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Midwest Experts Forecast 2016 Residential Real Estate Trends

December 22, 2015

As 2015 comes to a close, Chicago-area real estate pros are setting their sights on 2016. Here are the top trends Midwest industry experts, including builders, developers, architects, designers and brokers, predict will shape the residential real estate landscape in the year ahead. (Note: please see trend headlines below, then scroll down for full write-ups):

1. Developers Think Body & Soul
2. Down-To-Earth Living Takes Root
3. Empty Nesters Flock Close To Home
4. Secondary Spaces Take Center Stage
5. Vacation Homes Have Their Day In The Sun
6. Get Your Game On
7. Delivery Dilemmas
8. Master Baths Go Minimalist

1. Developers Think Body & Soul: As a holistic approach to health becomes more mainstream, features dedicated to the well-being of both the body and soul are becoming a must-have for renters and buyers alike. “Multifamily developers continue upping the ante in terms of amenities to stay competitive, and now we’re seeing an evolution to more emphasis on overall wellness rather than strictly entertainment and recreation,” said David Kennedy, principal at KTGY Architecture + Planning’s Chicago/Midwest office.

Developers are also focusing on mental wellness, especially in urban areas like Chicago. That’s where Crescent Heights’ Walton on the Park apartment tower features a seventh-floor meditation garden, providing an unusually tranquil space in the heart of the city, and why Waterton’s recent redevelopment of Presidential Towers included a new outdoor Zen garden. “We’re finding residents value substance over flash and are more likely to appreciate the many uses for a garden, such as meditation, yoga or reading, over a single-purpose space like a screening room,” said David Schwartz, CEO of Waterton, which owns and manages nearly 20,000 apartments across the U.S.

Taking the concept a step further and creating an entire park is Related Midwest, which is preparing to break ground on One Bennett Park, a hybrid condo/apartment tower that will include an adjacent 1.7-acre public park. “The tower and park are named after Edward H. Bennett, co-author of the Plan of Chicago, which stressed the importance of green spaces in the cityscape,” said Curt Bailey, president of Related Midwest. “More than a century later, this balance is as important as ever.”

Single-family homes are also being designed with mental wellness in mind. Elissa Morgante, co-principal of architecture and interior design firm Morgante Wilson Architects, notes more clients are requesting yoga rooms and meditation areas in their homes. “Location is a key consideration for these Zen spaces, as they’re meant to be an escape from the busiest areas of the home,” she said.

2. Down-to-Earth Living Takes Root: As farm-to-table increases in popularity, real estate pros say people will be looking to bring that trend closer to home in 2016. At Prairie Crossing, a conservation community located in Grayslake, residents have access to a 100-acre working organic farm. “Residents can lease a garden plot to farm themselves, subscribe to receive produce deliveries, or visit the farm stand to purchase produce,” said Shane Halleman, broker at john greene Realtor, who is listing homes at Prairie Crossing.

The trend is also growing at apartment communities. Property managers at Residences of the Grove in suburban Downers Grove planted an herb garden for residents. “Our foodie residents love being able to add fresh ingredients that they picked right outside their building to their meals,” said Diana Pittro, executive vice president of RMK Management Corp.

Even high-end homes are including more down-to-earth features. Morgante, from Morgante Wilson Architects, notes dedicated potting rooms, located near the garage and tricked out with custom shelving and storage, are popular among clients who enjoy gardening. The architect has also created a glass greenhouse, connected to the home’s main floor, for a client who wanted to pursue their gardening hobby year-round.

3. Empty Nesters Flock Close To Home: According to Midwest experts, a growing number of empty nesters are choosing to downsize within the same state rather than moving to warmer locales. Developers like Jerry S. James, president of Edward R. James Companies, expect to see even more boomers forego the traditional snowbird migration in 2016. “At our communities like Westgate at The Glen in Glenview and Brighton Mews in Park Ridge, boomers who raised their families in these suburbs don’t want to leave where their friends and family live so they’re drawn to our infill locations,” said James. “Another motivator for staying close to home is the convenience and comfort of staying close to their current doctors, medical care facilities, places of worship, favorite shops and restaurants.”

Brian Brunhofer, president of Meritus Homes, agrees, noting that an increasing number of ranch buyers at the builder’s The Reserve of St. Charles community are local empty nesters. “Many of these buyers plan to continue working for the foreseeable future, so they want to downsize to a single-level home close to their job,” he added. Meanwhile, Peter Brennan, president of Foxford Communities, reports local empty nesters make up the majority of sales at Clocktower Pointe, its condo development in Countryside. “At this stage in their lives, baby boomers want to make things as simple as possible,” said Brennan. “For most, that means enjoying a maintenance-free lifestyle with plenty of space and upscale finishes for hosting family – it doesn’t mean having to upkeep a second home far away.”

Empty nesters in search of a second home are also choosing closer-to-home options. Tammy Barry, director of sales and marketing for Heritage Harbor Ottawa Resort in Ottawa, says a large percentage of buyers at the marina resort community are retirees from Chicago’s suburbs who want a low-maintenance home with access to amenities like boating and hiking, but without moving too far from their primary home. “Heritage Harbor gives them the sense of getting away, but it’s still very easy to get back to Chicago whenever they want,” she said.

4. Secondary Spaces Take Center Stage: As the median size of new homes has decreased in 2015, buyers in 2016 will look for ways to showcase their personal style within a smaller footprint and likely turn to secondary spaces as an outlet. “A trend we are seeing among a number of our buyers is that they are taking full advantage of the variety of high-end, stylish finishes we offer and adding distinct design elements to one small, but high-impact part of the home, such as a powder room that every visitor and guest will see,” said Jeff Benach, co-principal of Lexington Homes. “That’s especially true with buyers moving up from a condo or apartment who are eager to make the home their own, and want to add luxury within a budget.”

Buyers at Enclave of Heritage Estates in Lake Barrington are also playing up secondary spaces like kitchen pantries and walk-in closets by adding furniture-quality shelving or designer lighting. “Our buyers put a lot of thought and their own design sense into the semi-custom homes at Enclave, and that extends to areas that can be overlooked as simply functional spaces,” said Andy Kiener, director of project sales for Kinzie Brokerage. “But those extra details are appreciated by buyers day in and day out.”

Brunhofer of Meritus Homes is also seeing buyers at its semi-custom communities in Elgin and St. Charles invest in more functional upgrades. “Our buyers know they’ll get more impact from a carefully crafted mudroom that will keep their family organized than a two-story foyer,” he said. “Even tricking out the butler’s pantry so they’ll appreciate it every time they entertain is a small, yet meaningful choice.”

5. Vacation Homes Have Their Day In The Sun: With the National Association of Realtors reporting vacation home sales in 2014 surpassed their 2006 pre-recession peak, many experts in the vacation home market expect 2015 sales to match that pace and for this strong momentum to continue in 2016, particularly as more baby boomers purchase second homes to enjoy in retirement.

“Retirees might be fueling the market, but across the board more people are buying vacation homes as a place to escape their busy lives and spend meaningful time with their families,” said Barry of Heritage Harbor Ottawa Resort. “In fact, there is increased demand for larger single-family homes in our community because buyers want a retreat where their entire extended family can gather.”

Those with a vacation home to sell are increasingly likely to do so via an auction, according to real estate auction house SVN Auctionworks. In 2015 the firm saw a substantial uptick in the vacation market and expects that trend to continue in 2016. “Gradually, homeowners are realizing auctions are not just for distressed properties, and in fact are a preferred method to sell one-of-a-kind properties like vacation homes,” said Diana Peterson, president of SVN AuctionWorks.

6. Get Your Game On: The year ahead will see a revamping of the traditional game room as developers look for new ways to differentiate their projects. According to KTGY’s Kennedy, this updated focus on gaming-style amenities is driven by millennial renters, many of whom became accustomed to amenity-rich student housing. “We’re also seeing a trend toward vintage arcade-style games, including nostalgic offerings like table-top shuffle board, which appeal to renters of all ages,” said Kennedy.

At 1000 South Clark, JDL Development’s new luxury Chicago apartment tower that will open in early 2016, gaming amenities will be front and center. “Rather than placing arcade games, foosball and billiards in isolated corners of the building, we’ve added them to inviting spaces that also include TVs and controlled music so it’s more of a lounge environment,” said Yale Dieckmann, executive vice president and chief investment officer at JDL Development.

REVA Development Partners also reports residents of all ages like to “get their game on,” naming the pool table and bocce court as top features at its rental communities The Oaks of Vernon Hills and Northgate Crossing. “Residents young and old are drawn to these games, and they’re an easy, low-pressure way to meet neighbors, socialize and build community,” said Matt Nix, principal of REVA Development Partners.

Fifield Cos., known for its amenity-rich luxury rental towers, will offer its first arcade gaming center at NEXT, a new River North building. The game room will feature retro arcade games, and include old-school favorites like Pac-Man and Galaga. “With people delaying homeownership and electing to rent until a later age, it’s important that our amenities cater to a broader range of renters’ ages and interests,” said Randy Fifield, vice chairman of Fifield Cos. “The NEXT game room will offer classic games that appeal not only to Millennial renters, but also to our Generation X and older Gen Y renters. These games have a way of transporting gamers back to their youth.”

Ditching the game room rulebook is FitzGerald Associates Architects, which is designing a band room and recording studio, complete with recording equipment and acoustical treatment, at The Millennium apartment tower in Chicago’s Loop. “These days, everyone is a DJ,” said Rick Whitney, principal of FitzGerald. “With technology, you can essentially have an entire band in your iPad and create music anywhere. We’re giving residents a ‘home studio’ experience, but with a professional-quality recording studio and a place where the band can jam.”

7. Delivery Dilemmas: With residents increasingly using online sites to shop for everything from clothing and toiletries to groceries and household items, multifamily developers are paying more attention than ever to the logistics of delivery and how to handle the hundreds of packages that arrive at their buildings each day.

“We’ve pretty much seen every type of delivery, from a full set of car tires, to doggie wheelchairs, so we need to be prepared for whatever comes,” said Zach Ktsanes, asset manager at Crescent Heights, which has managed more than 5,000 units in Chicago. In addition to dedicating storage space to accommodate deliveries, its buildings use technology to manage the receipt and notification of each delivery.

RMK Management also uses a scan-and-notify electronic package management system, in addition to offering extra storage space at the nearly 30 communities it manages throughout the Midwest. “Efficient management of deliveries is key to staying on top of the volume of packages, and that starts with notifying residents nearly instantly when an item has arrived so they can collect it,” said Diana Pittro, executive vice president of RMK Management.

And at Hubbard Place in downtown Chicago, The Habitat Company, which manages more than 23,000 units nationwide, James Bond makes the deliveries. Residents are notified via text message with a secret code they can use to open a custom wood drawer built into the lobby wall to retrieve packages. “The system, which we affectionately call ‘James Bond’ internally, lets residents access their deliveries 24/7 and allows our staff to focus on other priorities,” said Sheila Byrne, executive vice president of property management for The Habitat Company.

8. Master Baths Go Minimalist: Citing Remodeling Magazine’s 2015 “Cost vs. Value” report – in which midrange bathroom remodels returned just 70 percent of their cost at sale, and upscale remodels returned just 60 percent – many local experts predict sweeping master baths with supersized showers and tubs will fall out of favor with buyers in 2016.

At Provenance, a luxury new-home community in Northbrook, Red Seal Homes is shifting square footage from the master bath to a master sitting room, dressing room or larger walk-in closet. “Buyers are preferring a walk-in shower with a custom tile base over the separate shower and soaking tub, which takes up far more space,” said Brian Hoffman, an executive with Red Seal Homes.

Similarly, developer Sedgwick Properties has started foregoing tubs in the master bath in favor of larger, stand-alone showers. “Typically, other bathrooms in the home already have a tub for guests, making them less essential in the master,” said Marty Paris, president of Sedgwick Properties. But a smaller footprint doesn’t mean homeowners want their master bath to be any less luxurious. “The decrease in size not only frees up space elsewhere in the home, but also makes it possible to splurge on fixtures and finishes that might not otherwise be economical.”

Perhaps the biggest change is the overall perception of the master bath. “Many of these larger master baths were modeled after spas or hotels, but some homeowners discovered they would rather go to the spa for the full experience than try to replicate it in their home,” said Jeanine McShea, managing broker of Chicago-based Related Realty.

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