Q1 2023 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, known for its stunning architecture, vibrant cultural scene, and deep-dish pizza, is home to the headquarters of several major corporations, including Boeing, McDonald's, United Airlines, and Allstate Insurance.
The population in Chicago is 8.9 million with a 0.4% growth rate.
Chicago's multifamily real estate market experienced a stable Q1 2023 behind rising rental rates and positive absorption. Experts predict there's still room for this market to grow.
General Area Overview & Demographics
Chicago, often referred to as the "Windy City," is a vibrant metropolis located in the state of Illinois, United States. With a rich history, diverse culture, stunning architecture, and a bustling urban atmosphere, Chicago has established itself as a world-class city that attracts visitors and residents from around the globe, yet renters in the city still struggle to keep up with their monthly payments.
The Culture, Education, and Landscape of Chicago, IL
Situated on the southwestern shore of Lake Michigan, Chicago is the third-largest city in the United States, both in terms of population and economic significance. It is a major hub for finance, commerce, technology, transportation, and culture, making it a thriving center for business and innovation.
Demographically, Chicago is a diverse and multicultural city, reflective of America's melting pot. The racial and ethnic makeup of Chicago is diverse, with a significant African American population, followed by white, Hispanic, and Asian communities. This diversity is one of the city's greatest strengths, contributing to a vibrant cultural scene, a variety of cuisines, and a sense of inclusivity.
Chicago's neighborhoods each have their distinct character and charm. The downtown area, known as "The Loop," is the central business district and home to iconic skyscrapers such as the Willis Tower and the Tribune Tower. The city is renowned for its magnificent architecture, with landmarks like the Cloud Gate sculpture, affectionately called "The Bean," attracting tourists and locals alike.
Chicago prioritizes equitable access to quality education, empowering students to succeed and contribute to their communities. Chicago is home to prestigious universities like the University of Chicago, Northwestern University, and the University of Illinois at Chicago, which offer a wealth of academic programs and research opportunities, attracting students from around the world.
Beyond the urban landscape, Chicago boasts an impressive array of cultural institutions and attractions. The city is famous for its world-class museums, including the Art Institute of Chicago, which houses a vast collection of artworks from various periods and cultures. Additionally, Chicago is known for its thriving music and theater scene, with the renowned Chicago Symphony Orchestra and a vibrant theater district featuring Broadway productions and local performances.
Chicago's sports teams are an integral part of the city's identity. It is home to beloved franchises such as the Chicago Cubs (baseball), Chicago Bulls (basketball), Chicago Bears (American football), and the Chicago Blackhawks (ice hockey), inspiring fierce loyalty and a passionate fan base.
Summary of Chicago Multifamily Real Estate Performance in Q1 2023
Vacancies for Chicago multifamily real estate landed at 4.7% by the end of Q1 2023, a large year-over-year increase from Q1 2022's record-low of 2.9%.
Absorption was positive in the quarter at approximately 2,000 units.
What Are Multifamily Rents Like in Chicago?
Average monthly rents for Chicago multifamily real estate rose nearly a full percentage point above Q4 2022's numbers in Q1 2023 to about $1,886 per month yet remained below Q3 2022's numbers.
Chicago's multifamily rents increased by nearly 7.5% over Q1 2022's figures.
New Multifamily Real Estate Development Activity in Chicago in Q1 2023
About 6,024 new units were completed in Chicago's multifamily real estate market over the past year. The Fulton Market and River North submarkets received most of these deliveries.
Inventory expansion rates for Chicago multifamily were down by 0.8% year-over-year.
Market Forecast for Chicago's Multifamily Real Estate Market
A 1.3% increase in inventory is expected to occur by the end of 2023, bringing total completions to nearly 9,500 units.
Vacancies are expected to climb to about 5.6% throughout the remainder of the year while a 3.6% increase in multifamily rent is also expected.
Takeaways for Multifamily Real Estate Investors
Downtown Chicago apartment leasing activity has risen as employers continue to encourage returns to the office: The multifamily sector in the Lincoln Park-Lakeview area is performing well as a result.
Many investors are looking to reconfigure valuable office and hotel properties into mixed-use multifamily spaces in the already frequented areas of Downtown Chicago. As these new developments come online in the Downtown submarket, leasing activity is likely to decline in other submarkets.
Do your research, stay diligent, and happy investing.
Methodology
This report was written with property information from the MyEListing.com platform in corroboration with other freely available commercial real estate research data.
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