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After almost a decade of a national housing crisis, Rockford is on the rise with a demand for luxury apartments. The rental market is robust, and growing, in the region. First Midwest Group’s residential arm, First Midwest Rentals, is proud to offer luxury options across the Stateline.
(RRStar, Isaac Guerrero, Mar10, 2017) - The “Canfield building” that looms over the southeast corner of Jefferson and Church streets is the latest entry into the Rockford area’s rental market, which landlords say is as robust as ever.
The building debuted in 1936 as Dr. Harry Canfield’s medical clinic, but has been mostly empty in recent decades. First Midwest Group, which bought the building in 2013, spent the past year transforming the second floor into nine upscale one- and two-bedroom apartments, which are being leased beginning this month.
Like other recent downtown apartment developments, the Canfield building is an outlier. High-end amenities include granite kitchen countertops, stainless steel appliances and bathrooms with custom tile work, rain showers and defogger mirrors. Rents range from $950 to $1,200 a month, well above the $736 median gross rent for Winnebago County, according to U.S. Census Bureau estimates.
“We have quality space, and people are willing to pay a few hundred dollars more for quality space,” said First Midwest Group owner Sunil Puri.
The rental housing market in the Rockford area is healthy enough to absorb higher-end, niche apartments like those in the Canfield building at 326 W. Jefferson St., Puri said. And business is so healthy that one property manager says vacancy rates remain low even though the market added thousands of rental units in the wake of the Great Recession.
Beginning in 2008, a glut of foreclosed homes flooded the Rockford market, slowing home sales and depressing prices. Today, home sales and prices are rebounding. Realtors sold more homes in Boone, Winnebago and Ogle counties in 2016 than in any year since the Great Recession, though it’s unclear when the market will return to prerecession levels.
The rental market, though, appears to be as robust as ever. Part of the reason is that many for-sale homes became rentals because sellers weren’t inclined to accept huge losses when property values fell, said Adam Gribble, whose company, Gribble Real Estate Services, manages 280 rental homes and apartments in Winnebago and Boone counties.
“Lots of people who lost their homes in the Great Recession became landlords, even though they never planned to or wanted to,” Gribble said. “And a lot of those foreclosed homes were bought by investors for cheap and put on the rental market. In other cases, people could no longer afford their mortgage but could still afford paying rent month to month.”
The inventory of rental housing in Winnebago County rose 8 percent from 35,349 in 2010 to 38,307 in 2015, according to U.S. Census Bureau estimates. By comparison, the number of owner-occupied housing in Winnebago County remained relatively flat during the same time — 75,730 homes in 2010 compared with 75,388 homes in 2015.
A similar phenomenon has played out across the country. Renters have accounted for all of the nation’s net growth in households since 2005, according to a 2016 national housing survey conducted by Harvard University’s Joint Center for Housing Studies. Renter households increased by nearly 9 million between 2005 and 2010 — the largest increase over any 10-year period on record. Meanwhile, the U.S. homeownership rate sank to its lowest point in 50 years in 2016.
Young adults are responsible for much of the rental boom, according to a recent Pew Center analysis of census and mortgage loan data. Households headed by people 35 or younger had a home ownership rate of 43.1 percent in 2004 compared with 35.2 percent today, the study found. By comparison, the homeownership rate among households 35 to 44 has fallen 16 percent during the same 12-year period.
Renters in their 20s and 30s represent the sweet spot for Urban Equity Properties, a Rockford-based firm that has been downtown’s most active developer during the past few years. The company partnered with a New Jersey developer last year to remake the 11-story office tower known as the Rockford Trust building, 202 W. State St., into 62 apartments.
The one- and two-bedroom apartments at what is now called the Burnham Lofts range from 800 to 1,300 square feet and rent for $1,050 to $1,595. Thirty leases have been signed since the apartment building went on the market in January, said Urban Equity Properties President Justin Fern.
“A lot of folks don’t want to be in something that’s vinyl-sided and in the middle of a cornfield,” Fern said. “They want something cool and hip and close to the coffee shops and other amenities you can walk to downtown. That’s what they’re looking for.”
Fern’s company has a portfolio of roughly 250 rental units in the downtown area and scores more in older, more established Rockford neighborhoods. Converting the old Valencia Apartment complex at North Court Street and Fisher Avenue in northwest Rockford into 32 one- and two-bedroom units is among his next projects. Those apartments will be more moderately priced at $525 to $750 a month when they’re available sometime in the next year, Fern said.
“We set out last year to redevelop 100 units a year for the next five years,” Fern said. “I wouldn’t be making that kind of investment if I didn’t think the market was strong.”
Gribble, too, said his business is brisk. Rents have increased slowly and steadily, perhaps 5 to 7 percent, since 2010, he said. The vacancy rate for his portfolio of apartments and rental homes is below 5 percent, he said.
“The rental market is as strong as I’ve ever seen it,” Gribble said. “We’re busy.”
