Downtown Chicago’s Rent Growth Inches Upward

Chicago’s downtown apartment market is bouncing back after a year of tepid growth.

Rents averaged $3.61 per square foot in the third quarter for Class A apartments in central neighborhoods, marking a 2.3 percent increase from the same period in last year, Crain’s reported, citing Integra Realty Resources.

The rent growth, while modest, highlights resilient demand, even as the city has seen a large number of deliveries. More than 3,200 units have entered the downtown market so far this year, but occupancy held steady at 94.7 percent.

“We’ve come out of this supply boom downtown,” Integra Senior Managing Director Ron DeVries said. “So when that happens, it usually puts downward pressure on the luxury market.”

However, demand for high-end multifamily properties has remained stable, with absorption projected at 3,762 units for the year — the highest number since 2021.

Several factors have contributed to this steady demand. High interest rates have deterred many prospective homebuyers, keeping them in the rental market, while concerns about the economy have led others to avoid the financial commitment of purchasing a home.

Furthermore, corporate relocations to Chicago have continued to attract renters to the downtown area, while Gen Z’s preference for urban living has further boosted demand.

“They like to live in city centers. They like to rent. They live in apartments, and they have mom and dad to help them, potentially, as well,” KPMG Senior Economist Yelena Maleyev said.

In terms of downtown construction next year, DeVries anticipates a major slowdown with just 500 units in the pipeline.

“Hardly anything is going to come online,” he said, adding, “new construction is virtually shut down. We’ll have to see what happens in 2025, but I don’t see a bunch of new buildings getting started probably for a year.”

— Andrew Terrell