Luxury Apartment Rentals Are Hot Again

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With amenities that include outdoor spas, poolside cabanas, private wine lockers, 24-hour fitness centers with views of the city -- who wouldn't want to live in an apartment these days? In Chicago, the big bets developers made by building nearly 1,300 new downtown apartments in 2009 appear to be paying off, big time.

While the condo market flounders in the continued throes of a stifled economy, the downtown rental market in Chicago is booming, according to the Chicago Tribune. Despite rents that exceed $5,000 per month, many potential condo buyers are opting to rent an apartment thanks in part to some very appealing amenities.

So why would anyone consider paying pricey monthly rent, rather than purchase a home or condo for comparatively cheap (compared to the pre-bust era) prices? Because of the risk of continued declines in those prices, says the Tribune. It notes that the median price for a traditionally sold condo or town house in April fell almost 10 percent to $316,000, according to numbers from the Chicago Association of Realtors by Midwest Real Estate Data.

The ability to maintain more financial flexibility has also made apartments with sexy amenities more appealing to younger workers looking to live downtown, according to the Tribune.

While many renters already have benefited by taking up offers of one to two months of free rent, those bargaining chips quickly are becoming history. Since there aren't many building projects on the horizon in downtown Chicago, occupancy rates are expected to reach 90 percent in the next year or so, and market-rate increases are expected by spring 2012.

For an idea of what's available in downtown Chicago, take a look at unit 2207 in EnV Chicago, a 603 square-foot studio apartment with one bathroom, priced between $1,682 to $2,088 per month. While that's pretty pricey given that the average price for a studio in Chicago was $911 in May, according to MyApartmentMap, amenities include:

  • Rooftop: Pool terrace with cabanas and chaise lounges, all-season bar and catering kitchen, barbecue grill area, 24-hour fitness center overlooking a captivating city skyline and private wine lockers
  • 7th floor: Fire-pit lounge and garden, media room with large-screen television and surround sound, Internet lounge, juice and coffee bar, dog run and iPod-docking stations
  • Community features: Wi-Fi throughout the building, full-service concierge, EnV iPhone app
  • Interior unit features: bamboo floors, granite countertops and kitchen islands, 9-foot high ceilings, built-in wine racks

Taking all of that into account, paying around $2,000 per month probably doesn't seem as painful to potential renters.

Apartments are also seeing a strong year in New York City. Marcee Yadgar, rental manager at Anchor Associates in New York, is seeing fewer vacancies this summer compared to last summer, which means fewer benefits for potential renters.

Yadgar notes that fewer concessions (i.e., landlords paying broker fees or offering free rent) are being offered this year. "Landlords filled their vacancies last year, and it seems as though tenants are staying and renewing their leases -- thus fewer availabilities, making it harder for new tenants to negotiate prices."

Patience may be the name of the game, as more availabilities should present themselves in the fall once the summer rush is over, and "landlords will start to offer more incentives again."

Apartment hunters may have become a bit spoiled in light of all of the concessions and negotiating leverage they've experienced lately. "Often, I think clients expect too much," said Yadgar. "They are still expecting to find that $4,500 apartment for $3,000. It is our job to educate them and share our vast knowledge in this changing market."

See apartments for rent in Chicago and New York City in AOL Real Estate
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