(Above) The great room at 1633 N North Park Avenue in Chicagos Old Town neighborhood. Photo by Andrew Miller. (Click on images to view larger versions.)
Chicagos hotel and rental apartment markets are undergoing dramatic changes because of the COVID-19 pandemic.
1-Aug-20 With tens of thousands of people following state and city guidelines to stay at home, downtown Chicago hotels are posting soaring vacancies and managers are slashing room rates. And, the once-booming Airbnb market is sputtering in the Windy City.
One top Chicago Airbnb manager revealed that the citys once-thriving business is off 30 to 50 percent, and thousands of future reservations have been canceled. It is likely that hotel and Airbnb reservations will not rebound until early 2021 or later when a COVID-19 vaccine is developed, experts predict.
While some luxury downtown hotels are reducing room rates from the $300-per-night range to as little as $69 per night, apartment landlords who formerly hosted swank, completely furnished Airbnb units are quickly redrafting 2020 marketing plans with a shift to leasing apartments on six-month and one-year standard leases.
Within the past six months, 35 furnished apartments have been rented in Census Tract 8007, which includes Lincoln Park and Old Town, noted Realtor Sara Benson (left), president of Chicago-based Benson Stanley Realty.
An analysis of currently available furnished apartments in Lincoln Park revealed 22 active listings with monthly rents ranging from $1,775 to $14,950, Benson said.
Renting former Airbnb apartments on standard leases is proving to be a strong business model, said San Diego-based Airbnb manager Paul Lougee (right) of Native Travel, who recently leased a professionally furnished one-bedroom apartment on Lincoln Avenue in Old Town to a medical professional for $2,350 on a one-year lease.
Another professionally decorated and furnished one-bedroom-plus-den unit on North Park Avenue in Old Town is currently being listed by Benson Stanley Realty for $2,395 per month. The 1,000-square-foot apartment features a 16-by-18-foot great room and a 12-by-18-foot master bedroom.
The unit showcases an Absolute Black granite tuxedo kitchen with undermount stainless steel sink, gas range, dishwasher, built-in Euro-style washer/dryer, and refrigerator with ice maker.
The full bath with marble floor has a glass-walled shower and two-person Jacuzzi tub with Grohe full-body sprays.
The furnished apartment features hardwood floors and new area carpets in the great room, den, and master bedroom; tasteful new modern furnishings; and the building owners original art, lamps, and end tables. Other amenities are track lighting, Levolor blinds, central air conditioning, and forced-air gas heating system.
The rent includes access to a spacious deck that is perfect for entertaining. The deck features built-in seating and Weber gas barbecue grill and overlooks a gated private walled patio and garden with restful in-ground fountain, statue, and waterfall.
Pandemic pushes rents lower
Average apartment rents in the United States decreased by $2 per month to $1,457 in June, and year-over-year growth was negative for the first time since December 2010, reported Yardi Matrix.
Gateway cities such as Chicago, Boston, Houston, Washington, D.C., and 15 other cities posted negative rent growth. The survey reported that rents have declined $12 per month nationwide since January 2020.
Also, MRI Software reported a worrisome trend of increasing use of credit cards to fund rent payments from unemployed renters of market-rate apartments.
The Yardi Matrix report also tracked an exodus from major U.S. cities, fueled by the success of remote working and the desire of many renters to exit populous areas, where it is harder to socially distance and rents are more expensive. Colorado Springs, Indianapolis, Kansas City, Minneapolis/St. Paul, St. Louis, and Tucson posted growth in rentals.
In California, Paul Lougee noted the rise of staycations, where city families are renting luxury suburban single-family Airbnb homes with swimming pools to avoid crowded cities over the summer.