CHICAGO-Notwithstanding the success of locally-based Habitat Co., one of the largest residential property management firms with more than $2 billion in assets and more than 20,000 units under management, the company will also soon participate in a historic moment in the city’s history.

The company is the management partner of the Chicago Housing Authority, which heads up the transformation of the city’s legacy public housing, more than 25,000 apartment units that include public and affordable housing.

The most notorious of these developments are the Cabrini-Green towers, part of the city’s early public housing attempts. With high towers that once held more than 10,000 people, as crime increased in the city, these projects became rampant with crime and drugs. Infamous stories of police avoiding the projects, murders of gang members and even the slayings of innocent children encouraged the city to demolish the towers.

Mark Segal, Habitat’s CEO, says downtown vacancies are dwindling and new development is even being planned, as crews work to build new public housing developments that include all walks of life living together. As the last Cabrini tower closes this month and comes down soon after, Segal tells GlobeSt.com that it’s the dawn of a new day in apartment living in Chicago.

GlobeSt.com: What’s the apartment market like today in Chicago?

Segal: Multifamily in the Chicago market is in a better position today than any of us expected. The market is strengthened, and occupancies and rents are going up. Also, this has been happening in a year when 2,500 new rental units were delivered. While the absorption has been challenging, there’s been an overall increased demand in rental housing, and we all expect that’s going to continue in 2011. The market gets the benefit of no new product being developed, so things are looking good.

GlobeSt.com: Looking at the long term, will multifamily success continue for the next few years?

Segal: If you look at all sectors, multifamily is probably the strongest performer for a lot of reasons. One of the things that attracts us is the demographics, such as the Echo Boomers, Generation Y, coming out of college now, they are prime renters, and we believe they are going to be renters for longer period of time than people been in the past. Also, more people are choosing rental housing than for sale, deferring home purchases. I saw data somewhere that was saying there’s a 1% decline in home ownership, that’s three million new renters.

Also I think there’s a growth in opportunity for senior apartments, whether it’s mixed age or dedicated senior people who have lost retirement. This is really the barbell, two enormous ends of what we believe represents a very large demographic.

GlobeSt.com: There’s also an influx of renters forced out of their homes. Does that change the acceptance policies at the management companies?

Segal: With people who are renters by necessity rather than by choice, we have not changed our screening criteria, we’re still trying to focus on the people we would have approved before the downturn. Other companies have people changed their screening criteria, but that’s creating more demand and is benefiting everyone. For those companies that choose to ignore foreclosures on a person’s credit, that’s helping us preserve standards and drive occupancy at own units.

GlobeSt.com: With this new demand, what’s happening with rents?

Segal: Rents are going up today in most instances, and will continue to go up because concessions and incentives are burning off. Next year is when we’ll see real rent growth start. It’s just a matter of  supply and demand, that’s the key to our industry. I think with employment growth, people are becoming more comfortable where they’re at employment-wise. Chicago is well-diversified. Also, where people may have moved back home, we’re now seeing uncoupling in some households.

 GlobeSt.com: Will we see any new apartment development?

Segal: With development, there’s going to be lots of thought assigned to this in the next couple of years. We’re seeing rents go up, with no deliveries scheduled through at least 2011. The thinking is how to get into a pipeline to be absorbed in 2012. There’s a number of people looking at new development opportunities, but the challenge remains cost. Even though they’re on the rise, rents still aren’t where we thought they would be when the most recent projects were built, and while construction costs have gone down, it’s not a significant decrease relative to the rent increase. I think most of us are optimistic. I think in the long term trend you’ll see incredible demand growth in multifamily. Financing terms are still a little tight, but I was in a meeting earlier today, we’re already starting to see those terms get loose and actively considering development. We think we’re well positioned at Habitat.

GlobeSt.com: What does a typical renter want in an apartment today?

Segal: New renters want live-work-play opportunities, with a high level of service and a great deal of amenities. People want to live in an urban setting, with not just amenities,  they also want to know that entertainment is accessible. This renter demands a lot of care and attention, service when they want it. To these demands, we have launched a number of initiatives, and are providing a lot of online services for our prospects, such as online leasing, rents payments and service requests. We don’t want our residents to be concerned about when we have office hours, we want to meet needs when they have needs.

People also want to be right next to transportation, but these days they want to live near a rail line, not the freeway. We’re actually seeing a decline in the number of cars stored at our garages. It used to be at least one-to-one parking, one spot per one resident, and now even the city is backing off that requirement. We are also featuring the Zipcars, the car-sharing service at some of our locations.

GlobeSt.com: Prior to the downturn, developers were turning apartment projects into condos. Now that the condo market has died down, are condo projects turning into apartment projects?

Segal: We’ve seen that happen to some extent, but there’s not that many large condo developments any longer that were are underway. Once you record a condo declaration, to unwind it is complicated. Until recently there were only three or four projects over 100 units that fit this, intended to be condos but had potential to become rental. One of these, the Lofts at Roosevelt Collection, a development in the South Loop, we worked with developers to evaluate the possibility of converting the two residential towers to rental. We’ve been managing them about a year, and achieved a very rapid lease-up for them, 93% in a years time.

You’re going to continue to see challenges in the condo market in terms of unsold units, lenders taking back unsold units and trying to sell. We developed 400 N. LaSalle, a rental project, and sold it at the peak of the market. The owner was looking to convert it to condos, but I think in the past two months the remaining inventory was purchased by one investor who is renting out until they can make the property condo.

GlobeSt.com: How has the work been going with the massive public housing transformation in the city?

Segal: We have been really pleased to participate in this effort, it’s one of the largest urban redevelopment efforts in the country, with 25,000 residential units being redevelopment. We’ve changed the physical condition of the city by tearing down these high rises and changed them into vibrant, mixed-income communities. We’re changing people’s lives, generating jobs and property values are going up. And many people don’t realize that these redevelopments include public housing, affordable housing and market-rate housing next to each other, at a tremendous success. We’re about 80% done with the Chicago project, and now have expanded into other areas, including Gary, IN and four properties in Detroit.