Condo ownership steps into the future
Chicago is a great city for walking. Working downtown, I’ll frequently travel on foot to my next meeting or appointment – it gives me a chance to “tune in” to the city. In a decade of doing so, I’ve watched Chicago’s Loop change from a place that clears out at 6 p.m. to one that plays host to thriving communities, day and night.
Neighborhood by neighborhood, downtown Chicago is changing, and it’s happening because more people want to live in the city. Empty warehouses in the South Loop have been transformed into luxury residences. But it’s not just the Loop that’s changing—River North, Old Towne, and Streeterville are among the hot and fast growing luxury condo and apartment areas. And it’s not just happening in Chicago. Walk around the downtowns of most major U.S. cities, and you’ll see new condos and apartments everywhere you look.
City living is picking up speed
The reason is simple: demand is driving supply. Two key groups are hungry to live in the heart of America’s metropolises: young millennials and wealthy baby boomers.1 They’re fueling the growth of new downtown living in cities across the country.
The boomers are headed back to the city, abandoning far-flung suburbs in search of more active empty-nester lifestyles. From July 2013 to June 2015, the number of boomers 50 to 59 buying homes in cities increased from 11% to 13%.2 (And with over 70 million boomers in America, that’s a lot of homes!2) As for millennials, a whopping 62% of them said they prefer the higher density of city living in mixed use communities because it lets them live closer to friends, enjoy short commutes and experience a diversity of people and experiences, according to Nielsen data.3 On average, the 33 largest U.S. cities added 50% more educated millennials than did their suburbs – with Chicago (of course!) and L.A. far outpacing the trend.4
The condo market is responding with remarkable growth. In 2014 alone, Corelogic reported double digit growth in the construction completion of condo buildings.5 Here in Chicago, a recent Tribune article reported that condo sales are up 50% from 2011 lows and, in the past two years, new condo construction has doubled – with a definitive trend toward more luxury units.6
And as fast as condos are being built, they’re selling even faster – at their fastest pace in 10 years, averaging a mere 52 days on the market.7 Right now, Chicago leads the country in residential tower construction, with 54 new high rise projects underway in the Windy City.8 And these projects include high-profile luxury condos – including the 406 units under development in Vista Towers, where select units are priced from $8 to $10 million.6
A national phenomenon
Of course, the condo boom extends far beyond Chicago. In Los Angeles alone, an estimated 2,000 new luxury units are under development or sold.9 Across the country, Miami offers a clear example of how developers are mixing residential and commercial spaces to create neighborhoods that are the whole package for those on the hunt for new condos. One of the fastest growing and trendy new neighborhoods is Brickell, which includes Brickell City Centre, a mixed use complex of luxury condos, office buildings, hotels and shopping. Luxury brands are getting into the game, too. Aston Martin is lending its name to a project in Miami that will feature units from 600 to 19,000 square feet, with prices from $600,000 to $50 million.10
Similarly, In New York, ONE57 in the Plaza District offers art, fashion and dining with views of Central Park.
Another selling point is access to parks, waterfront, and outdoor spaces. Dallas boasts the Museum Tower, a 42-story building in the 68-acre downtown Arts District. It’s next to the new Klyde Warren Park, which covers a highway and creates a beautiful refuge in the heart of the city.
And the trend extends much further than just the big cities. In smaller cities across the country, condos are flourishing. Nashville has two projects underway with condo units at $1 million and up. And even Plano, Texas is in the mix, building a 27-story condo tower as the centerpiece of the $3 billion Legacy West development.11
Not just more, but also different
As affluent downtown professionals stay longer and boomers arrive in cities, the buildings themselves are even changing. Since 2004, the average size of condos being built has increased from 1,100 square feet to 2,500 square feet, and units now typically contain three bedrooms.6 Downsizers are looking for added offices and dens, while younger families wanting to stay longer in the city push for more living space.
Demand is up for amenities, as well, with lounges, coffee bars and staff for services adding to now-standard luxuries like rooftop access or stunning views.12 Some buildings are adding automated motorized parking and plug-in stations for electric cars.12, 13 Multi-tiered indoor bike racks are selling points, too.
Buildings, too, are reflecting a new focus on community spaces. New buildings targeted to millennials boast fire pits, pool tables, dog parks, and movie rooms – even rooms with all the equipment for residents to homebrew their own beer. Indeed, one New York building even boasts a lounge space dedicated to the “tween” set, to appeal to families.12
Insurance and the modern condo owner
As condo living changes, so does the landscape for owners. Owning is different, and so protecting what you own is different, too. From my perspective at a startup insurance provider, that tells me we have to keep doing a lot of listening and thinking about our coverages for the people living in those new high-rises – the people who, like me, love walking from here to there in the big, beautiful, vibrant city.
Christoph Ritterson is Senior Vice President of Marketing at Berkley One.