Q4 2022 Multifamily Real Estate Report: Chicago, IL
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Chicago is the third largest city in the nation and home to some of the finest architecture in the country. With a growth rate of 2.7%, the city’s population reached 8,901,000 in 2022.
The unemployment rate for Chicago reached 4.2% in December 2022.
Chicago’s multifamily real estate market experienced continuously low vacancies, increasing rental rates, and a decrease in sales in Q4 2022.
General Area Overview & Demographics
The city of Chicago is the third most populous city in the nation. The racial make-up of the city is 45.3% White (31.7% Non-Hispanic White), 32.9% Black or African American, 5.5% Asian, 0.5% Native American, 0.1% Hawaiian/Pacific Islander, and 15.7% Other.
Chicago, IL Median Household Income & Population
According to the US Census Bureau, the median household income in Chicago in 2021 was $60,159. In 2021, 43.3% of households in Chicago had an income below the poverty level, and many households struggle to keep up with monthly rent payments.
The median age of Chicago residents is 33.9 years with 22.5% of the population below the age of 18, 11.7% between the ages of 18 and 24, 32.0% between 25 and 44, 23.1% between 45 and 64, and 10.6% 65 years or older.
Several world-class universities are located in the city such as the University of Chicago, Northwestern University, and the Illinois Institute of Technology. The city also has an abundance of community colleges for those looking to pursue a lower-cost education.
Chicago is home to iconic attractions such as the Willis Tower (formerly known as the Sears Tower), Millennium Park, Navy Pier, and The Magnificent Mile. Additionally, the city boasts a vibrant nightlife with popular restaurants and bars in neighborhoods like Wicker Park, Lakeview, and Lincoln Park.
The city experiences all four seasons with hot, humid summers and cold winters. The city typically receives over 30 inches of rain per year with the majority of precipitation occurring in the months between April and September. Snowfall is also common during winter months with an average annual snowfall of 37 inches.
Summary of Chicago Multifamily Real Estate Performance in Q4 2022
Vacancy rates reached 4.7% in Q4 2022 for Chicago multifamily real estate, a 5-year record low for the city. The Loop submarket posted the highest vacancy rates at 8.1%.
Absorption rates were strongest in mid-tier and lower-tier units.
What are multifamily rents like in Chicago?
Asking rents for Chicago multifamily real estate averaged $1,836 per month, per unit, increasing quarter-over-quarter from Q3 2022.
Combined average rents for Class B and C properties were at about $1,424 per month, per unit. This is the lowest this average has been in twenty years.
Purchase & Leasing Activity
The median sales price for Chicago multifamily reached $201,600 per unit in Q4 2022. The overall median sales prices for the year averaged $168,300 per unit.
The number of sales transactions was down 17% quarter-over-quarter at the close of 2022.
Notable Multifamily Real Estate Deals in Chicago in Q4 2022
There were several notable deals that took place for Chicago multifamily real estate in Q4 2022:
- The Elle property had 496 units sold for $170 million.
- Fieldpointe of Schaumburg property had 396 units sold for $79.8 million.
- GlenLake Village property had 425 units sold for $67.2 million.
- Concordia Place Apartments property had 207 units sold for $33.5 million.
These are select examples among other activity.
New Multifamily Real Estate Development Activity in Chicago in Q4 2022
Multifamily deliveries for the year reached 4,490 units; Q4 2022 accounted for 1,170 of those units.
New construction being added to the pipeline at the close of the year totaled 13,948 units.
Market Forecast for Chicago’s Multifamily Real Estate Market
Expect vacancy rates and average asking rents to rise slightly in 2023.
Projects under construction will likely increase and, in turn, increase deliveries.
The average prices per unit for Chicago multifamily real estate should decrease in H1 2023 after historically strong performance throughout 2022.
Takeaways for Multifamily Real Estate Investors
Chicago’s multifamily real estate market has continued to grow stronger in recent years across the board.
2023 could see favorable sales prices for potential sellers. These strong numbers, however, are likely to decline as the year progresses.
Renter and buyer demand could also lessen as the country faces economic strain. The overall health of the market, at the current moment, may be appealing to potential investors.
Do your research, stay diligent, & happy investing.
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