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.