I have written this post in response to commentary written by a national broker who sells large apartment buildings.  In reading his post, you will gain some current confidence as to why the apartment building sector may be positioned for recovery.  His basic premise is that home ownership is dwindling causing folks to become renters. 

He also suggests the lack of new supply of apartment buildings will cause a new imbalance between renters and available units.  I won’t argue with him here, but I think there is something much more significant to consider for Chicago apartment building investors.  The number one reason these investors should be optimistic is so many buildings have been converted to condos.  A recent review of the Eastern part of Logan Square revealed that more than thirty percent of these buildings had been converted.

Think about it!  Thirty percent of your competition has been eliminated.  Additionally, the replacement cost of these buildings provides a barrier to entry that will protect your investment from future competition.

Please see Richard Donnellan’s of ARA commentary:  http://www.globest.com/commentary/179495-1.html.