Chicago Multifamily Market Report
Chicago Key Findings
- Chicago’s multifamily market stabilized in Q4 2024 as a result of measured supply, compressed vacancy rates, and positive absorption figures.
- Demand across the multifamily market in Chicago is healthy due to the addition of 10,000 units over the past 12 months.
- Two of Chicago’s submarkets are recording the most move-ins throughout the past year—Downtown Chicago (around 2,300 units) and North Lakefront (approximately 1,700 units) over the past 12 months.
Chicago By the Numbers
- Vacancy Rate: 5.3%
- Cap Rate: 6.8%
- Units Under Construction: 7,225
- Market Asking Rent Per Unit: $1,797
- Rent Growth: 2.5%
- Sales Price Per Unit: $207,556 | Past 12 Months | Source: CoStar Group
Chicago Demographics
- Unemployment Rate: 5.3%
- Current Population: 9,423,597
- Households: 3,746,108
- Median Household Income: $87k | Past 12 Months | Source CoStar Group
According to the USBLS, Chicago is attracting industrial employment back to the city. From August 2023 to August 2024, this employment sector grew by 2.1%, adding 8,700 new positions to the marketplace. Since mid-2021, the region’s manufacturing base has continuously increased.
Market Performance
Demand across the multifamily market in Chicago is healthy with the addition of 10,000 units over the past 12 months. Two of Chicago’s submarkets that are recording the most move-ins throughout the past year are Downtown Chicago (around 2,300 units) and North Lakefront (approximately 1,700 units). These two submarkets account for about 45% of the metro’s year-over-year absorption gains. Chicago’s limited multifamily development should propel rent increases above 3% through at least Q1 2025.
Chicago is on the national radar, with stronger demands fundamentals than the national average. Nonetheless, there are ongoing concerns about Chicago’s crime and insurance rates, stagnating household growth, and rising property taxes. Given these circumstances, institutional players may once again find themselves on the sidelines. If that’s the case, Chicago will most likely rely on its long-standing private buyers, who are more comfortable with these risks than institutions. As a result, unit prices are expected to remain stagnant through 2025.
Construction
Chicago’s low number of multifamily starts and strong demand statistics keep supply tight and demand high. Chicago’s building starts decreased by more than 95% between the peak of 22Q1 and the trough of 24Q3. As of the fourth quarter of 2024, approximately 9,200 units had been finished, with another 7,200 under construction.
Sales
During Q4 2024, Chicago’s 12-month multifamily sales volume is at $3.3 billion, a 35% year-over-year reduction and one of the lowest levels recorded in ten years. During Q1 2023, high-net-worth individuals and other private entities dominated the financing market, accounting for almost 80% of all purchases.
