Hyde Park, home of the University of Chicago, is a historic neighborhood nestled between 49th & 59th and east of Washington Park. Just a 5 mile drive down Lake Shore Drive from the Loop, and a stone’s thrown from the South Shore Golf course, Hyde Park offers investors an attractive submarket of Chicago for a long term investment as they capitalize on rent growth, business growth, and neighborhood development.
Much like Rogers Park has benefitted from Loyola University investing in a three-pronged format to ensure sustainable growth (i.e. neighborhood, businesses and housing), Hyde Park has been blessed with similar advantages but on a much larger scale. With an endowment of over $7B, University of Chicago’s, Jim Hennessey, is one of the execs who have paved the way to rejuvenate Hyde Park since 2008. University of Chicago-led investments include Harper Theater, Harper Court (1.1M square foot mixed-use building), and of course, their long term plan to expand into the surrounding neighborhood of Washington Park to bring more businesses, diversity, and quality housing for the benefit of the local community.
It's not just University of Chicago who's making the news in the development push; Mesa Development and Antheus Capital have chosen to embark on new developments. The following developments have been proposed and/or broken ground:
- Solstice on the Park- A Hotel & Apartment development designed by Studio Gang
- City Hyde Park- A 15 Story Mixed-Use Development (Opening in 2016)
- Vue53- A 13 story residential and retail development
With an array of developments underway, it's not difficult to understand why very little multifamily & mixed-use investment opportunities surface. However, when they do, investors understand, while yields are seemingly low, the long term appreciation is quite attractive as developers and institutions join the University of Chicago's movement to bring new life to a bustling region which houses one of the most well respected institutions in the world.
Cap rates (via CoStar Group) for multifamily, office, and mixed-use buildings range between 5% for Class A buildings (i.e Harper Court, which received dozens of offers, was purchased by an Israeli institution for $112M) to the low 6% region for apartment quality, value-add buildings. With the boundaries of Hyde Park continuing to be pushed via new businesses and residents, Hyde Park may very well outpace some prime North Side neighborhoods in appreciation, rent growth, and new businesses.