Compasspoint Development Plans 400 Rental Units in Chicago’s Northwest Suburbs

Barrington-based Compasspoint Development aims to introduce nearly 400 luxury residential units to the Chicago suburbs, leveraging the high demand and rising rents in the area. The company has three residential projects in progress across northwest suburbs including Barrington, Arlington Heights, and Des Plaines. Construction is set to commence this summer on a seven-story, 131-unit building in Des Plaines, followed by developments in Arlington Heights and Barrington.

Anticipated Supply Amidst High Construction Costs

Despite high construction costs hindering suburban apartment development, Compasspoint's projects are expected to meet the rising demand. Data from Integra Realty Resources reveals that suburban Chicago's apartment occupancy stood at 97.3% by the end of 2023, indicating a strong market.

Outrageous Demand and Rental Trends

Joe Taylor, Managing Member of Compasspoint Development, notes the overwhelming demand for suburban apartments. Their completed 212-unit complex in Des Plaines, opened in 2022, reflects this trend with 97% occupancy and rental rates matching upscale studios in downtown Chicago. Suburban rents witnessed a 5.4% increase year-over-year in the fourth quarter of 2023, surpassing the growth rate in downtown Chicago.

Factors Driving Suburban Apartment Demand

Integra's analysis suggests that increased remote work flexibility is contributing to the appeal of suburban living, especially with proximity to employment centers and essential amenities. Taylor emphasizes the convenience of their developments for suburban workers, with easy access to transit stops and downtown amenities.

Financing Challenges and Strategies

Each project in Compasspoint's pipeline requires an estimated $40 million to $50 million in development costs. Securing financing has been challenging, especially since interest rates surged in 2023. However, the company is exploring various financing options, including conventional routes and partnerships with unions, as seen in their previous project in Des Plaines.

Resilience in Real Estate Financing

Taylor remains optimistic about securing financing, citing past success during the pandemic as evidence of continued appetite for real estate projects even in challenging times.