average rent
average occupancy rate
ytd sales volume
YoY rent change
yoy occupancy change
individual transactions
QUARTERLY DEMAND
YTD: 7,053
QUARTERLY COMPLETIONS
YTD: 6,317
Average Monthly Mortgage Payment
Average Monthly Rent
* The Average mortgage payment is based off a median home sales price of $362,100 as reported by NAR.
In Q2 2023, Chicago’s apartment operators and investors found reason for celebration as rental demand significantly rebounded during the crucial spring leasing season. The number of renters outstripped new unit deliveries by a sizable margin, driving the average occupancy rate up by 30 basis points from the Q1 figure to a healthy 95.5% in June. Of Chicago’s 20 submarkets, only three experienced quarterly declines in occupancy rates. In contrast, the upscale suburb of Naperville enjoyed a substantial 90 basis point increase over the first quarter figure, elevating the suburb’s average occupancy rate to 95.9%. Among the major urban submarkets, the Lincoln Park / Lakeview area maintained the highest occupancy rate at 96.5%. Breaking this down further, Class A, B, and C properties registered occupancy rates of 96.0%, 97.8%, and 99.4% respectively in this submarket.
A comparison of apartment product classes in Chicago reveals a relatively narrow divergence in occupancy rates. On the low end, Class A properties recorded an occupancy rate of 94.8% in the second quarter, while Class B properties registered at 96.2% on the high end. With only a 140-basis point difference separating these two product classes, the variation in occupancy rates is minimal. Delving further, Class B properties saw the largest quarterly increase in occupancy, rising 40 basis points to 95.4%. This uptick nudged the average occupancy rate for Class B communities just above its prior five-year average. Meanwhile, both Class A and C properties reported an occupancy increase of 10 basis points over the preceding quarter.
Despite a slight moderation in rent growth during the second quarter, the broader Chicago apartment market continues to exhibit strong health. With annual rent growth measuring 4.8% in June, the rate remains significantly above both the prior five-year average and the long-term historical average in Chicago. In fact, this figure places Chicago as the seventh-highest market for rent growth in Q2 among the 50 largest apartment markets in the U.S. The Midwest was well-represented in the top ten, housing five of the leading 10 markets.
Analyzing product class performance within the Chicago market reveals that above-average rent growth was largely driven by Class B and C apartment communities, which registered annual growth rates of 5.9% and 5.8%, respectively. While Class C apartments didn’t witness the same double-digit rent growth in 2022 as its Class A and B counterparts, the Class C segment has seen a more modest decline from its peak rent growth holding steady at 5.8% as of June this year. In stark contrast, Class A communities, which stood at a peak of 17.9% just four quarters ago, have experienced a dramatic fall of 14.5 points, settling at an annual growth rate of 3.3% in the most recent quarter. It’s worth noting that the higher the rent goes, the farther it can potentially fall. However, the cooling down in Class A rents has been particularly marked.
| Urban Submarkets | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| The Loop | 94.2% | -1.1% | $2,553 | 1.6% |
| Streeterville/River North | 95.3% | -0.3% | $2,840 | 1.7% |
| Lincoln Park/Lakeview | 96.2% | -0.5% | $2,347 | 4.1% |
| Evanston/Rogers Park/Uptown | 92.3% | -3.0% | $2,146 | 4.1% |
| Bronzeville/Hyde Park/South Shore | 95.3% | 0.8% | $1,631 | 1.0% |
| South Cook County | 95.5% | 0.0% | $1,337 | 6.4% |
| Central Cook County | 94.5% | 0.1% | $1,870 | 4.4% |
| Weighted Average | 94.8% | -0.5% | $2,316 | 2.6% |
| Suburban Submarkets | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| North Cook County | 95.0% | -0.5% | $1,838 | 7.3% |
| Arlington Heights/Palatine/Wheeling | 95.2% | -0.7% | $1,845 | 7.2% |
| Schaumburg | 96.3% | -0.2% | $1,735 | 7.7% |
| North DuPage County | 95.8% | -0.8% | $1,575 | 5.1% |
| Central DuPage County | 94.7% | -0.6% | $1,917 | 3.8% |
| Southeast DuPage County | 95.5% | 0.2% | $1,752 | 4.7% |
| Naperville | 96.0% | 0.1% | $1,871 | 4.4% |
| Will County | 96.7% | 0.0% | $1,660 | 2.8% |
| Aurora | 94.8% | -1.1% | $1,806 | 5.3% |
| Far Northwest Chicago Suburbs | 95.9% | -0.4% | $1,576 | 4.3% |
| Lake County/Kenosha | 96.1% | -0.2% | $1,622 | 2.1% |
| Gary/Hammond | 96.6% | -1.6% | $1,170 | 3.1% |
| Merrillville/Portage/Valparaiso | 95.8% | -0.8% | $1,284 | 1.8% |
| Weighted Average | 95.7% | -0.4% | $1,694 | 4.6% |
Number of Units Under Construction
Number of Units Units UC Delivering In the Next 4 Quarters
Number of Units Under Construction
Number of Units Units UC Delivering In the Next 4 Quarters
Downtown Chicago has reaffirmed its status as the metro area’s epicenter for multifamily transactions. Despite a noticeable dip of 35% in sales volume of single asset conventional multifamily properties during the first three quarters of 2023, the overall decline in transaction activity has been much less steep compared to nearly every other major market in the U.S. On average, U.S. multifamily volume has plummeted over 60% across the same timeframe. While institutional capital continues to have a foothold in Chicago, a significant majority of buyers have predominantly been private investors, attracted by the opportunities to acquire properties at reduced prices.
*Most Active Buyers and Sellers are based on the sale volume of apartment units.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
In August 2023, the Chicago Metro exhibited steady job growth, adding a substantial number of new positions across various sectors. The sectors demonstrating notable growth include Education and Health Services with an addition of 34,800 jobs (4.8% growth), and Leisure and Hospitality with 28,000 new jobs (5.9% growth). Other sectors like Government, Construction, and Financial Activities also experienced growth, adding 5,500 (1.1%), 2,800 (1.5%), and 2,800 (0.9%) jobs respectively. The region continues to show a significant addition of jobs in key sectors like Education, Health Services, and Leisure and Hospitality, reflecting the diverse economic landscape of the Chicago Metro. The figures indicate a promising economic scenario with steady job gains in several sectors.
August Annual Jobs Created
August 2023 Employment growth
August 2023 Unemployment rate
3.8% us rate
| Sector | Change from August 2022 to August 2023 | Percent Change |
|---|---|---|
| Education and health services | 34,800 | 4.8% |
| Leisure and hospitality | 28,000 | 5.9% |
| Government | 5,500 | 1.1% |
| Construction | 2,800 | 1.5% |
| Financial activities | 2,800 | 0.9% |
| Other services | 1,300 | 0.7% |
| Manufacturing | 400 | 0.1% |
| Mining & logging | 100 | 6.7% |
| Information | (5,000) | -6.0% |
| Trade, transportation, and utilities | (8,300) | -0.9% |
| Professional and business services | (12,200) | -1.4% |
The cost-of-living index in Chicago, IL, is marked at 105.4, denoting a relatively moderate cost of living when compared to other major gateway markets. The housing index stands at 113.6, with a median home sales price of $362,600, reflecting a year-over-year change of -2.0%. The average mortgage payment in Chicago is $2,871, as opposed to the average rent which is priced at $1,964. Comparing the cost of living between Chicago, IL, and New York, NY, a substantial difference emerges. Chicago’s cost of living in various sectors is markedly lower. These comparative figures underscore Chicago’s economic appeal, especially for individuals or families looking to reside in a major urban center without the exceedingly high expenses associated with cities like New York. The lower cost of living across multiple sectors, particularly housing, presents a notable financial advantage, making Chicago an attractive alternative for a wide demographic spectrum seeking urban living with a moderated cost burden.
105.4
$2,871
113.6
91
109.4
$362,600
The “Cost of Living” index score provides a comparative assessment of the relative expense involved in maintaining a standard of living in a specific area, benchmarked against a national index score of 100.
The outlook for Chicago’s apartment market in the third quarter of 2023 remains cautiously optimistic, with a manageable pipeline of an estimated 7,100 units anticipated over the next four quarters. The city continues to benefit from a healthy job market, which as of August 2023, has seen steady job growth. Looking ahead, there’s a strong basis to believe that job growth will maintain its momentum in the metro area. Chicago’s stature as the Midwest’s capital and a key investment hub continues to draw significant multi-million-dollar initiatives, promising to fuel future job growth. Noteworthy are investments like Loop Capital Real Estate Partners’ $100 million venture in a South Cook County film studio, and The Chan Zuckerberg Initiative’s $250 million commitment to a biotech hub, both of which hold the potential to generate thousands of jobs independently. With such significant investments and the ongoing job creation across various sectors, the economic climate in Chicago is expected to remain favorable for the apartment market.
