The news for renters in Oak Park is good — so far. In spite of an occupancy spike that has filled apartments to “the highest level in years,” according to one landlord, rents are not increasing at the accelerated rate reported in Chicago and other suburbs.
Two Chicago realtor organizations released reports in early August indicating rents were rising fast in Chicago and the suburbs. One study, by multi-unit realtors Marcus and Millichap, said rents increased by 2.5 percent on average last year, and that they were poised to rise by another 3.4 percent in 2011. Appraisal Research Counselors reported rents went up five percent last year and were on target to increase again, although not so high — in reaction to a shortage of supply.
Not so in Oak Park.
“I’ve seen modest increases in rent, maybe 2 percent last year and 2.5 to 3 percent this year, but 5 five percent,” says Rob Breymaier, director of the Oak Park Regional Housing Center. “Occupancy rates have gone up and the rents have remained reasonable.”
Property managers are just happy to have units occupied.
“We’d rather be full than raise the rent,” says Jacqueline Arica, general manager of RK Properties, who rent nearly 300 units in eight Oak Park buildings, mostly along Austin Avenue.
Reasons given for the occupancy increase included foreclosure, job insecurity and the need for flexibility to move, and the inability to get a mortgage.
Renters are shying away from condos. “[They’re] giving up on the false hope of ever increasing real estate prices to bail you out of a bad [condo] purchase,” says Bill Planek of Oak Park Apartments, who rents almost 1,000 units in Oak Park, Forest Park and Austin. Planek says he has the highest occupancy in years and admits to “pushing rents.”
The rise in occupancy is recent, landlords agree. “I remember [a couple years ago] going to meetings of the owners and managers association of Oak Park and hearing tales of woe about landlords having a hard time renting their places,” says Oak Park Assessor Ali ElSaffar, whose family owns several buildings.
Until recently, Oak Park renters were lured away by new construction, specifically student housing and mid-level multi-unit buildings in Chicago. Also, parking rates in Oak Park are significantly higher than neighboring suburbs or Chicago, says Breymaier. “If I’m a tenant and I’m going to move to Oak Park, it costs more to park. It’s essentially more rent.”
But the Oak Park rental market has rebounded and done it faster than neighboring suburbs, according to a 2010 Annual report from the Oak Park Regional Housing Center. Breymaier credits the variety of building stock, and the reputation of Oak Park along with reasonable prices.
“[Oak Park] has never been the most or least expensive. We fit in the middle of the market,” he says. “What that does is allow for a wide variety of folks to move into the community. We also have high quality units in vintage buildings. They’re attractive, desirable and have reasonable rent.
“Our rental market rebounded quicker than the rest of the region. They’ve caught up to us now,” adds Breymaier. “We were ahead in the game from a community point of view. We had fewer months [with units] sitting there and less revenue being generated.”
Average rents in Oak Park range from $700-1100 per month for a one-bedroom and $1,000 – 1,700 per month for two-bedroom units.
It’s possible that rents may not stay reasonable for long. Some landlords say other forces are cutting into their profit margins and putting upward pressure on rents, such as tenant expectations, lack of village provided resources, and property taxes.
“People now looking at the rental market want amenities that are at a higher rate,” says Planek. “Higher-finished apartments [with granite counters and stainless steel] rent the fastest. [These tenants] can afford a mortgage payment, but don’t want to [buy].”
Arica says RK properties has had to upgrade many of its units in order to stay competitive. “We’re starting to rework our kitchens because the competition has done it.”
Many village-run resource programs for multi-unit management companies have been trimmed or eliminated. “Previously in Oak Park, the village had matches to pay for improvements or low-interest loans,” says Arica. “We’ve had a drastic cut in funds from the village that has really tightened things. In the past, there were rental reimbursement programs and matching grants for unit upgrades. We used to be able to get a low-interest loan for something big like windows, a roof or a boiler.”
Breymaier says the village is doing the best it can with the resources it has.
“They had to reevaluate those programs and retool. That process made programs better than they were before. But we have to figure out a way to fund those programs.”
Rising property taxes could also contribute to an increase in rents.
“My property taxes average $2,400 per unit,” says Planek. “That’s $200 a month per unit goes to taxes before rent — whether the unit is full or empty. Now that the District 97 referendum passed, [in May] those taxes will go up.”
However, apartment building owners are getting a break on taxes, says ElSaffar, because of a Cook County initiative that has lowered the multi-unit tax rate over 10 years from 33 percent to 10 percent (starting next year). That’s the same rate paid by single family homes and condominium owners.
