average rent
average occupancy rate
ytd sales volume
YoY rent change
yoy occupancy change
individual transactions
QUARTERLY DEMAND
YTD: 5,495
QUARTERLY COMPLETIONS
YTD: 4,111
Average Monthly Mortgage Payment
Average Monthly Rent
* The Average mortgage payment is based off a median home sales price of $375,900 as reported by the Redfin.
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 | 94.3% | -1.1% | $2,504 | 3.1% |
| Streeterville/River North | 95.1% | -0.5% | $2,784 | 2.4% |
| Lincoln Park/Lakeview | 96.5% | -0.7% | $2,285 | 4.9% |
| Evanston/Rogers Park/Uptown | 94.3% | -1.9% | $2,103 | 4.4% |
| Bronzeville/Hyde Park/South Shore | 94.7% | -0.4% | $1,607 | 3.8% |
| South Cook County | 95.2% | -1.9% | $1,309 | 8.4% |
| Central Cook County | 94.5% | -0.5% | $1,861 | 7.9% |
| Weighted Average | 94.9% | -0.9% | $2,272 | 4.1% |
| Suburban Submarkets | Average Occupancy | Annual Occupancy Change | Average Monthly Rent | Annual Rent Change |
|---|---|---|---|---|
| North Cook County | 95.8% | -1.0% | $1,824 | 8.6% |
| Arlington Heights/Palatine/Wheeling | 95.5% | -1.4% | $1,842 | 10.8% |
| Schaumburg | 96.6% | -0.9% | $1,695 | 6.4% |
| North DuPage County | 96.4% | -1.2% | $1,549 | 6.6% |
| Central DuPage County | 95.1% | -2.1% | $1,902 | 7.8% |
| Southeast DuPage County | 95.4% | -2.1% | $1,739 | 7.2% |
| Naperville | 95.9% | -1.4% | $1,826 | 2.2% |
| Will County | 96.4% | -0.3% | $1,660 | 5.8% |
| Aurora | 95.4% | -0.9% | $1,779 | 4.3% |
| Far Northwest Chicago Suburbs | 96.5% | -1.4% | $1,562 | 5.0% |
| Lake County/Kenosha | 96.2% | -1.4% | $1,607 | 3.0% |
| Gary/Hammond | 96.6% | -1.6% | $1,168 | 3.0% |
| Merrillville/Portage/Valparaiso | 95.9% | -2.0% | $1,272 | 3.2% |
| Weighted Average | 95.9% | -1.4% | $1,676 | 5.9% |
Units Under Construction
Units UC Delivering In the Next 4 Quarters
Units Under Construction
Units UC Delivering In the Next 4 Quarters
Downtown Chicago has reasserted its dominance as the metro’s hub for multifamily transactions. Even though there’s been a slight decline in sales volume over the first two quarters of 2023, multifamily property transactions have demonstrated exceptional resilience and stability when compared to other segments in the commercial real estate industry. While institutional capital continues to have a presence in Chicago, the majority of buyers have predominantly been private investors, seeking opportunities at reduced prices.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
In May 2023, the Chicago Metro demonstrated substantial job growth, adding 81,900 new positions according to the Bureau of Labor Statistics (BLS). This job growth rate of 1.7% continued the strong performance from the earlier quarters of the year. The region saw considerable job gains across various sectors, with the leisure and hospitality sector leading the charge, adding 33,400 new jobs (growth rate of 7.4%). This was closely followed by the education and health services sector, which added 31,300 jobs (growth rate of 4.3%). The financial activities sector also experienced growth, adding 4,000 jobs, reflecting a growth rate of 1.3%. Chicago’s unemployment rate in May was comparably low, matching the national rate of 3.4%. The region continues to showcase robust economic performance with widespread job growth across multiple sectors.
May Annual Jobs Created
May 23 Employment growth
May 23 Unemployment rate
3.4% us may rate
Change from May 2022
to May 2023: 33,400
Percent Change: 7.4%
Change from May 2022
to May 2023: 3,600
Percent Change: –0.4%
Change from May 2022
to May 2023 – 31,300
Percent Change 4.3%
Change from May 2022
to May 2023 – 300
Percent Change -0.2%
Change from May 2022
to May 2023 – 4,000
Percent Change – 1.3%
| Sector | Change from May 2022 to May 2023 | Percent Change |
|---|---|---|
| Leisure and hospitality | 33,400 | 7.4% |
| Professional and business services | (3,600) | -0.4% |
| Education and health services | 31,300 | 4.3% |
| Mining, logging, and construction | (300) | -0.2% |
| Financial activities | 4,000 | 1.3% |
| Government | 5,000 | 1.0% |
| Manufacturing | 8,200 | 2.0% |
| Other services | 3,400 | 1.8% |
| Information | (2,600) | -3.2% |
| Trade, transportation, and utilities | 3,100 | 0.3% |
The Chicago apartment market in 2023 continues on a cautiously optimistic trajectory, with a manageable pipeline of an estimated 8,000 units expected over the next four quarters. Boosted by a healthy job market that added approximately 82,000 new jobs year over year as of May 2023, the city is poised for increased household formation. If the economy maintains its current course, the creation of new jobs in the metro area should help uphold apartment market fundamentals into 2024.
Looking ahead, there are multiple reasons to believe that job growth will stay robust in the metro. Chicago’s reputation as the Midwest’s capital and a major investment hub has attracted numerous multi-million-dollar initiatives that promise to drive future job growth. Notably, Loop Capital Real Estate Partners’ $100 million investment in a South Cook County film studio and The Chan Zuckerberg Initiative’s $250 million commitment to a biotech hub have the potential to generate thousands of jobs on their own.
