Chicago Residential Rent Growth Slows Despite High Demand

Chicago Residential Rent Growth Slows Despite High Demand

Aleksandra Novaković
2 min read

In downtown Chicago, there are indications of a slowdown in residential rent growth following a period of rapid increases. Despite this, demand for apartments remains high, with 2,400 units added this year and a total of 3,600 expected by the end of 2024. The average monthly rent for Class A apartments in the area has risen to $3.68 per square foot, pointing to a robust market according to Ron DeVries of Integra Realty Resources. The factors fueling this demand include high interest rates discouraging home purchases and employment relocations to the city. However, remote work trends are redirecting some demand to neighborhoods outside the central business district, where rents are rising faster due to limited new supply. Overall, the market remains strong, with downtown occupancy at 93.8 percent and no concessions offered by landlords, suggesting continued strength in the rental market.

Key Takeaways

  • Demand for downtown Chicago apartments still exceeds supply, with 2,400 units added in 2024.
  • Despite new units, average rent for Class A apartments rose to $3.68 per square foot.
  • Net absorption of 1,390 units in Q1 2024 indicates a strong market post-pandemic.
  • High interest rates and employment relocations are driving rental demand.
  • Development may slow next year, potentially leading to rent increases of 5-8%.


The slowdown in Chicago's downtown rent growth, despite high demand and limited supply, reflects a market adjusting to economic shifts. High interest rates and employment relocations boost rental demand, while remote work trends divert some to suburban areas. This separation could result in higher rents in outlying neighborhoods and a potential slowdown in downtown development, predicting a 5-8% rent increase next year. Landlords, developers, and tenants will be affected, with landlords benefiting from current high occupancy and developers potentially facing challenges in a softening market. Tenants may face higher rents or choose to move to less central areas.

Did You Know?

  • Net Absorption: Indicates the change in the total number of rented units in a real estate market over a specific time period. It is calculated by subtracting the number of units vacated from the number of units leased. A positive net absorption indicates that more units are being leased than vacated, signaling strong demand in the market.
  • Class A Apartments: These are the highest quality apartments in a given market, targeted at high-income renters and commanding the highest rents.
  • Concessions: In the context of rental markets, concessions refer to incentives offered by landlords to attract tenants. The absence of concessions suggests a strong market where landlords do not need to offer additional incentives to fill vacancies.

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