‘Very little rental development’: Arlington Heights apartment building to add 301 units to suburban market

Arbor House, an eight-story apartment development giving new life to the southern entrance into Arlington Heights, will feature the kind of communal amenities designed to appeal most to young professionals.

An entertainment lounge will have a golf simulator, catering kitchen, pingpong table and a place to watch TV — all looking out onto a terrace with fire pits. Residents also will have access to an outdoor pool with a sun deck, a fitness center and co-working space, plus dog-friendly extras.

“This building is unique. I think, first and foremost, it’s definitely a little bigger than most suburban multifamily developments,” said Brian Carley, executive managing director of development for Bradford Allen, the Chicago-based real estate firm building the 301-unit complex just off the Jane Addams Tollway.

Arbor House is unique on another level: It’s “one of the few new products coming online next year,” Carley said.

Gail Lissner, a managing director for Integra Realty Resources, said there’s been a slowdown in projects breaking ground.

“We’re not expecting a lot of deliveries next year,” she said.

Historically, over the last 30 years, only about 1,700 rental apartment units per year have been added on average to the entire suburban Chicago market, Lissner said.

Since 2015, it’s been averaging about 3,000 units a year.

“But that’s a really small number when you think about how large this geographic area is and how many people are living there,” Lissner said. “so there has been very little rental development that has taken place.”

‘Broad demand’

Chicago-area apartment deliveries totaled 2,448 units through the second quarter of this year — down 61.3% year over year, according to a Cushman & Wakefield report. Metro 19, a five-story apartment complex northwest of the Roselle Metra station, was cited among the key completed suburban projects this year.

“The issues that we see is just mostly raising equity dollars. That seems to be the biggest challenge for new construction,” Lissner said. “There’s a lot of available construction money out there, so developers can certainly get construction loans. But for deals to pencil out, there is that strain caused by rates, but of course rent growth will be something that will help make more projects feasible.”

Integra’s last quarterly survey of 120,000 rental units in the suburban market found that rent had grown 4.1% from a year ago, Lissner said.

The same survey showed an overall occupancy rate of 97.5%. That’s considered a market operating at a full occupancy level, she said.

“At this point, with the growth that we’ve seen in housing prices, along with the interest rate environment, there’s less of that type of movement taking place currently,” Lissner said of people staying in apartments.

Bradford Allen’s Carley said more people are interested in renting for myriad reasons and not just the economics, but also for lifestyle and convenience.

“There is a broad demand for apartments still in the greater metro area, downtown Chicago as well, but certainly in the ‘burbs,” he said.

Near the Jane Addams off-ramp, the new apartment building primarily is geared toward the younger professional who commutes into Chicago or somewhere in between, though an empty-nester is “certainly welcome here,” Carley said.

Arbor House is only the beginning of the developer’s plans to transform the gateway corridor.

‘Bullish on this whole area’

Arbor House marks the first phase of a broader, master planned community. Bradford Allen has acquired a collection of properties at the southern end of Arlington Heights, including the Guitar Center site and eight acres at Arlington Heights and Seegers roads.

The developer also plans to convert the former Daily Herald office building into the ArlingtonMed medical office complex. A vignette office suite has been built out on the second floor to show what a fully finished medical office would look like.

The developer envisions restaurants, along with, ideally, a boutique market offering prepared foods in the ground-floor commercial space of the apartment complex under construction on the southeast corner of Arlington Heights and Algonquin roads. Arbor House will have studio, one-, two- and three-bedroom units.

As soon as the developer gets a sense of the rental velocity on Arbor House, the plan is to “push ahead full steam” on the next phase, Carley said.

“We’re pretty bullish, and we’re bullish on this whole area,” he said.

He acknowledged tariffs are “definitely a concern.”

“There’s still just a handful of cranes that are up in the Chicagoland area. So hopefully, as we start planning next year into our next building, there's still some decent buying power, and tariffs don’t kill us.”

The developer was able to work with the contractor on the Arbor House project to do a “fully concrete building,” Carley said.

“We have a really strong building, an asset, a long-term asset for our company,” he said. “And that certainly translates to the residents in a quieter unit versus wood decking, wood walls. We actually have metal studs and concrete.”

Apartments will have quartz countertops and in-unit washers and dryers. The first move-ins are expected in 2026.

— Daily Herald writer Christopher Placek contributed to this report