exhibited in the Secondary Market Area.
RECI
55
CoStar reports that rent concession levels were substantial during the Great
Recession, but only marginal since the 1st quarter 2012.
30
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
‐2.00%
‐4.00%
‐6.00%
‐8.00%
‐10.00%
‐12.00%
‐14.00%
‐16.00%
‐18.00%
25
20
15
10
5
0
‐5
‐10
‐15
‐20
‐25
‐30
Deliveries
Net Absorption
Vacancy Percent
FIGURE 42: SECONDARY MARKET AREA DELIVERIES, ABSORPTION,
VACANCY AND RENT CHANGE: Q4 2008 to Q1 2016
LAKE COUNTYMARKET
AREA APARTMENT
DELIVERIES
Lake County
Apartment deliveries in Lake County, as shown in Figure 43, were relatively
high prior to the Great Recession. Much of the apartment construction
came to halt by 2008, though some projects proceeded in late 2009 and
2010. There was a resurgence of deliveries in 2014.
FIGURE 43: HISTORICAL APARTMENT DELIVERIES IN LAKE COUNTY:
2005 TO Q 12015
350
328
300
294
280
248
Number of Units Delivered
250
240
200
165
148
150
126
110
106
100
100
100
84
66
75
65
50
14
9
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
2006 Q3
2006 Q4
2007 Q1
2007 Q2
2007 Q3
2007 Q4
2008 Q1
2008 Q2
2008 Q3
2008 Q4
2009 Q1
2009 Q2
2009 Q3
2009 Q4
2010 Q1
2010 Q2
2010 Q3
2010 Q4
2011 Q1
2011 Q2
2011 Q3
2011 Q4
2012 Q1
2012 Q2
2012 Q3
2012 Q4
2013 Q1
2013 Q2
2013 Q3
2013 Q4
2014 Q1
2014 Q2
2014 Q3
2014 Q4
2015 Q1
2015 Q2
2015 Q3
2015 Q4
2016 Q1
9
0
RECI
56
The largest apartment developments completed since 2005 include the
following:















Coventry Glen, Round Lake, IL
AMLI at Museum Gardens, Vernon Hills, IL
Zion Senior Cottages, Zion, IL
301 Riverwalk Place, Buffalo Grove, IL
Cardinal Square - Building A, Mundelein, IL
1199 E. Port Clinton Road Condos, Vernon Hills, IL
Thomas Place - Fox Lake, IL
The Commons at Town Center, Vernon Hills, IL
Village Park, Waukegan, IL
Lakefront Residences at Grayslake, Grayslake, IL
Thomas Place – Gurnee, Gurnee, IL
Zurich Meadows, Lake Zurich, IL
The Oaks of Vernon Hills, Vernon Hills, IL
Woodview Apartments, Deerfield, IL
Amli Deerfield -
280 units
294 units
110 units
90 units
84 units
66 units
100 units
84 units
126 units
70 units
100 units
95 units
328 units
248 units
240 units
As shown, two recent developments, Amli Deerfield and Woodview located outside the subject property Primary Market Area - added 240
apartment units in the 4th quarter 2015.
According to the CoStar database and other research that we performed,
there are nine other apartment developments (other than the subject
property units) in Lake County, totaling 429 units that are proposed for
delivery in in Lake County in 2016 through 2018. Only 363 units area
under construction or proposed for the Primary and Secondary Market
Areas.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Primary and Secondary
Market Areas
The Oaks Phase II, Vernon Hills, IL
833 Laurel, Highland Park
Manchester Square, Libertyville, IL
McGovern Flats, Highland Park, IL
Roger Williams, Highland Park, IL
440 Green Bay Road, Highwood,
Fides/Downtown Lake Bluff
Focus Dev. Site Lake Forest, IL
Fides/Downtown Highwood, IL
32 units (2016)
30 units (2016)
34 units (2016/2017)
73 units (2017)
30 units (2017)
52 units (2017)
40 units (2017)
110 units (2017)
28 units (2018)
Much of the apartment development of the last 10 years in Lake County
took place in the central and western parts of Lake County. We estimate
that approximately 52% of the 2,327 units that were delivered in the county
over the past 10 years were built in the Primary and Secondary Market
Areas, as referenced in Exhibit 44. As part of our research of future rental
apartment deliveries, we contacted representatives of several communities in
the North Shore including Lake Bluff, Lake Forest, Libertyville, Mettawa,
Vernon Hills, Lincolnshire, Riverwoods, Buffalo Grove, Highwood and
Highland Park.
RECI
57
FIGURE 44: HISTORICAL AND FORECAST APARTMENT DELIVERIES IN
THE PRIMARY AND SECONDARY MARKETS 2005 TO Q2 2018
350
300
294
280
248
Number of Units Delivered
250
240
200
165
150
148
150
126
110 106
100
100
100
84
66
75
65
66
73
52
50
30 30
9
14
28
9
0
2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
Note: Proposed developments are also shown in this chart. Delivery dates represent approximations only.
The subject property’s 28 units are also represented.
As shown in Figure 45, we forecast deliveries, absorption and vacancy for
the Primary Market Area. After reflecting the apartment deliveries that
have been proposed for the Primary Market Area (delivery dates have been
estimated) and forecasting absorption based, in part, on historical trends in
this market, we forecast the vacancy rate through 2018.
As units are delivered (as the have been in the 2015 and early 2016), we
forecast positive absorption which is typical of trends in this market between
2007 and 2011 (i.e., before and after the Great Recession), as shown above
in Figure 44.
As shown in Figure 45, after new units were delivered in 2015 (AmliDeerfield and Woodview), submarket absorption spiked. Our experience in
urban and suburban submarkets that have been subject to no or minimal
apartment construction over decades, especially those markets proximate to
major employment centers, has been that newly constructed rental units are
absorbed fairly rapidly as existing apartment renters and other households
capitalize on the availability of new and/or “higher quality” rental units.
Initially, in this case, vacancy may spike somewhat, rent growth may slow,
but over time vacancy levels off, especially if there is, as we believe, pent-up
demand for rental housing in the Primary Market Area. As shown in Figure
46, for the period 2016 to 2018, we show two vacancy rate forecasts – a Base
Case and a Pessimistic Case. RECI forecasts that the vacancy rate will rise to
between 4% and 6% as a result of the delivery of units under construction or
proposed. If additional units are developed in the Primary Market Area
through 2018, the vacancy rate could rise above 6%.
RECI
58
FIGURE 45: PRIMARY MARKET AREA DEMAND/SUPPLY FORECASTS:
DELIVERIES, ABSORPTION AND VACANCY
225
45.00%
200
40.00%
175
35.00%
150
30.00%
125
25.00%
100
20.00%
75
15.00%
50
10.00%
25
5.00%
0
0.00%
‐25
‐5.00%
‐50
‐10.00%
Deliveries Units
Net Absorption Units
Vacancy Percent ‐ Optimistic
Vacancy Percent ‐ Pessimistic
250
Note: Delivery dates represent approximations only. The subject property’s 28 units are also represented.
Even though we have not developed a rent forecast, we anticipate continued
increases in the Primary Market Area’s average rent along with positive net
absorption and a reduction in vacancy. Again, this assumes that all of the
units that have been proposed in the Primary Market Area are built in 2016,
2017 and 2018. In the next section of this report, we perform an additional
demand analysis which reflects pent-up demand for rental apartments.
RECI
59
SECTION VII – MARKET AREA DEMAND
MARKET AREA
DEMOGRAPHICS
In order to support the demand/supply forecasts presented at the end of the
last section of this report, we perform an additional analysis aimed at
quantifying total rental unit demand. Here we are concerned with the
subject property’s capture rate within the Total Market Area (Primary
Market Area and Secondary Market Area, combined). If the capture rate
necessary to absorb the subject property’s 28 units is relatively high, the
analysis suggests that proposed new construction may cause a
demand/supply imbalance.
But first, we review the demographics of these two geographic areas. As
shown in Figure 46, the Primary Market Area contains 59,640 persons and
21,852 households in contrast to the Secondary Market Area which contains
40,264 persons and 12,924 households.
FIGURE 46: PRIMARY AND SECONDARY MARKET AREA DEMOGRAPHICS
Primary Market Secondary Market
Demographics
Area
Area
2 0 10 S u m m a ry
P o pula tio n
Ho us e ho lds
F a m ilie s
Ave ra ge Ho us e ho ld S ize
Owne r Oc c upie d Ho us ing Units
R e nte r Oc c upie d Ho us ing Units
M e dia n Age
M e dia n Ho us e ho ld Inc o m e
2 0 15 S u m m a ry
P o pula tio n
Ho us e ho lds
F a m ilie s
M e dia n Age
Ave ra ge Ho us e ho ld Inc o m e
H is t o ric a l T re n d s : 2 0 10 - 2 0 15 C o m p o u n d e d A n n u a l A v e ra g e C h a n g e
P o pula tio n
Ho us e ho lds
F a m ilie s
Owne r Ho us e ho lds
R e nte r Ho us e ho lds
M e dia n Age
2 0 2 0 S u m m a ry
P o pula tio n
Ho us e ho lds
F a m ilie s
M e dia n Age
Ave ra ge Ho us e ho ld Inc o m e
F o re c a s t T re n d s : 2 0 15 - 2 0 2 0 C o m p o u n d e d A n n u a l A v e ra g e C h a n g e
P o pula tio n
Ho us e ho lds
F a m ilie s
Owne r Ho us e ho lds
R e nte r Ho us e ho lds
M e dia n Age
59,640
21,852
16,556
2.67
17,484
4,368
43.8
N/A
40,264
12,924
8,741
2.51
9,165
3,759
31.9
N/A
60,318
22,359
16,775
2.64
17,415
4,944
45.2
$ 123,334
$ 184,762
39,886
13,188
8,836
2.50
9,065
4,123
33.0
$ 93,605
$ 146,783
0.23%
0.46%
0.26%
-0.08%
2.51%
0.63%
---
-0.19%
0.41%
0.22%
-0.22%
1.87%
0.68%
---
60,895
22,691
16,917
2.63
17,575
5,116
46.4
$ 141,102
$ 209,077
40,255
13,357
8,897
2.50
9,128
4,229
34.5
$ 106,436
$ 168,332
0.19%
0.30%
0.17%
0.18%
0.69%
0.53%
2.73%
0.18%
0.25%
0.14%
0.14%
0.51%
0.89%
2.60%
Sources: U.S. Census and ESRI
RECI
60
The median household income in the Primary Market Area ($123,334) is
above the median income in the Secondary Market Area ($93,605). This
may in part be a result of the slightly older median age in the Primary
Market Area (45.2 years) in contrast to that of the Secondary Market Area
(33.0 years).
It is also noteworthy to point out that between 2010 and 2015, the number
of owner occupied households declined as the number of renter households
increased in both the Primary and Secondary Market Areas.
The population and number of households in the Secondary Market Area
increased at a more rapid rate than the population and households in the
Primary Market Area. This trend is forecast to continue between 2015 and
2020, also as shown in Figure 46.
MARKET AREA
HOUSING
A profile of the housing stock of both the Primary and Secondary Market
Areas is presented in Figure 47.
The Primary Market Area is estimated to contain a total of 23,321 housing
units and the Secondary Market Area is estimated to contain 32,863 housing
units in 2015. Approximately 15% of total units in the Primary Market
Area were built since 2000 with a slightly lower percentage, 12.0%, built
since 2000 in the Secondary Market Area. Nevertheless, roughly 17% of
total housing units in both the Primary Market Area and the Secondary
Market Area were built before 1950.
The Primary Market Area is estimated to contain a total 3,939 renteroccupied housing units and the Secondary Market Area is estimated to
contain 3,571 renter-occupied housing units. Of total housing units, the
percentage of units that are owner-occupied is 82% in the Primary Market
Area and slightly higher or 72% in the Secondary Market Area. Of total
housing units, 71% of the units in the Primary Market Area are single-unit
detached in contrast to a slightly lower share, 65%, in the Secondary Market
Area.
Nearly 36% of renter households moved into their unit since 2010 in the
Primary Market Area in contrast to 42% of renter households in the
Secondary Market Area. Among owner-occupied households 72% of
households moved into their unit between 1990 and 2000 in the Primary
Market Area in contrast to 76% in the Secondary Market Area.
The percentage of owner-occupied units (homes) without a mortgage in the
Primary Market Area is estimated 32% in contrast to the Secondary market
Area, which is 30%.
RECI
61
FIGURE 47: PRIMARY AND SECONDARY MARKET AREA HOUSING
Primary
Market Area
2 0 15 T O T A LS
To ta l P o pula tio n
To ta l Ho us e ho lds
To ta l Ho us ing Units
O WN E R - O C C UP IE D H O US IN G UN IT S B Y M O R T G A G E
S T A T US
To ta l
Ho us ing units with a m o rtga ge /c o ntra c t to purc ha s e /s im ila r de bt
S e c o nd m o rtga ge o nly
Ho m e e quity lo a n o nly
B o th s e c o nd m o rtga ge a nd ho m e e quity lo a n
No s e c o nd m o rtga ge a nd no ho m e e quity lo a n
Ho us ing units witho ut a m o rtga ge
%
58,418
21,538
23,321
Secondary
Market Area
%
36,133
12,639
13,843
17 ,6 0 0
12,006
333
3,554
150
7,969
5,593
100.0%
68.2%
1.9%
20.2%
0.9%
45.3%
31.8%
9 ,0 6 8
6,389
144
1,874
50
4,322
2,679
100.0%
70.5%
1.6%
20.7%
0.6%
47.7%
29.5%
2 3 ,3 2 1
16,541
1,917
518
627
582
616
1,281
1,213
27
0
100.0%
70.9%
8.2%
2.2%
2.7%
2.5%
2.6%
5.5%
5.2%
0.1%
0.0%
13 ,8 4 3
9,043
1,516
209
397
379
572
711
885
130
0
100.0%
65.3%
11.0%
1.5%
2.9%
2.7%
4.1%
5.1%
6.4%
0.9%
0.0%
2 3 ,3 2 1
60
3,506
2,511
2,904
2,518
4,430
3,359
870
3,162
1970
10 0 .0 %
0.3%
15.0%
10.8%
12.5%
10.8%
19.0%
14.4%
3.7%
13.6%
13 ,8 4 3
14
1,651
2,234
2,015
2,152
1,884
1,588
533
1,772
1975
10 0 .0 %
0.1%
11.9%
16.1%
14.6%
15.5%
13.6%
11.5%
3.9%
12.8%
2 1,5 3 9
17 ,6 0 0
1,180
7,178
3,951
2,716
1,358
1,217
3 ,9 3 9
1,431
2,132
255
64
42
15
2001
10 0 .0 %
12 ,6 3 9
9 ,0 6 8
420
4,021
2,409
1,087
710
421
3 ,5 7 1
1,481
1,736
246
72
36
0
2002
10 0 .0 %
H O US IN G UN IT S B Y UN IT S IN S T R UC T UR E
To ta l
1, de ta c he d
1, a tta c he d
2
3 or4
5 to 9
10 to 19
20 to 49
50 o r m o re
M o bile ho m e
B o a t, R V, va n, e tc .
H O US IN G UN IT S B Y YE A R S T R UC T UR E B UILT
To ta l
B uilt 2010 o r la te r
B uilt 2000 to 2009
B uilt 1990 to 1999
B uilt 1980 to 1989
B uilt 1970 to 1979
B uilt 1960 to 1969
B uilt 1950 to 1959
B uilt 1940 to 1949
B uilt 1939 o r e a rlie r
M e dia n Ye a r S truc ture B uilt
O C C UP IE D H O US IN G UN IT S B Y YE A R H O US E H O LD E R
M O VE D IN T O UN IT
To ta l
O wn e r o c c u p ie d
M o ve d in 2010 o r la te r
M o ve d in 2000 to 2009
M o ve d in 1990 to 1999
M o ve d in 1980 to 1989
M o ve d in 1970 to 1979
M o ve d in 1969 o r e a rlie r
R e n t e r o c c u p ie d
M o ve d in 2010 o r la te r
M o ve d in 2000 to 2009
M o ve d in 1990 to 1999
M o ve d in 1980 to 1989
M o ve d in 1970 to 1979
M o ve d in 1969 o r e a rlie r
M e dia n Ye a r Ho us e ho lde r M o ve d Into Unit
69.9%
6.7%
40.8%
22.4%
15.4%
7.7%
6.9%
36.3%
54.1%
6.5%
1.6%
1.1%
0.4%
2000
75.5%
4.6%
44.3%
26.6%
12.0%
7.8%
4.6%
41.5%
48.6%
6.9%
2.0%
1.0%
0.0%
Source: U.S. Census Bureau, 2009-2013 American Community Survey and ESRI
RECI
62
PRIMARY AND
SECONDARY
MARKET AREA
RENTER DEMAND
In order to support the demand/supply forecasts presented in the previous
section of this report, we perform an additional analysis aimed at quantifying
rental housing demand and calculating the subject property’s capture rate
within the Total Market Area (both the Primary Market Area and the
Secondary Market Area, combined).
FIGURE 48: SUBJECT PROPERTY MARKET AREA
Sources: U.S. Census, ESRI, Neilsen PRIZM, and Real Estate Counselors International, Inc.
The capture rate represents the percentage of likely consumers that would
need to be attracted to the planned development to reach stabilized
occupancy (i.e., 95% occupancy). Typically, the capture rate for any single
apartment development should not be considerably higher than 5% - 10%
of total rental demand, according to industry standards/benchmarks,
though this can vary from market to market based upon market size, density,
recent new supply, etc.
In order to perform this analysis, we obtained housing data from the 2010
U.S. Census, the 2007-2011 American Community Survey, the 2009-2013
American Community Survey and ESRI. The exact methodology and
source data is outlined in detail in Figure 50. Below, we offer a synopsis of
the several steps.
The first step is to calculate total renter-occupied housing units’ share of
total occupied housing units for two recent periods – 2010 and 2014. The
second step is to establish the target rental housing share for the Total
Market Area (Primary and Secondary Market Areas, combined) which
because of both a moderately low share (around 26%) and lack of
multifamily rental housing construction over at least the past 15 years, is
forecast by RECI to range between 27% to 28%. (Note: For comparison
purposes, the average share for the entire North Shore is 24.5%. The
average share for a diverse mix of 14 suburban municipalities located in
north Cook County and northwest Cook County is 26%).
RECI
63
Third, we apply the 27% and 28% share against Total Market Area
households and then make adjustments for: (a) a 5% vacancy rate; (b)
replacement demand; and (c) competitive apartment units under
construction or proposed for the Primary and Secondary Market Areas.
The resultant total rental unit demand range for the Primary and Secondary
Market Areas after these adjustments equals 400 to 773 units. Hence the
proposed 28 units represents a capture rate of 3.6% to 7.0% of demand for
total rental units.
Fourth, based upon our research of the income distribution associated with
Primary and Secondary Market Area renter households, we conclude that
only a portion of all renters have household incomes sufficiently high to
support monthly rents as proposed for the subject property. Based on the
data available from the 2007-2011 American Community Survey, we
estimate, of total Market Area Renter Households, only 53% have income
levels high enough to support the proposed rent structure for the subject
property. Applying this share to “qualified” (or high income renters) rental
demand, referenced above, indicates qualified new demand of 212 to 410
apartment units.
Also, as shown in Figure 49, the proposed 28 units represent a capture rate
of 6.8% to 13.2% of total demand for units of the subject type among renter
households with income levels above $50,000. Therefore, we conclude that
the market should be able to support the addition of 363 other apartment
units that are under construction or proposed (and accounted for in for
calculations) for the Primary and Secondary Market Areas.
RECI
64
Row
A
Calculation
FIGURE 49: DEMAND/CAPTURE RATE ANALYSIS FOR 28 APARTMENT
UNITS IN HIGHWOOD, IL. PRIMARY AND SECONDARY MARKET AREA
DEMAND/SUPPLY FORECAST RANGE
Note
High
Low
2 0 10 Primary and Seco nd ary M arket Area Ho us eho ld s
(1)
3 7,776
3 7,776
8 ,12 7
B
2 0 10 Primary and Seco nd ary M arket Area Rent er-Occup ied Unit s / Ho us eho ld s
(2 )
8 ,12 7
C
2 0 10 Primary and Seco nd ary M arket Area Rent er Ho us eho ld Share
(3 )
2 1.5%
2 1.5%
D
2 0 15 Primary and Seco nd ary M arket Area Ho us eho ld s
(4 )
3 5,54 7
3 5,54 7
E
Es t imat ed 2 0 15 Primary and Seco nd ary M arket Area Rent er-Occup ied Unit s
(5)
9 ,3 4 5
9 ,3 4 5
F
Es t imat ed 2 0 15 Primary and Seco nd ary M arket Area Rent er Share
(6 )
2 6 .3 %
2 6 .3 %
G
Ta rg e t R e nt a l Ho us i ng S ha re
(7)
2 7%
28%
H
2 0 15 Targ et Primary and Seco nd ary M arket Area Rent al Unit s
(8 )
9 ,59 8
9 ,9 53
I
Difference b et ween Es t imat ed 2 0 15 unit s and 2 0 15 Targ et Rent al Unit s
(9 )
2 53
608
J
Primary and Seco nd ary M arket Area Rep lacement Demand
(10 )
30
30
K
Sub ject Pro p ert y Rep lacement Demand
(11)
0
0
L
Plus : 5% Vacancy Rat e
(12 )
480
498
M
Les s : Unit s Und er Co ns t ruct io n o r Pro p o s ed in t he Primary and Seco nd ary M arket Areas
(13 )
363
363
N
To t a l D e ma nd f o r N e w P ri ma ry a nd S e c o nd a ry M a rke t A re a R e nt a l U ni t s
(14 )
400
773
O
Share o f Demand fo r Unit s wit h Gro s s Rent mo re t han $1,3 0 0
(15)
53 %
53 %
P
Demand fo r Primary and Seco nd ary M arket Area Rent al Unit s wit h Rent s o ver $1,3 0 0
(16 )
2 12
4 10
Q
Sub ject Pro p ert y M AXIM UM Numb er o f Planned Unit s
(17)
R
Cap t ure Rat e o f Primary and Seco nd ary M arket Area Rent er HHs
(18 )
0 .3 0 %
28
0 .3 0 %
28
S
C a p t ure R a t e o f To t a l N e w R e nt a l D e ma nd
(19 )
7.0 %
3 .6 %
P
Cap t ure Rat e o f Demand fo r Rent al Unit s wit h Rent s o ver $1,3 0 0
(2 0 )
13 .2 %
6 .8 %
N O TES :
(1)
Ob t ained fro m t he 2 0 10 U.S. Decennial Cens us .
(2 )
Ob t ained fro m t he 2 0 10 U.S. Decennial Cens us .
(3 )
Rent er Unit s (Ro w B) d ivid ed b y To t al Unit s (Ro w A) .
(4 )
(5)
Ob t ained fro m t he es t imat es availab le fro m ESRI.
(6 )
Rent er Unit s (Ro w E) d ivid ed b y To t al Unit s (Ro w D).
(7)
(8 )
Ob t ained fro m t he es t imat es availab le fro m ESRI.
Fo recas t cap t ure rat e b as ed o n rent er s hare fro m U.S. Cens us Bureau, 2 0 0 9 -2 0 13 5-Year American Co mmunit y Survey fo r M o raine To wns hip ,
Lake Co unt y, IL (2 3 %) and M ain To wns hip , Co o k Co unt y, IL. (2 4 %).
Targ et Share (Ro w G) t imes To t al Unit s (Ro w D).
(9 )
Difference b et ween 2 0 10 t arg et unit s (Ro w I) minus (Ro w E).
(10 )
Annual rep lacement d emand eq ual t o 1% o f unit s b uilt p rio r t o 19 70 (3 0 .1% o f all rent al unit s in Primary and Seco nd ay M arket Areas ).
(11)
(12 )
(13 )
No rent al unit s will b e d emo lis hed b efo re co ns t ruct io n will co mmence o n 3 6 unit b uild ing .
5% as s umed s t ab ilized vacancy rat e t imes Targ et Rent er Unit s (Ro w H).
The s um o f all ap art ment unit s t hat are und er co ns t ruct io n o r p ro p o s ed in t he Primary and Seco nd ary M arket Area.
Increas e in Demand (Ro w I) p lus Rep alcement Demand fo r all unit s includ ing s ub ject p ro p ert y (Ro w J and Ro w K), p lus vacant rent er unit s (Ro w
L) minus rent er unit s und er co ns t ruct io n/ p ro p o s ed (Ro w M ).
The s hare o f rent er ho us eho ld s wit h inco mes o ver $50 ,0 0 0 annual inco me o b t ained fro m U.S. Cens us Bureau, 2 0 0 9 -2 0 13 5-Year American
Co mmunit y Survey fo r Primary and Seco nd ary M arket Areas .
(14 )
(15)
(16 )
Up p er inco me rent ers s hare (Ro w N) t imes To t al Demand (Ro w O).
(17)
(18 )
Numb er o f Unit s p lanned fo r t he Lake Bluff s it e (Sup ject Pro p ert y).
(19 )
Numb er o f Sub ject Pro p ert y Unit s (Ro w Q) d ivid ed b y To t al Rent er Unit s (Ro w E).
Numb er o f Sub ject Pro p ert y Unit s (Ro w Q) d ivid ed b y To t al Unit Demand (Ro w N).
(2 0 )
Numb er o f Sub ject Pro p ert y Unit s (Ro w Q) d ivid ed b y Unit Demand fo r Up p er Inco mr Rent ers (Ro w P).
Sources: U.S. Census Bureau, 2007-2011 American Community Survey, 2009-2013 5-Year American Community Survey, ESRI and Real
Estate Counselors International, Inc.
RECI
65
GEODEMOGRAPHIC
ANALYSIS OF
PRIMARY MARKET
AREA HOUSEHOLDS
In addition to analyzing the demographics of the Primary Market Area, we
also researched the geodemographics (also known as psychographics) of the
Primary Market Area by applying a specialized database –Nielsen’s PRIZM
database. This database is a market segmentation system which defines all
U.S. household in terms of 66 demographically and behaviorally distinct
types, or "segments," to help marketers discern those consumers’ likes,
dislikes, lifestyles and purchase behaviors.
Not only do we use these classifications to supplement our analysis of market
area demographics, but this database can be useful in marketing to the
targeted households. The corresponding value/number to the left of the
segment name refers to the socioeconomic rank of the household type or
segment. The segments with the lowest numbers are the most affluent. It is
no surprise that the North Shore is characterized by the most affluent
household types or “segments” as they are known. The segments that are
the brightest red in Figure 50 are the most affluent. As shown on the map,
these segments are also denoted by the rankings “1”, “2” and “3” primarily.
(the lower the rank; the higher the income level). These three household
types or segments are known as “Upper Crust” (1), “Blue Blood Estates” (2)
and “Movers and Shakers” (3). Also, noteworthy on the map below are the
households located in and around Highwood that are more diverse.
FIGURE 50: DOMINANT HOUSEHOLD TYPES (PRIZM PSYCHOGRAPHIC
SEGMENTS) FOR SOUTHEAST LAKE COUNTY
Sources: ESRI, Nielsen and Real Estate Counselors International, Inc.
Note: Although these neighborhoods (actually U.S. Census Block Groups) contain a range of household,
the PRIZM data presented in the map identifies the predominant household type.
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66
Through our extensive research of apartment markets across the country,
we have found the traditional segments or household types residing in
apartments in large metropolitan areas typically include: “Young Digerati”,
“Bohemian Mix”, “Executive Suites”, “Urban Achievers” and “Young
Influentials”. These households typically reside proximate to downtown
employment centers and/or trendy urban neighborhoods. In the Primary
Market Area the numbers of households that fall within the household types
referenced above are nonexistent or relatively small. Hence this is not an
apartment market that has the breadth and depth of the downtown of a
major city.
Notwithstanding, the Primary Market Area contains a very diverse mix of
household types. In fact, we have identified 10 household types or segments
that we believe contain a significant number of households that are either
renters or given the opportunity, would become renters at a future stage in
their lives. The household types include singles and couples, mostly without
children. Potential target households may include 25-35 year olds, singles
and couples in their late 30s and 40s, as well as older folks including empty
nesters. These households span a range of affluence that may include some
Middle, Upscale and some considered wealthy.
These household types are identified on the right side of the pie chart in
Figure 51.
FIGURE 51: PROFILE OF PRIZM DATABASE
SEGMENTS FOR THE PRIMARY MARKET AREA.
GEODEMOGRAPHIC
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67
These ten segments we have identified in the Primary Market Area include,
ranked in order of socioeconomic standing:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Movers & Shakers (03)
Executive Suites (08)
Second City Elite (10)
Brite Lites, Li'l City (12)
New Empty Nests (14)
Gray Power (21)
Young Influentials (22)
Up-and-Comers (24)
Middleburg Managers (27)
Boomtown Singles (35)
Defining characteristics of these household types are presented in Figure 52,
below.
FIGURE 52: DEFINING
HOUSEHOLD TYPES
#
S o c io
Ec o no mi c
R a nk
1
3
P R IZM N E
S e g me nt
N i c kna me
S o c i a l G ro up
N a me
M o vers & Shakers Elit e Sub urb s
Inc o me
C la s s if ic a t i
on
Wealt hy
P re d o mi na nt
Inc o me
where $10 0 k+ > 9 0 %
CHARACTERISTICS
Ag es
3 5-6 4
Seco nd Cit y Elit e
Seco nd Cit y
So ciet y
Up s cale
$75k+ > 9 0 %
4 5+
2
20
3
8
Execut ive Suit es
The Affluent ials
Up s cale
$75k+ > 9 0 %
2 5-4 4
4
12
Brit e Lit es , Li'l
Cit y
Seco nd Cit y
So ciet y
Up s cale
$75k+ > 9 0 %
2 5-54
5
14
New Emp t y Nes t s The Affluent ials
Up p er M id d le
where $50 k+ > 9 0 %
6 5+
P re d o mi na nt HH
C o mp o s i t i o n
M arried Co up les
M arried Co up les / No
Child ren
Sing les / Co up les / No
Child ren
OF
THE
TEN
P re d o mi na nt
Ed uc a t i o n C l a s s
Co lleg e Grad uat e +
PRIZM
P re d o mi na nt
Emp l o y me nt
Execut ive, Pro fes s io nal,
Whit e Co llar
Pro fes s io nal, Whit e Co llar
Execut ive, Pro fes s io nal,
Whit e Co llar
M arried Co up les
M arried Co up les / No
Child ren
Co lleg e
Co lleg e
Co lleg e
Co lleg e
7
22
Yo ung Influent ials M id d leb urb s
M id s cale
$3 0 k-$75k > ~8 0 %
<3 5
8
24
Up -and -Co mers
Cit y Cent ers
M id s cale
$3 0 k-$75k > ~8 0 %
<3 5
Sing les / Co up les / No
Child ren
M o s t ly Sing les / No
Child ren
Sing les / Co up les
9
27
Cit y Cent ers
M id s cale
$3 0 k-$75k > ~8 0 %
55+
Sing les / Co up les
Co lleg e
Pro fes s io nal/ Whit e Co llar
10
35
Lo wer M id d le
where 9 0 % < $50 k
<3 5
M o s t ly Sing les
So me Co lleg e
Whit e Co llar/ Service
6
21
Gray Po wer
M id d leb urg
M anag ers
Bo o mt o wn
Sing les
M id d leb urb s
Cit y Cent ers
M id s cale
$3 0 k-$75k > ~8 0 %
6 5+
COMPETITIVE
ALIGNMENT AND
RENTAL SURVEY
According to CoStar, the Primary Market Area contains 2,297 apartment
units which were built primarily in the pre-1980 period.
The Secondary Market Area contains 1,162 apartment units. CoStar
reports that Lake County, as a whole, contains approximately 30,000
apartment units. The complete inventory of apartments in Lake County is
shown in Figure 53.
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68
FIGURE 53: LOCATION OF APARTMENTS IN LAKE COUNTY, IL
Seventeen apartment/rental properties in the Primary and Secondary
Market Areas were surveyed and include five large Class B/C properties,
eight Class A and/or newly constructed apartment communities and four
condo/townhome rental properties, as depicted in the in Figure 54.
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69
FIGURE 54: MAP OF COMPETITIVE PROPERTIES SURVEYED
Sources: Real Estate Counselors International, Inc. Field Survey November 2015
The five Class B/C apartment communities (including the nearby Fort
Sheridan Place and Braeside Apartments) were built in 1970s, 1980s and
1990s, all but one contain more than 100 units, and are located less than one
block up to eight miles from the subject property. We include four of these
since they represent some of the larger apartment properties in southeast
Lake County. One of the five is small, but appears to be typical of many of
the rental units located in east Lake County. However, due to age and
neighborhood location we believe that they would not be directly
competitive with the subject property, as planned.
The eight Class A properties were built since 2000 (actually one –
Manchester Square - is still under construction) and each range between 30
units and 328 units. The condo/townhome rentals consist of a mixture of
older rented condominium units and three recently developed condominium
rentals (15 Clay Avenue Condos, built in 2008, the condo units built at Fort
Sheridan in 2002 and The Ravines Condominiums in Highland Park, IL
built in 2002.).
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70
One-bedroom/one-bath units at the five Class B/C apartments
generally rent for between $1,000 and $1,800 per month. Two
bedroom/two-bath units generally rent for between $1,500 and $2,400 per
month.
As shown in the oversize exhibit in the Addenda, the Class B/C apartment
units that were surveyed include:

Fort Sheridan Place, 634 Sheridan Road, Highwood, IL 60040 (252
units), built in 1970 (renovated in 2011).

Braeside Apartments, 511 County Line Road, Highland Park, IL 60035
(16 units), built in 1975 (and renovated in 2000).

Americana Apartments, 1755 Lake Cook Road, Highland Park, IL
60035 (108 units), built in 1982.

Deer Valley Apartments, 30011 Waukegan Avenue, Lake Bluff, IL
60044 (224 units), built in 1991.

Forest Pointe/Village Green, 29533 N. Waukegan Road, Lake Bluff, IL
60044 (236 units), built in 1989.
Unit amenities at three of these properties include most of the typical
amenities found in garden-style apartment developments, central airconditioning, cable ready, ceiling fans, washer and dryer in each unit or in
the case of Fort Sheridan Place, on each floor as it is a mid-rise property.
At Braeside Apartments only washer/dryer connections are provided. The
two garden-style communities also feature vaulted ceilings and fire places in
some units. The units at Fort Sheridan Place have been completely
renovated since 2009; Deer Valley management has been renovating units
upon turnover. These renovated units feature stainless steel, energy-efficient
appliances, granite countertops, high-end cabinetry and hardwood-style
flooring. Common area amenities at both properties include clubhouses,
fitness centers, business centers and swimming pools. Deer Valley and Forest
Point/Village Green also feature an outdoor pool and patios/balconies.
One-bedroom/one-bath units at the eight Class A/newly constructed
apartment developments generally rent for between $1,500 and $2,400
per month. Two bedroom/two-bath units generally rent for between
$2,500 and $3,500 per month. The eight Class A apartment properties
surveyed include:

The Oaks of Vernon Hills, 103 Oak Leaf Lane, Vernon Hills, IL 60061
(328 units), built in 2014.

Deerfield Village Centre, 625 Deerfield Road, Deerfield, IL 60015 (56
units), built in 2000.

Woodview Apartments, 15 Parkway North, Deerfield, IL 60015 (248
units), built in 2015. :
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71

Renaissance Place, 849 Green Bay Road, Highland Park, IL 60035 (30
units), built in 2000. Unit size, monthly and per square foot rental rates:

Focus Development Western/Laurel, 1000-1042 N. Western Avenue,
Lake Forest, IL 60045 (110 units), planned for development in
2016/2017. :
Manchester Square, 601-611 N. Milwaukee Avenue, Libertyville, IL
60048 (34 units), built in 2008; renovated/reconfigured in 2015. Unit

size, monthly and per square foot rental rates have not yet been reported
by the developer.

AMLI at Museum Gardens, 1155 North Museum Blvd., Vernon Hills,
IL 60061 (294 units), built in 2005.

AMLI Deerfield, 1525 Lake Cook Road, Deerfield, IL 60015 (240
units), built in 2015.
These eight Class A/Upscale properties feature a wide range of common
area and unit area amenities. Each of these properties are located on
heavily trafficked thoroughfares. The Oaks of Vernon Hills, Woodview
Apartments, Amli at Museum Gardens and AMLI Deerfield were all built
since 2005 and feature extensive common area amenities found at most
garden-style properties. However, of these four properties, only the Oaks of
Vernon Hills is a garden-style property.
The others are low-rise/mid-rise with four to seven stories. Each of these
four properties contains more than 200 apartment units.
AMLI Deerfield and Woodview Apartments are the two newest and most
upscale properties in terms of unit features and amenities. Amli Deerfield
features stainless steel appliances, side-by-side refrigerators, under-counter
beverage centers, 42" painted white wood shaker-style or espresso wood flat
panel kitchen cabinets, task lighting, marble or glass tile backsplashes,
gooseneck kitchen faucets and pull-down sprayers, full size washers and
dryers, 9-foot ceilings, crown molding, some private yards and balconies.
Woodview’s units include an open kitchen design, quartz countertops,
upgraded plank flooring, stainless steel appliances, full-size stackable washers
and dryers, private balconies and patios, a peninsula/island counter with
overhead lighting, and other modern kitchen amenities, including a pulldown gooseneck kitchen faucet.
Amli at Museum Gardens was built in 2005 and has very large (i.e., what
appear to be too large for this market) units. Unit features include nine-foot
ceilings, gourmet kitchens with 42-inch upper cabinets, black or white
Whirlpool appliances, full-size built-in microwaves, refrigerators with
automatic ice makers, track lighting in kitchens, kitchen pantries and linen
closets, designer floors featuring Berber carpet, home offices with wood
floors, full-size washers and dryers, walk-in closets, raised cultured marble
vanities, double bowl vanities, storage available, private balconies,
sunrooms, Individually controlled heat and air conditioning, high-speed
internet available and four phone-line capability.
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72
Amli - Deerfield and Woodview were constructed in 2014/2015 and as
such, feature the most extensive common area amenities and exhibit the
most contemporary finishes. Both of these properties have visibility from
Interstate 94/294.
Amli-Deerfield was designed to qualify for LEED Silver designation and
features a fitness center, swimming pool, resident lounge with fireplace and
gourmet kitchen, a business center with coffee bar and lounge area, golf
simulator room, garage parking, electric charging stations, and secure
bicycle storage and repair shop and a dog wash.
Deerfield Village Square, Renaissance Place and Manchester Square are
smaller properties with 53, 30 and 34 units, respectively. Each of these three
properties are located in North Shore community downtowns, along a major
thoroughfare and accessible to Metra trains. Deerfield Village was built in
2000 as part of the redevelopment of downtown Deerfield. It is located
adjacent to Deerfield Square. In 1998, a significant portion of the Deerfield
downtown area was demolished and replaced with a new outdoor shopping
district, Deerfield Square, sometimes called "The Square" or "The
Commons" by some Deerfield residents. This downtown area is composed
of stores, restaurants and facilities, such as Barnes & Noble, Biaggi's
Ristorante Italiano, Footloose, Potbelly Sandwich Shop, CorePower Yoga,
Whole Foods Market, and Pure Barre. In addition to retail space, Deerfield
Square includes some office space and an outdoor plaza which is used
during the summer for free outdoor concerts. The property is also a very
short walk to the Deerfield Metra station. This property features the highest
per square foot rents of all of the properties that we surveyed.
Renaissance Place (downtown Highland Park) and Manchester Square
(downtown Libertyville) and are similar developments to Deerfield Village.
Renaissance Place an urban-style low-rise residential property which is part
of a mixed-use development with high-end retail tenants on the first floor.
The property was built in 2000 and contains 30 apartment units. In
addition to upscale retailers, trendy restaurants the project contains an
upscale movie theater. The property includes heated underground garage
parking, a fitness center, security, and elevator access.
At Manchester Square, multifamily units that were originally built in 2008
are being reconfigured/redeveloped. This property was purchased in 2013
by Chicago-based Cedar Street Companies, which intends to reconfigure
the second and third floor apartment units. The first floor retail has been
successful but the original developer's attempt to market the upper floors as
residential condominium units and office suites space failed. Plans are for a
portion of the units to be offered as "affordable", to those with incomes
lower than the metro Chicago average. Parking includes a combination of
indoor and outdoor spaces. This property is three stories tall, and the
exterior is of high quality materials with brick and limestone-type finish.
Gated balconies with sliding glass doors are featured. Asking rental rates
and amenities have not yet been determined.
There is one large apartment development planned in Lake Forest, 4.5 miles
north of the subject property. The developer is Focus development and they
plan to build 110 units in 2016/2017.
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73
This property was formerly the site for the municipal services department of
Lake Forest, which has been moved to a new facility near I-294 and Hwy
60. The site has been cleared and the developer is awaiting final approvals
on various components of development. The apartments are planned to be
demised in 3-story brick clad structures with fireplaces in some units.
This entire development is also expected to include 12 detached singlefamily homes ranging in size from 3,900 to 4,400 sf and 42 condominiums
ranging in size from 1,408 to 2,600 square feet.
One-bedroom/one-bath units at the four Condo/Townhome rentals
generally rent for between $950 (Lake Forest North Condominiums) and
$1,800 (15 Clay Avenue) per month. Two bedroom/two-bath units
generally rent for between $1,200 (Lake Forest North Condominiums) and
$3,500 (The Ravines Condominiums) per month.
The four Condo/Townhome rentals four surveyed include:

15 Clay Avenue Condos, 15 Clay Avenue, Highwood, IL (12 units),
built in 2008.

The Ravines Condominiums, 3535 Patten Road, Highland Park, IL
60035 (50 units), built in 2002.

Bachelor's Officers Quarters/Barracks Lofts Condominiums, 25 Ronin
Road, Highwood, IL 60035 (actually, several nearby addresses), built in
1890, renovated in 2002.

Lake Forest North Condominiums, 1301 N. Western Avenue, Lake
Forest, IL 60045 (120 units), built in 1972.
Of these four properties, 15 Clay Avenue Condos, The Ravines
Condominiums the Bachelor's Officers Quarters/ Barracks Lofts
Condominiums are located within one mile of the subject property. The
fourth property, Lake Forest North Condominiums, is older and not
competitive with the subject property, but was included to illustrate another
core segment of the nearby rental unit inventory – vintage rental
condominiums.
PRIMARY MARKET AREA
APARTMENT DEMAND
OUTLOOK AND
ABSORPTION
The apartment properties located in the Primary Market Area exhibited a
1st Quarter 2016 occupancy rate of 96.5%, which is just above the metro
area average of 95.3%. The Secondary Market Area exhibited a mid-1st
quarter vacancy rate of 95.50%. By themselves, strong growth in rents and
an average occupancy above 95% would indicate demand already exceeds
supply, suggesting that the market has rental unit demand that is presently
not being met. Over the last four years (1st quarter 2012 to 1st quarter
2016), the average asking rent has increased by nearly 11% in the Primary
Market Area.
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74
The submarket average effective rent has increased despite a surge in
apartment unit construction located to south of Primary Market Area
boundary. (Note: quarter to quarter changes in the average rent do indicate
quarterly declines as well as increases.) A total of 488 apartment units were
delivered in 2015 at two properties – Amli Deerfield and Woodview. These
units are being absorbed at a relatively rapid pace – about 15 units per
month.
Our experience in urban and suburban submarkets that have been subject
to minimal or no new apartment construction in 20 to 30 years, especially in
urban submarkets proximate to major employment centers, has been upon
the delivery of new rental units, the units are absorbed fairly rapidly as
existing apartment renters and other households capitalize on the availability
of newer/better quality renter units.
Earlier in this section of the report we calculated a capture rate that
represents the percentage of likely consumers that would need to be
attracted to the planned development to reach stabilized occupancy (i.e.,
95% occupancy). We calculated a capture rate of 3.6% to 7.0% of demand
for all renter units in the Total Market Area. Refining this analysis to reflect
only higher income households (i.e., household income of $50,000+), the
capture rate increases to 6.8% to 13.2%. These two measures suggest that
there is opportunity for additional rental units.
Also, in Section VI, we forecast the potential impact of an additional 363
units in eastern Lake County units on the Primary Market Area vacancy
rate. A demand/supply forecast that suggests the delivery of as many as 521
apartment units (total of all apartment projects that are under construction
or proposed in the Primary and Secondary Market Area) will be able to be
absorbed after an initial spike in the vacancy rate in the Primary Market
Areas. The vacancy rate is forecast to ultimately decline to be no higher
than 4% to 7%, according to RECI’s forecasts.
Three potential sources of demand for apartments in downtown Highwood
include: (1) renter households that work in downtown Highwood, downtown
Lake Forest, Downtown Highland Park or other downtowns along the
Metra line in Cook County; (2) renter households presently residing in older
rented condos or apartments in the Highwood, Highland Park and Lake
Forest communities that that may be more suited to newly constructed
apartments; and (3) renter households residing in northern Cook County
who work north of the Northbrook/Deerfield area, who presently commute
by commuter train or vehicle.
Absorption
Forecast
In order to develop a forecast of apartment unit absorption, we look to the
lease-up rate of recently built apartment developments within or near Lake
County, Illinois. Figure 55 below shows average monthly absorption
estimates for 15 apartment communities that we have studied since 2009 as
part of a broader analysis of Class A apartment developments in Lake
County, IL. Our research suggested that each of these properties were
properly positioned for their respective submarkets. All but one, for its size
(301 Riverwalk Place), achieved a moderate to high rate of lease-up.
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75
This project was built by developer of office/industrial properties (Hamilton
Partners) and also had a significant locational disadvantage – set back well
off of Milwaukee Avenue.
One of the most rapid rates of lease-up was associated with Deerfield Village
apartments. We attribute this to its location at the intersection of two major
thoroughfares, location adjacent to Deerfield’s redeveloped downtown and
the time period (2000) it was delivered.
In summary, our research of the last three to four years suggest that an
apartment absorption rate of 10 to 20 units per month is typically achievable
for larger apartments projects when: (1) the product is properly positioned to
penetrate urban/suburban apartment demand; and (2) the property is
properly priced (i.e., subject property rents are not considerably above its
primary competitors).
We would expect smaller apartment developments like the subject property
to exhibit an absorption rate closer to one-half the monthly rate of larger
properties, say below 10 units per month. For example, the lease-up rate for
two smaller properties in 2013 - Emerson Square and Central Station –were
estimated at 5 units per month, as shown below.
FIGURE 55: CLASS A AND CLASS A/UPSCALE APARTMENT UNIT
ABSORPTION RATES
g
Number of
Units
Total
Leasing
Leased/
% of Total
City
Units
Began
Units
Month
#
Property Name
1
Deerfield Village Center
Deerfield
56
2000
12
21.4%
2
Amli at Museum Gardens
Vernon Hills
298
3Q 2004
17
5.7%
3
Madison at Park Butterfield Mundelein
522
2004
22
4.2%
4
Coventry Glen
Round Lake
225
2Q 2005
19
8.4%
5
301 Riverwalk Place
Buffalo Grove
90
4Q 2006
5
5.6%
6
Port Clinton
Vernon Hills
60
2Q 2009
10
16.7%
7
Commons at Town Center
Vernon Hills
85
4Q 2009
7
8.2%
8
Emerson Square*
Evanston
32
4Q 2013
5
16.7%
9
AMLI Evanston
Evanston
195
1Q 2013
10
5.1%
10
1717
Evanston
175
1Q 2013
11
6.3%
11
Central Station
Evanston
80
2Q 2013
5
6.3%
12
Oaks of Vernon Hills I
Vernon Hills
304
3Q 2014
16
5.3%
13
Woodview
Deerfield
248
1Q 2015
14
5.6%
15
Amli - Deerfield
Deerfield
240
3Q 2015
14
5.8%
12
8.4%
Total/Average
2,848
Sources: Real Estate Counselors International, Inc. Field Surveys, 2000-2016
*Note: Features affordable rental units and is considered a Class B property.
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76
Nevertheless, based on the data that we have available to us, we have
concluded a monthly absorption rate range for the subject property to be six
to nine units per month, as shown in Figure 56. This absorption rate range
implies that a 28 unit apartment project would be leased to 95% (i.e., 27
units) between four and nine months.
FIGURE 56: CLASS A APARTMENT UNIT ABSORPTION FORECAST FOR THE
SUBJECT PROPERTY
Total Number of Units to be Absorbed to
Reach 95%+ Occupancy of 28 Unit Property
27 Units
Forecast Range
Low Absorption
High Absorption
Forecas t Range of Monthly Abs orption, in Units
6
Forecas t Range of Monthly Abs orption, in %
23%
Forecas t Period to abs orb 28 units , in Months
4
UNIT MIX AND
RENTAL RATES
Evaluation Of
Unit Mix
Several of the newer apartments in the Primary and Secondary Market
Areas – Amli at Museum Garden, Woodview, Amli –Deerfield and the Oaks
of Vernon Hills – are targeting singles/married couples and offer 60% to
80% one bedroom units and/or studio apartments. Renaissance Place and
Deerfield Village, located in east Lake County, are 50% to 60% two
bedroom units and 40% to 50% one bedroom units. (They do not offer
three bedroom units.)
Earlier in this section, we summarized the most competitive apartments in
located in the Primary and Secondary Market Areas. In addition, we also
surveyed key characteristics of 13 recently completed and under
construction apartment projects in northern Cook County and Lake County
and summarized the unit mix of each and the unit sizes by unit type. These
properties reflect the most recent design plans of apartment developers in
the region and are shown in Figure 57. A summary of our findings is as
follows:



RECI
Studio apartments are primarily found in the in the largest
apartment developments, with more than 200 units. Studio
apartments are found in seven of the 13 projects. Examples include
Woodview, Amli Deerfield, Amli Evanston, E2, Tapestry and The
Reserve. Central Station is only 80 units, but featured eight or 10%
studios.
Among the properties with studio units, they generally account for
only 6% to 15% of total units. E2 in downtown Evanston features
the largest percentage – at 24%.
Three bedroom units are featured in in seven of the 13
developments, but in only four of the largest developments (over 200
units).
77
9
34%
3

Among the properties with three bedroom units, they generally
account for only 3% to 18% of total units. Two of the smaller
properties – Emerson Square and The Founders exhibit the highest
percentage of three bedroom units, at 31% to 33%.

Unit sizes for studio, one bedroom, two bedroom and three
bedroom units are summarized:
o Studio units range in size from 505 square feet to 654
square feet, with an average of 595 square feet.
o One bedroom units range in size from 695 square feet to
1,318 square feet, with an average of 834 square feet.
o Two bedroom units range in size from 950 square feet to
1,517 square feet, with an average of 1,174 square feet.
o Three bedroom units range in size from 1,090 square feet
to 1,518 square feet, with an average of 1,351 square feet.

For those properties that reported vacancy by unit type (only five of
the 13), we did not observe any pattern of high vacancy among any
single unit size/type.
Regarding the subject property’s amenities kitchens will feature 42” cabinets
and granite countertops and an island featuring the sink and dishwasher.
All units will have nine foot ceilings. These amenities should be attractive to
most residents and a significant upgrade from many of the rental units
located in the Primary market Area.
RECI
78
FIGURE 57: RECENTLY COMPLETED AND UNDER CONSTRUCTION APARTMENTS: UNIT MIX AND UNIT SIZES
Unit Mix Number
#
Property Name
1 Woodview
2 Amli Deerfield
3 Emerson Square
4 Midtown Square
5 Central Station
6 E2
7 Amli Evanston
8 The Reserve
9 833 Laurel
10 The Founders
11 Tapestry Glenview
12 Northshore 770
13 Northgate Crossing
LOW
HIGH
AVERAGE
City
Deerfield
Deerfield
Evanston
Evanston
Evanston
Evanston
Evanston
Glenview
Highland Park
Northbrook
Northbrook
Northbrook
Wheeling
Year
Built
2015
2015
2013
2014
2013
2015
2013
2015
2016
2015
2014
2016
2016
Studio
24
23
0
0
8
85
6
16
0
0
44
0
0
1 BR
2 BR
3 BR
112
104
8
127
90
0
4
18
10
68
70
0
44
24
4
111
108
50
71
98
39
96
96
30
2
10
0
14
14
14
133
113
0
NA
NA
0
234
54
0
2
10
0
234
113
50
85
67
12
RECI
% Unit Mix
Total
248
240
32
138
80
354
214
238
12
42
290
0
288
32
354
167
Studio
10%
10%
0%
0%
10%
24%
3%
7%
0%
0%
15%
--0%
0%
24%
6%
1 BR
45%
53%
13%
49%
55%
31%
33%
40%
17%
33%
46%
--81%
13%
81%
41%
2 BR
42%
38%
56%
51%
30%
31%
46%
40%
83%
33%
39%
--19%
19%
83%
42%
79
Unit Size
3 BR Studio
3%
596
0%
536
31%
--0%
--5%
601
14%
505
18%
654
13%
630
0%
--33%
--0%
645
----0%
--0%
505
33%
654
10%
595
1 BR
764
830
700
810
837
695
831
821
1,318
750
877
821
787
695
1,318
834
2 BR
1,182
1,218
950
1,162
1,225
1,126
1,260
1,157
1,517
1,000
1,133
1,135
1,197
950
1,517
1,174
3 BR
1,328
--1,090
--1,485
1,443
1,518
1,396
--1,200
------1,090
1,518
1,351
Unit Type with
Highest
Vacancy (April,
2016)
IBR/2BR
IBR/2BR
NA
NA
1 BR
3BR
NONE
NA
NA
NA
NA
NA
NA
In view of the targeted demand segments, we believe that the one bedroom
and two-bedroom units should represent roughly 40% to 50% and 50% to
60% of total units, respectively. The client’s unit mix falls within these
ranges.
U ni t D e t a i l
#
B e d ro o m Ty p e
C o unt
% o f To t a l
U ni t s
U ni t
S q ua re
Feet
To t a l
S q ua re
Fe e t
1
1 Bed ro o m, 1 Bat h
4
14 .3 %
680
2 ,72 0
2
1 Bed ro o m, 1 Bat h, Den
8
2 8 .6 %
800
6 ,4 0 0
3
8
2 8 .6 %
985
7,8 8 0
4
8
2 8 .6 %
1,0 2 5
8 ,2 0 0
28
10 0 . 0 %
TO TA L/ A V ER A G E
900
2 5,2 0 0
Our analysis of the unit sizes of recently built and projects under
construction indicated: (1) the subject’s planned one bedroom units at 680
square feet is only slightly below the bottom end of the range of 695 square
feet to 1,318 and (2) the subject’s larger one bedroom unit, at 800 square
feet, is just below the average of the range of sizes of one bedrooms; and (3)
the planned two bedroom units, at 985 square feet and 1,025 square feet are
above the bottom end of the range, at 950 square feet, but below the average
size of one bedrooms units, at 1,174.
Establishing
Rental Rates For
Subject Property
In order to establish the “market” rents for the subject property, we
evaluated the monthly and per square foot rents of both the surveyed Class
A/newly constructed apartments and the rental condos/townhomes, with
special emphasis on unit features, location and the subject property’s unit
sizes. This analysis also reflected our analysis of household types, income
levels and affordability.
After considering such factors as property location, unit amenities and
common area amenities, we believe the target weighted average per square
foot rental rate range of $1,693 to $1,814 in today’s dollars. This equates to
an average monthly rental rate of $1.88 to $2.02 per square foot.
FIGURE 58: FORECAST MARKET RENTS AND TARGET HOUSEHOLDS FOR
SUBJECT PROPERTY
RECI
80
U ni t D e t a i l
#
B e d ro o m Ty p e
C o unt
M o nt hl y R e nt
%o f
To t a l
U ni t s
U ni t
S q ua re
Feet
To t a l
S q ua re
Fe e t
Lo w
Hi g h
M o nt hl y R e nt
PS F
Lo w
1
4
14 .3 %
680
2 ,72 0
$1,3 50
$1,50 0
$1.9 9
2
8
2 8 .6 %
800
6 ,4 0 0
$1,50 0
$1,70 0
$1.8 8
3
8
2 8 .6 %
985
7,8 8 0
$1,8 0 0
$1,9 0 0
$1.8 3
4
8
2 8 .6 %
1,0 2 5
8 ,2 0 0
$1,9 50
$2 ,0 0 0
$1.9 0
28
10 0 . 0 %
900
2 5,2 0 0
$ 1, 6 9 3
$ 1, 8 14
$ 1. 8 8
P o t e nt i a l Ta rg e t M a rke t
Hi g h
P R IZM Ho us e ho l d
C l a s s i f i c a t i o n a nd
S o c i o e c o no mi c R a nk
Execut ive Suit es (8 ), Gray Po wer
$2 .2 1 (2 1), Up -and -Co mers (2 4 ),
M id d leb urg M anag ers (2 7) and
$2 .13 Bo o mt o wn Sing les (3 5).
$1.9 3 M o vers & Shakers (3 ), Brit e Lit es ,
Li'l Cit y (12 ), New Emp t y Nes t s
(14 ), Seco nd Cit y Elit e (2 0 ), Yo ung
$1.9 5
Influent ials (2 2 )
$2 .0 2
Sources: Real Estate Counselors International, Inc. Field Survey, March 2016
RECI
81
SECTION VIII – FINDINGS/CONCLUSIONS
FINDINGS/
CONCLUSIONS
SUMMARY
We summarize the primary findings/conclusions of our study below:

Even before the U.S. economy fell into recession a watershed change
was emerging with respect to demand for rental housing in the United
States. The nation's homeownership rate actually began declining in
2005. The conditions brought about by the Great Recession and postrecession period prompted a renewed appreciation for the benefits of
renting, including the greater ease of moving, the ability to choose
housing that better fits the family budget, the lack of unnecessary
exposure to market volatility and the freedom that this brings. While
economic conditions drove household growth in the short run, the size
and age structure of the adult population are more important factors in
the long run.

Households of all but the oldest age groups have joined in the shift
toward renting. The largest share increase is among households in their
30s, up by at least 900 basis points over an eight-year span. But shares
of households across all five-year age groups between 25 and 54 also
rose by at least 600 basis points. Over the next decade, two broad
demographic trends - the aging of the Baby Boom population and the
increasing importance of minorities for household growth-will drive
significant changes in rental demand. Also, a return to the recent
average household size for 20-34 year olds of 2.40 to 2.45 equates to 1.9
million more households, with the vast majority of these adding to the
pool of renter households.

Chicago MSA employment is projected to continue to exhibit gains
throughout the forecast period, though growth is forecast to lag
somewhat behind the national average. The recent poor performance of
the metro area's very large Manufacturing and Financial Activities
sectors is anticipated to be a drag on job overall growth. Lake County
job growth, in particular, is forecast by Moody’s Analytics to accelerate
in 2016.

Lake County job growth has been fueling the demand for renter
housing. Since the 1970s, employment growth in Lake County has
exceeded population growth in the county. The growth in the number
of jobs in Lake County is directly related to the surge in commercial real
estate development (and jobs) during the 1970s, 1980s, 1990s and 2000s.
Over these four decades, Lake County was transformed into a major
employment center of the region, with most of the commercial
development occurring in the southeast portion of the county.
Migration and commuting patterns are also contributing to the demand
for rental housing in the county.
RECI
82

There are approximately 174,000 private sector jobs located within a
15-20 minute drive-time of downtown Highwood. Somewhat less than
50,000 of these jobs are manufacturing, wholesale trade and
transportation/warehousing (i.e., industrial) jobs. Approximately 35,000
jobs are traditional office-using jobs; just over 20,000 jobs are in the
retail sector and nearly 14,000 jobs are in the healthcare sector. The
Interstate 94 corridor contains a total of 55.0 million square feet of office
space and 90.0 million square feet of industrial space.

The tightest apartment market conditions in eastern Lake County’s
recent history have been exhibited in recent years. The Primary Market
Area contains approximately 41 square miles and has a total inventory
of 2,297 apartment units (and 3,939 total rental units). At the end of the
1st quarter 2015, the apartment vacancy rate in the Primary Market
Area was only 3.5%. The average monthly effective rent was $1,724 or
$1.90 per square foot in the 1st quarter. For nearly the past 10 years,
there were very few apartment units delivered in this market area until
recently.

The high apartment occupancy rates and recent strong growth in rents
in the Primary and Secondary Market Areas indicate demand continues
to exceed supply and suggests rental unit demand that is presently not
being met. This view is supported by: (1) the capture rate analysis that
suggests that the subject property needs to capture only about 7% to
13% of “qualified” renter demand to be leased–up; and (2) a
demand/supply forecast that suggests the delivery of as many as 363
apartment units (total of all apartment projects that are under
construction or proposed in the Primary and Secondary Market Areas)
will be able to be absorbed after an initial spike in the vacancy rate in
the Primary Market Area. The vacancy rate is forecast to ultimately
decline to be no higher than 4% to 7%, according to RECI’s forecasts.

Three potential sources of demand for apartments in downtown Lake
Bluff include: (1) renter households that work in downtown Highwood,
downtown Lake Forest, Downtown Highland Park or other downtowns
along the Metra line in Cook County; (2) renter households presently
residing in older rented condos or apartments in the Highwood,
Highland Park and Lake Forest communities that that may be more
suited to newly constructed apartments; and (3) renter households
residing in northern Cook County who work north of the
Northbrook/Deerfield area, who presently commute by commuter train
or vehicle.

Using the PRIZM geodemographic database, we have identified a
rather diverse mix of household types for apartments in downtown
Highwood. The Primary Market Area contains a very diverse mix of
household types. In fact, we have identified 10 household types or
segments that we believe contain a significant number of households
that are either renters or given the opportunity, would become renters
at a future stage in their lives. These household types include singles
and couples, mostly without children. Potential target households may
include 25-35 year olds, singles and couples in their late 30s and 40s, as
well as older folks, including empty nesters.
RECI
83
These households span a range of affluence that may include some
Middle, Upscale and some considered Wealthy.

In view of the targeted demand segments, we believe that the one
bedroom and two-bedroom units should represent roughly 43% and
57%, respectively, as shown below. We have concluded that the target
weighted average per square foot rental rate range for the 28 apartment
units developed on the subject property should be in the range of $1,693
to $1,814 in today’s dollars. This equates to an average monthly rental
rate of $1.88 to $2.02 per square foot.
U ni t D e t a i l
#
B e d ro o m Ty p e
C o unt
M o nt hl y R e nt
%o f
To t a l
U ni t s
U ni t
S q ua re
Feet
To t a l
S q ua re
Feet
Lo w
M o nt hl y R e nt
PS F
Hi g h
Lo w
Hi g h
1
4
14 .3 %
680
2 ,72 0
$1,3 50
$1,50 0
$1.9 9
$2 .2 1
2
8
2 8 .6 %
800
6 ,4 0 0
$1,50 0
$1,70 0
$1.8 8
$2 .13
3
8
2 8 .6 %
985
7,8 8 0
$1,8 0 0
$1,9 0 0
$1.8 3
$1.9 3
4
8
2 8 .6 %
1,0 2 5
8 ,2 0 0
$1,9 50
$2 ,0 0 0
$1.9 0
$1.9 5
28
10 0 . 0 %
900
2 5,2 0 0
$ 1, 6 9 3
$ 1, 8 14
$ 1. 8 8
Sources: Fides Capital Partners and Real Estate Counselors International, Inc.
RECI
84
$2 .0 2
ADDENDA
SUBJECT PROPERTY/NEIGHBORHOOD PHOTOS
TARGET RENTER HOUSEHOLDS
LIMITING CONDITIONS AND ASSUMPTIONS
LIMITING CONDITIONS AND ASSUMPTIONS
No responsibility is assumed for matters legal in nature. No investigation has been made of the
title to or any liabilities against the properties. It is assumed, unless otherwise noted, that the
owner's title claim is valid, all assessments are paid, the property rights are good and marketable,
and there are no questions or defects in title, boundaries, encroachments, easements, or liens.
No soil analysis or geological studies were made or furnished to the consultant to determine the
soil bearing capabilities of the land, nor were any water, oil, gas, coal, or other subsurface
mineral and use rights or conditions investigated.
To the best of our knowledge, all data set forth in this report are true and accurate. Although
gathered from reliable sources, no guarantee is made nor liability assumed for the accuracy of
any data, opinions, or estimates identified as being furnished by others. We assume all
information provided by the client--including a rent roll and other property data--is accurate.
We reserve the right to modify or change our findings and conclusions if these data are later
determined to be inaccurate.
Substances such as asbestos, urea-formaldehyde foam insulation, atmospheric emissions, PCBs,
hazardous chemicals, toxic waste, or other potentially hazardous materials could if present,
adversely affect the value of properties. Unless otherwise stated in this report, the existence of
hazardous substances, which may or may not be present on or in the properties, was not
considered by the consultant in the development of conclusions. No responsibility is assumed for
such conditions, and the consultant is not qualified to detect such substances.
The consultant is not required to give testimony or appear in court or at any governmental
hearing by reason of this analysis or report, unless prior arrangements and compensatory fees
have been agreed upon.
Exhibits, such as the site plan or parcel maps, are presented to assist in visualizing the properties
and its surroundings. No liability is assumed for their legal or cartographic accuracy. Parcel
sizes (i.e., square footages) reported by CoStar and zoning were verified when possible through
on-line public records databases. However, not all zoning classifications were verified which
would have required extensive research, but all sales and listing parcel sizes were confirmed. The
subject parcel sizes and the zoning classifications were also verified with Volusia County public
records.
Land areas and legal descriptions used in this analysis were obtained from public records and
have not been verified by a licensed surveyor or attorney. The land description is typically
included for identification purposes only and should not be used in a conveyance or other legal
document without proper verification by legal counsel.
No environmental impact study has been ordered or made. Full compliance with applicable
federal, state, and local environmental regulations and laws is assumed unless otherwise stated,
defined, and considered in this report.
It is also assumed that all required licenses, consents, or other legislative or administrative
authority from any local, state, or national government or private organization either have been
or can be obtained or renewed for any use which the report covers.
Accordingly, we do not opine on, nor are we responsible for, the structural integrity of the
properties including its conformity to specific governmental code requirements, such as fire,
building and safety, earthquake, and occupancy, or any physical defects.
The date of our forecasts to which the conclusions and opinions expressed apply, is set forth in
this report. The sales price ranges are based on the status of the national business economy, the
purchasing power of the United States dollar, and financing terms as of that date.
One or more signatories of this report is a member or associate of the Counselors of Real Estate.
The bylaws and regulations of the Counselors of Real Estate require each member and associate
to control the use and distribution of each report signed by them.
Possession of this report or any copy thereof does not carry with it the right of publication; nor
may this report be used by anyone but the client without the consent of Real Estate Counselors
International, Inc. We do not authorize conveyance of all or part of the contents of this report to
the public through advertising, public relations, news, sales, or other media without prior written
consent. Of particular concern are the forecasts, the identity of the consultants, and any
reference to the Counselors of Real Estate or the designation awarded by this organization.
COMPETITIVE RENTAL SURVEY
APRIL 2016: SURVEY OF SELECTED APARTMENT COMMUNITIES IN LAKE COUNTY AND NORTH COOK COUNTY
Building Name & Address
Class
Year built
# of Units
1 st Quarter
2016
Occupancy
Rate
Distance from
Subject
Property
Unit Type
Unit
# of Units Distribution
Square
Feet
Monthly Asking
Rent
Additional Fees
Unit Amenities
Common Area Amenities
Comments
CLASS B/C MULTIFAMILY PROPERTIES
1
Fort Sheridan Place
634 Sheridan Road
Highwood, IL 60040
C
1970/2011
252
97.2%
1 Block
1 Bed, 1 Bath
72
29%
2 Bed, 1 Bath
144
57%
3 Bed, 2 Bath
36
14%
571 - 630
$1,154 - $1,194
($1.89/sf - $2.02/sf)
881 - 933
$1,384 - $1,484
($1.57/sf - $1.59/sf)
1,144 - 1,172 $1,744 - $1,764
($1.51/sf - $1.52/sf)
2
Braeside Apartments
511 County Line Road
Highland Park, IL 60035
C
1975/2000
16
95.0%
5 Miles
2 Bed, 1 Bath
16
100%
1,000
3
Americana Apartments
1755 Lake Cook Road
B
1982
108
95.4%
6 Miles
1 Bed, 1 Bath
18
17%
822
2 Bed, 2 Bath
37
34%
2 Bed, 2 Bath + Den
28
26%
3 Bed, 2 Bath
53
49%
1 Bed, 1 Bath
120
54%
725
2 Bed, 2 Bath
104
46%
1,050
1 Bed, 1 Bath
126
56%
672 - 768
2 Bed, 2 Bath
110
49%
1,013
4
5
Deer Valley Apartments
30011 Waukegan Road
Lake Bluff, IL 60044
B/C
Forest Pointe/Village Green
29533 N. Waukegan Road
Lake Bluff, IL 60044
B/C
1991
1989
224
236
96.9%
97.9%
7 Miles
8 Miles
Application Fee
Security Deposit
Administration Fee
Pet Deposit
Pet Rent
Storage
$50
$500 to 2 times Monthly Rent
$150
$250
$15/pet/mo.
Complimentary
Central air-conditioning, cable ready,
dishwasher, disposal, microwave, walkin closets, window coverings. Units
have been completely renovated since
2009.
Security Deposit
Administration Fee
Pet Rent
$1,500
$200
$25/pet/mo.
Air-condition, ceiling fans, hardwood
Storage available in the basement, but
flooring, cable-ready, dishwasher.
no on-site amenities.
Washer/dryer connections are available
in the basement but not in the individual
units.
This is an older 4-building, 2-story apartment
complex situated directly across from the Braeside
Metra stop, on the north side of Lake Cook Road.
It has no amenities, but has been mostly updated
with hardwood floors and new kitchens.
Application Fee
Security Deposit
Pet Deposit
Additional Garage Space
$60
$500 (non-refundable)
$150
Air-conditioning, cable-ready, high-end
upgrades in kitchen, including
marble/quartz countertops and
European-style maple cabinets.
Laundry facilities in each unit, as well
as gas fireplaces and balconies.
Outdoor swimming pool provided, but
no exercise facility. One garage
space is provided with each unit, and
additional are available to rent.
Shorter term leases, and furnished
apartments are available, owing to the
large proportion of snow birds in
residence.
This property has large units with luxury
appointments both in the lobby areas, as well as
within the apartments themselves. The exterior
appears dated, and has not been updated. This
property was originally developed as a
condominimum-conversion with a total of four
buildings. However, only one has been converted
to condominiums and is not included in the unit
mix. The population at this property is much older.
$1,298 - $1,592
($1.79/sf - $2.19/sf)
$1,371 - $1,670
($1.31/sf - $1.59/sf)
Application Fee
Security Deposit
Administration Fee
Parking
Pet Deposit
Pet Rent
Storage
$50/application
$300
$200
$125/mo
$250
$25/pet/mo.
$30
Central air-conditioning, cable ready,
Clubhouse, fitness center, garages
ceiling fans in all bedrooms, stainless
available, on-site management, pet
steel, energy-efficient appliances,
friendly policies, recycling center,
granite countertops, fireplaces in some swimming pool, storage available, wi-fi
2-bedroom homes, granite countertops, available, business center, and
high-end cabinetry, hardwood-style
picnic/BBQ area available to
flooring, valuted ceilings in select
residents.
homes, private balconies & patios, walkin closets, washer/dryer in each unit,
view of wetland preserve.
Deer Valley is located directly across the street
from AbbVie's executive offices and corporate
headquarters in Abbott Park. Concessions are
currently being advertised at $750 for the 2bedroom units only. This property has a Lake Bluff
mailing address, but is located in unincorporated
Lake County, and is associated with the Libertyville
school system. Lease terms are offered at six to
15 months, with discounts for longer-term leases.
$1,039 - $1,818
($1.54/sf - $2.64/sf)
$1,407 - $2,422
($1.39/sf - $2.39/sf)
Application Fee
Security Deposit
Administration Fee
Garage Parking
Garage Deposit
Pet Deposit
Pet Rent
Storage
$40 or $10 on-line
$150
$100/mo
$50
$275
$30/pet/mo.
$30 - $50/mo
Central air-conditioning, washer/dryer in
units, cable ready with high speed
internet access available, above-range
microwave, garages available, private
balcony or patio available, woodburning
fireplaces in some units, vaulted
ceilings available.
This property was developed by the same
developer as the Deer Valley Apartments but is
under separate ownership. Forest Pointe is also
known as a Village Green property, and is owned
by Blackrock. Like Deer Valley, Forest Pointe is
located in unincorporated Lake County, and while
it has a Lake Bluff mailing address, is part of the
Libertyville school system. Short-term leases are
available, and discounts are available for
employees of Abbott, Motorola, Cardinal, Baxter,
and Hewitt Associates. No other concessions are
being offered.
$1,500 - $1,600
($1.50/sf - $1.60/sf)
$1,625
($1.98/sf)
1,473 - 1,699
$2,625
($1.55/sf - $1.78/sf)
1,859 - 2 136
$2,825
($1.32/sf - $1.52/sf)
1,851 - 1,886
$2,825
($1.50/sf - $1.53/sf)
Fitness centers in each building,
washer and dryers on each floor,
storage locker and bike storage in
basement.
Club room, business/conference
center, outdoor pool with sundeck,
activity center, 24-hour emergency
maintenance and 24-hour fitness
center. Dog run and dog walking
stations. Not all buildings are petfriendly.
Fort Sheridan Place was purchased in 2009 with
the intent to convert to condominiums, but this
effort was scrapped in favor of substantial overhaul
and renovation, including roof, siding and interiors.
In the process, the rents were substantially
increased, and the residential mixed was altered
from larger families to more singles and young
professionals. Owing to its position across from
the remaining functions of Fort Sheridan, the
property is also popular with military personnel.
This property is situated at the north end of
Highwood, and is approximately a 10-minute walk
to the Metra station.
CLASS A/UPSCALE AND NEWLY CONSTRUCTED MULTIFAMILY PROPERTIES
6
7
8
9
Renaissance Place
1849 Green Bay Road
A
Deerfield Village Centre
625 Deerfield Road
Deerfield, IL 60015
A
AMLI Deerfield
1525 Lake Cook Road
Deerfield, IL 60015
Woodview Apartments
15 Parkway North
Deerfield, IL 60015
10 Manchester Square
601-611 N. Milwaukee Avenue
Libertyville, IL 60048
A
A
A
2000
2000
2015
2015
2008/2015
30
93.3%
53
86.8%
240
47.5%
248
83.1%
34
1.7 Miles
5 Miles
8 Miles
7 Miles
12 Miles
1 Bed, 1 Bath
20
67%
960 - 1,273
$2,145 - $2,350
($1.80/sf - $2.32/sf)
1,330- 1,878
$3,025 - $3,475
($1.81/sf - $2.33/sf)
Security Deposit
One month's rent
Central air conditioning, cable or
satellite available, internet access,
extra storage available, patio or balcony
in most units, washer/dryer in unit, and
units come with window covering. Pets
are not allowed.
This is an urban-style residential
Current concession of free garage parking is
property which is part of a mixed-use included with a 6 or 12 month lease. Short-term
development with high-end retail on
furnished apartments are sometimes available.
the first floor. In addition to upscale
retailers, excellent restaurants and a
upscale movie theater are part of the
development. The property includes
heated underground garage parking, a
fitness center, security, and elevator
access.
2 Bed, 2 Bath
10
33%
1 Bed, 1 Bath
25
47%
760 - 995
Application Fee
Security Deposit
Parking
Pet Deposit
Pet Rent
Storage
$50/application
$500
$50/mo - Single; $75/mo - Tandem
$400 - 1 pet; $600 - 2 pets
$20/pet/mo.
$0 (1st come/1st serve)
Furnished, central air conditioning, high
speed internet available, dishwasher,
washer/dryer, small bedrooms, large
terraces, upgrading to nickel finished
fixtures, storage available at no charge.
Each unit has unique layout.
On-site management, on-site
maintenance, storage space(s),
concierge, garage parking, housesitting service, small free fitness
center, residents lounge, package
receiving, business center, elevator,
trash chutes, recycling center.
1 Bed+ Den, 2 Bath
1
2%
2 Bed, 2 Bath
27
51%
Studio
23
10%
527 - 631
Application Fee
Security Deposit
Administration Fee
Parking
Pet Deposit
Additional Pet Deposit
$65
$250 (refundable)
$180
$125/mo for garage pkg
$250 (refundable)
Stainless steel appliances, side-by-side This property was designed to qualify
refrigerators, under-counter beverage for LEED Silver designation. It is a
centers, 42" painted white wood shaker- smoke-free community with fitness
center, swimming pool, resident
style or espresso wood flat panel
kitchen cabinets, task lighting, marble lounge with fireplace and gourmet
or glass tile backsplashes, gooseneck kitchen, a business center with coffee
kitchen faucets and pull-down sprayers, bar and lounge area, golf simulator
room, garage parking, electric
full size washers and dryers, 9-foot
ceilings, crown molding, some private charging stations, and secure bicycle
storage and repair shop. It is pet
yards and balconies.
friendly, with a dog wash.
This is a new property which was completed in the
3rd quarter of 2015. It has high rental rates, but is
offering concessions on some units. Concessions
include 3 months free parking or one month's rent
free. It also offers short-term furnished apartments
from $105/day, with a minimum stay of 90 days.
1 Bed, 1 Bath
121
50%
1 Bed, 1 Bath with Office
6
3%
2 Bed, 2 Bath
76
32%
2 Bed, 2 Bath with Office
14
6%
Convertible, 1 Bath
204
82.3%
586 - 605
Application Fee
Administrative Fee
Security Deposit
Parking
Pet Deposit
Pet Rent
Storage
$50
$400
1 month's rent
$75 - $125
$20/pet/mo.
$25 - $100/mo
1 Bed, 1 Bath
22
8.9%
675 - 859
Units include quartz countertops,
upgraded plank flooring, stainless steel
appliances, private balconies and
patios, a peninsula/island counter with
overhead lighting, and other modern
kitchen amenities, including a pull-down
gooseneck kitchen faucet.
Outdoor pool with cabanas and hot
tub, fitness center with yoga studio,
outdoor kitchens and fire pits,
"iLounge" with coffee bar, clubroom,
business center, multimedia, gaming
and theatre room, private lounge with
shuffle board and pool table, pet wash
with turbo pet dryers. A dog park is
under construction.
This is a new property still in lease-up, offering
various concessions, including 1 month free on a
13-month lease. The $400 administrative fee can
be applied toward the first months' rent if a lease is
signed within 24 hours of a tour.
2 Bed, 2 Bath
21
8.5%
958- 1,319
3 Bed, 2 Bath
1
0.4%
1,328
Studio
1 Bed, 1 Bath
2 Bed, 2 Bath
3 Bed, 2 Bath
4
8
12
10
12%
24%
35%
29%
710
880
1,430
1,980
The units are being reconfigured.
Parking includes a combination of
indoor and outdoor spaces, and
redevelopment plans have been stalled
due to the limited number of units.
This property is 3 stories high, and the
exterior is of high quality with brick
and limestone-type finish. Gated
balconies with sliding glass doors are
featured. Amenities have not yet been
determined.
This property was purchased in 2013 by Chicagobased Cedar Street Companies, who intend to
reconfigure the second and third floor apartment
units. The first floor retail has been successful but
the original developer's attempt to market the
upper floors as condominium units and office
space failed. Plans are for a portion of the units to
be offered as "affordable", to those with incomes
lower than the Chicago average.
$1,820 - $2,240
($2.25/sf - $2.35/sf)
1,088
$2,650
($2.44/sf)
1,040 - 1,400
$2340 - $3,150
($2.25/sf)
$1,403 - $1,730
($2.24/sf - $2.79/sf)
722 - 858
$1,657 - $1,918
($2.18/sf - $2.30/sf)
966
$2,137 - $2,167
($2.21/sf - $2.24/sf)
1,147 - 1,303 $2,451 - $2,717
($2.09/sf - $2.18/sf)
1260 - 1340
$2,853 - $3,117
($2.25/sf - $2.33/sf)
$1,500 - $1,575
($2.48/sf - $2.65/sf)
$1,678 - $2,103
($2.30/sf - $2.49/sf)
$2,208 - $3,052
($2.13/sf - $2.39/sf)
$3,437
($2.46/sf)
11 Focus Western/Laurel
1000-1042 N. Western Avenue
12 The Oaks of Vernon Hills
103 Oak Leaf Lane
Vernon Hills, IL 60061
13 AMLI at Museum Gardens
1155 North Museum Blvd.
Vernon Hills, IL 60061
A
A
A
2007
2014
2005
110
302
N/A
4.5 Miles
97.7%
294
96.3%
9 Miles
1 Bed, 1 Bath
32
29%
750
2 Bed, 2 Bath
54
49%
1,100 - 1,600
3 Bed, 3 Bath
24
22%
1612 - 1811
1 Bed, 1 Bath
132
1 Bed, 1 Bath + Den
44
2 Bed, 2 Bath
94
2 Bed, 2.5 Bath + Den
Row Home
3 Bed, 2.5 Bath + Den
Row Home
25
1 Bed, 1 Bath
36
1 Bed, 1 Bath + Office
126
1 Bed, 1.5 Bath
30
2 Bed, 2 Bath
72
3 Bed, 2 Bath
30
1 Bed, 1.5 Bath
2
2 Bed, 2 Bath
10
2 Bed, 2.5 Bath
3 Bed, 3 Bath
7
$1,900
$2.53/sf)
N/A
$3,900
($2.15/sf - $2.41/sf)
696 - 889
$1,495 - $2,076
($1.84/sf - $2.77/sf)
893
$1,753 - $2,275
($1.96/sf - $2.55/sf)
1,197 - 1,249 $2,096 - $2,754
($1.65/sf - $2.20/sf)
1,447
$2,820 - $3,856
($1.95/sf - $2.66/sf)
1,800
$3,362 - $4,437
($1.87/sf - $2.47/sf)
1,001
$1,638 - $1,816
($1.64/sf - $1.81/sf)
1,045
$1,516 - $1,678
($1.45/sf - $1.61/sf)
1,064
$1,749
($1.64/sf)
1,203 - 1,216 $1,710 - $2,178
($1.42/sf - $1.71/sf)
1,402
$2,190
($1.56/sf)
This development is also expected to
The apartments are planned to be
demised in 3-story brick clad structures include 12 detached single-family
homes ranging in size from 3,900 to
with fireplaces in some units.
4,400 sf and 42 condominiums
ranging in size from 1,408 to 2,600 sf.
This property was formerly the site for municipal
services in Lake Forest, which have been moved
to a new facility near I-294 and Hwy 60. The site
has been cleared and the developer is awaiting
final approvals on various components of
development.
Application Fee
Security Deposit
Administration Fee
Parking
Pet Deposit
Pet Rent
$50
$250 (refundable)
$200
$150 - $180/mo for garage pkg
$300 (refundable)
$10/mo
Private garages open directly into
apartment buildings, while rowhomes
have an attached, two-car garage.
Units have granite countertops,
stainless stell appliances,
contemporary flooring and advanced
technology. One- and two-bedroom
apartments are situated in elevator
buildings. Units are equipped with
washers and dryers, and balconies.
Property is LEED certified, Silver.
Outdoor swimming pool with sundeck,
nature trails, a community room with
business center, pool table and
theater room, fitness center, dog park,
bicycle storage, individual resident
storage spaces and secure telephone
entry system, as well as on-site
management and maintenance staff.
This is the newest property in the market, and has
leased up very quickly. Only the one bedroom
units have any significant availability. Concessions
of 1 month's rent are currently offered on the one
bedroom units.The property is a typical garden
apartment property, constructed of wood frame
and demised in 8 buildings. The property is owned
by REVA Developmentment. Another 32 units will
be delivered in 2016 in Phase II of this project.
Application Fee
Security Deposit
Administration Fee
Parking
$65/applicatant
$250 (refundable)
$180
$150/mo for underground garage
$100/mo for detached garages
$250 (refundable)
$15 - $30/mo
Nine-foot ceilings, gourmet kitchens
with 42-inch upper cabinets, black or
white Whirlpool appliances, full-size
built-in microwaves, refrigerators with
automatic ice makers, track lighting in
kitchens, kitchen pantries and linen
closets, designer floors featuring Berber
carpet, home offices with wood floors,
full-size washers and dryers, walk-in
closets, raised cultured marble vanities,
double bowl vanities, storage available,
private balconies, sunrooms,
Individually controlled heat and air
conditioning, high-speed internet
7-story buildings with elevators and
telephone entry system, controlled
access gates, heated enclosed
reserved parking, crystal-chandeliered
great room, 24-hour fitness club,
resort style pool with sundeck,
clubhouse, gardens with fountains and
seating areas, walking/jogging path
that connects to Gregg`s Landing
trails, media room with 72-inch rearprojection television and state-of-theart audio and video equipment, library
and conference room with a fireplace,
business center with computers,
AMLI at Museum Gardens is located in Gregg’s
Landing, a master-planned residential community.
The community is located adjacent to Westfield
Shoppingtown Hawthorn Mall. The Tri-State
Tollway (I-94) is located 2.25 miles to the east and
the Libertyville Metra commuter train station
(Milwaukee North Line) is located nearly 3.5 miles
to the north. The property is located proximate to
the I-94 employment corridor. The property is
situated in a neighborhood that is primarily made
up of commercial land uses.
$50/application
Owing to new construction, the units
have high-end finishes, hardwood
floors, granite countertops with open
kitchen and stainless appliances. In
unit laundry, private balcony, indoor
garage.
There are no amenities, owing to the
small size of the property.
This new construction faces the remaining, newly
constructed army reserve functions at Fort
Sheridan. The exterior is brick, and the building
has an elevator. Units have been listed for
between $299,000 and $385,000, although none of
the units have sold, since the property was
developed in 2008. Rental growth for the units
since they were constructed has been substantial,
generally in the range of $100/month when the
units rolled.
Pet Deposit
Storage
RENTAL CONDOS/TOWNHOMES
14 15 Clay Avenue Condos
15 Clay Avenue
Highwood, IL
B
15 The Ravines Condominiums
3535 Patten Road
A
2008
2002
12
100.0%
50
N/A
.3 Mile
1 Mile
1,318
$1,600 - $1,800
($1.22/sf - $1.37/sf)
1517 - 1587
$1,950 - $2,000
($1.26/sf - $1.29/sf)
Application Fee
Pet Fee
Security Deposit
30
2,006 - 2,400
Varies
20
2,800
$2,400 - $3,500
($1.20/sf - $1.46/sf)
$2,800 - $3,200
($1.00/sf - $1.14/sf)
One Month's rent
These are luxury condominium units
This 9-story condo building has an
with high-end finish. Gourmet kitchens outdoor heated pool and exercise
with stainloess appliances, granite
facility. Pets allowed with weight limit.
countertops, cherry cabinets, glass tile
This building was originally intended to include two
condo towers, but only one was constructed. The
units are generally owned by empty nesters and
snowbirds, and very few are available for rent.
15 Bachelor's Officers Quarters
Barracks Lofts Condominiums
25 Ronin Road, Highwood, IL
A
16 Lake Forest North Condominiums
1301 N. Western Avenue
B
1890/2002
1972
150
120
N/A
N/A
1 Mile
4.5 Miles
2 Bed, 2.5 Bath
N/A
3 Bed, 3 Bath
N/A
1 Bed, 1.5 Bath
60
2 Bed, 2 Bath
60
1,400 - 2,100
$2,500 - $2,700
($1.29/sf - $1.71/sf)
1,750 - 3,000 $3,000 - $3,250
($1.00/sf - $1.86/sf)
Varies
These luxury condominiums have a
wide range of finishes, but largely
respect the historic architecture of Fort
Sheridan, and typically offer lofts, wide
balconies, and garage spaces. Interior
appointments are high end, with
European kitchens, hard wood floors,
exposed beams and other unique
finishes.
838 - 1,040
Varies
These are condominium units, so each The property is distinguished by its
unit has different finish. There are no lack of covered or garage parking and
washer/dryers in any of the units, and its dated design.
some of the units have very antiquated
furnace/air conditioner units.
$950 - $1,200
($1.13/sf - $1.15/sf)
1,170 - 1,400 $1,200 - $1,400
($1.00/sf - $1.03/sf)
While the buildings do not offer garden
apartment style amenities, the position
of these buildings on the bluff
overlooking Lake Michigan offers
substantial open space and
outstanding views.
In addition to the historic buildings renovated and
gutted as part of the Fort Sheridan redevelopment
project, some newer buildings were also built,
which typically include townhomes. Rents for
these units can extend from $3,450 to over $4,000
per month.
This is a condominium development which has
many units owned by investors for rent only. The
condominium rules were changed over a decade
ago to limit this ability, however, so not all units are
rental units. Sales prices on these units are
remarkably low, sometimes reaching below
$120,000.
CERTIFICATION
CERTIFICATION
The undersigned certify, except as may be otherwise noted in this report, that:

To the best of our knowledge and belief, the statements of fact contained in this report are true
and correct.

The reported analyses, opinions, and conclusions are limited only by the reported assumptions
and limiting conditions, and are the personal, unbiased professional analyses, opinions, and
conclusions of the undersigned.

Neither the undersigned, Real Estate Counselors International, Inc., nor any of its officers, have
any present or prospective interest in the properties that are the subject of this report, or have any
personal interest or bias with respect to the parties involved.

Our compensation is not contingent upon the reporting of a predetermined conclusion that favors
the cause of the client, the attainment of a stipulated result, or the occurrence of a subsequent
event.

Thomas J. Amato and Mary Claire Sparrow made a personal observation of the subject property
site.

To the best of our knowledge and belief, the reported analyses, opinions, and conclusions were
developed, and this report has been prepared, in conformity with the Code of Ethics of the
Counselors of Real Estate and the Standards of Professional Practice and Bylaws of The
Counselors.

No one provided significant professional assistance to the persons signing this report.

The assignment was not based on a requested minimum pricing range or specified result.
Thomas J. Amato, CRE
Mary Claire Sparrow
QUALIFICATIONS
PROFESSIONAL QUALIFICATIONS - THOMAS J. AMATO, CRE
Professional Experience
Mr. Amato is Director of Due Diligence/Market Research at
RECI. In this capacity, he has counseled developers, retailers,
lenders, institutional investors and TIC Sponsors with regard to
acquisition due diligence, disposition strategies and market
feasibility of apartments, retail, office, industrial, medical office,
student housing, senior housing, self storage facilities and
manufactured housing. He has over 30 years of experience in
real estate investment and market research and more than six
years of experience in commercial real estate appraisal.
Mr. Amato has held senior research positions in two of the
largest real estate investment firms active in the United States
during the 1980s and 1990s - The Balcor Company and Equity
Group Investments, LLC. Mr. Amato also has considerable
experience as a real estate consultant to equity/debt investors
and other entities, providing market feasibility services to some of
the largest retailers and retail developers of the 1970s and 1980s,
and most recently, to institutional clients in matters of real estate
development, acquisition, and disposition as President of Delta
Associates - Midwest. In 1990, Mr. Amato joined Equity Group
Investments, LLC and created the real estate/corporate market
research division serving Samuel Zell's investment subsidiaries.
These included Equity Residential Properties Trust, Equity
Office Properties, Manufactured Home Communities, Equity
Group - Corporate Investments, American Classic Voyages
Company, Capital Trust, and other investment subsidiaries. Mr.
Amato led a team of consultants in a wide range of research and
consulting engagements that included real estate due diligence,
corporate M & A due diligence, marketing research, consumer
segmentation research, and regional extensive economic
research.
Education
Professional Designations
and Affiliations
University of Illinois
Masters Degree
Dominican University
Bachelors Degree
Counselors of Real Estate
Designation: CRE
National Association of Realtors
Lambda Alpha International
Invitations and Acknowledgments University of Illinois Guest Lecturer
PROFESSIONAL QUALIFICATIONS – MARY CLAIRE SPARROW
Professional Experience
Mary Claire Sparrow has been active in the commercial real
estate industry for over 17 years. Her experience has involved
the appraisal and consulting of industrial, multi-family, office,
hotel and retail properties.
Most recently, between 2010 and 2013, Mrs. Sparrow appraised
commercial properties in the Midwest for NPV Advisors, a
national real estate appraisal concern. The majority of her
clients were pension funds and major banks. Between 2005 and
2009, she re-valued the commercial portfolio of property for
Shields Township, Illinois. These properties represented the full
range of commercial real estate, from very small to large,
institutional grade properties.
Mrs. Sparrow previously worked in the Cushman & Wakefield
Appraisal Division, where she concentrated appraisal and
consulting work on retail, office and hotel properties and
portfolios, and prior to that provided general real estate
consulting services for Landauer Associates, with emphasis on
computerized real estate analysis, valuation and feasibility
studies. Mrs. Sparrow also worked as an Investment Manager
for Rubloff Capital Investments, acquiring retail properties for
this Japanese-funded arm of Rubloff. She began her career as a
Real Estate Analyst for VMS Realty, where she performed due
diligence and deal structuring for this early leader in the
syndications industry.
Education
University of Wisconsin - Madison
BBA- Real Estate and Urban Land Economics and Finance,
Investment and Banking
Professional Designation
Appraisal Institute
Practicing Affiliate

Jun 8, 2016 - City of Highwood

Transcription

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