The supply-and-demand setup in the Chicago metro is as good as it has been in a decade, says Galen Faurot-Pigeon, industry principal, multifamily, for Real Estate Business Analytics (REBA).
According to REBA, multifamily deliveries are at a decade low and the under-construction pipeline is down about 25%, setting up the market for sustained rent growth.
Per REBA Benchmark, its real-time rent and occupancy dataset, the Windy City leads the Midwest with 2.6% year-over-year rent growth through March, ahead of Minneapolis-St. Paul at 1.9%; Kansas City, Missouri, at 1.4%; and Indianapolis at 0.4%. In addition, REBA notes it’s the fourth-highest rent growth market in the nation, coming in behind San Francisco; San Jose, California; and Virginia Beach, Virginia.
The occupancy rate in the Chicago metro, according to REBA Benchmark, is 95.9% as of March, down 65 basis points year over year. While the level is still healthy, Chicago’s year-over-year decline puts it in the middle of the pack among the nation’s top 50 markets.
“Chicago is a diversified-economy market anchored by Fortune 500 headquarters and a deep health and education sector,” says Faurot-Pigeon. “Apartment demand has remained resilient, as population growth turned positive due to slow domestic outmigration and positive international migration. Unlike much of the Sun Belt, Chicago is a supply-constrained market that never overbuilt, and rents remain materially below coastal gateway markets.”
REBA’s supply data finds just under 10,000 units delivered to the metro area last year, about 1.3% of its total inventory. Units under construction have dropped from about 25,000 to 18,000. “Not all of that pipeline will deliver in 2026, so less new supply will be delivered in the coming year,” notes Faurot-Pigeon.
The supply is heavily bifurcated between urban and suburban, with the majority of new deliveries in the urban core, according to REBA. Within the urban core, construction clusters are being seen in the West Loop, Fulton Market, and the Loop, with adaptive reuse, led by LaSalle Street’s office-to-residential push, defining downtown completions.
Faurot-Pigeon adds the metro has its share of risks for multifamily owners and operators, including crime being a real negative, with REBA’s crime index coming in about 25% higher than the U.S. average.
“Property taxes are the No. 1 concern by a wide margin, and they could propagate a fiscal doom loop of outmigration, lack of funding, and further increased taxes. Compounding that, assessment volatility and uncertainty make underwriting difficult,” he says. “Insurance premiums are rising as well, making the operating cost picture a big headwind for investing in Chicago. Chicago is a highly regulated landlord environment for a plaintiff-friendly state, which raises operational legal costs for landlords.”