Chicago
MULTIFAMILY
REPORT
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2024 | MID-YEAR
Annual Rent Change
Annual Inventory CHANGE
Deliveries & Absorption
Employment
Rent & Occupancy
Sales
Jobs Added / Lost*
LAST 12 MONTHS
21,800
0.5% YOY
Unemployment*
June 2024
4.8%
70 BPS YOY
With many notable Fortune 500 companies and a strategic location within the country, the Chicago metro area is a significant employment hub. The metro is home to 32 Fortune 500 headquarters, 14 of which are in the city of Chicago. In the 12 months preceding June 2024, Chicago MSA employers raised the employment level by 0.5%, adding 21,800 jobs. Key employment industries within the metro include manufacturing, professional and business services, trade, transportation, and utilities, and private education and healthcare. Chicago's central location, superior transmodal hubs, and access to financial resources support a manufacturing industry that is vital to the metro's economy. In the fourth quarter of 2023, Gotion, a world-leading battery manufacturer, announced a new $2 billion electric vehicle battery gigafactory in Kankakee County that will create over 2,600 new well-compensated jobs. The superior trade, transportation, and utilities industry in the Chicago metro area encourages companies to open distribution and warehousing facilities throughout the region. Given the metro's location within the country, Chicago has the nation's second-largest trade, transportation, and warehousing workforce, with more firms within this industry than anywhere else in the nation. The Kraft Heinz Company is reinforcing that by announcing a new $400 million distribution facility in Dekalb that will bring more than 150 jobs to the region in 2025.
EMPLOYMENT
Gotion Announces New $2 Billion Electric Vehicle Battery Gigafactory
READ MORE
Kraft Heinz to build $400 million distribution facility in DeKalb
READ MORE
Thompson Center's $280M redevelopment to become Google's Chicago HQ kicks off
READ MORE
EMPLOYMENT TRENDS
IN THE NEWS
The Chicago metro area's construction pipeline has been active but less prominent than other major U.S. markets. The zoning and labor challenges also hinder the development approval process, creating a high barrier to entry for future development. In an effort to create more housing, there has been a recent surge in conversion activity, with more than $150 million in public funding allocated to convert office space into apartments. In 2023, builders in the Chicago MSA brought 8,436 units online, narrowly outpacing the previous five-year annual average of 8,359 units from 2018 to 2022. This year expects to come short of that but still deliver a healthy total. Through the first two quarters of 2024, 3,715 multifamily units were delivered. Projections indicate that by the end of the fourth quarter of 2024, 7,432 multifamily units will be delivered. Year to date, net absorption outpaced deliveries with 4,327 net move-ins due to obstacles lowering construction activity. However, by the end of the year, deliveries are projected to outperform absorption. Demand has been shown to be the most prominent in the Evanston/Rogers Park/Uptown and Streeterville/River North submarkets, as they are in the highly sought after Downtown and North Lakefront areas.
Deliveries & Absorption
As multifamily development feels a slight pushback from external factors, there have been no signs of the market becoming oversupplied, which would, in turn, lower occupancy and deflate rent growth. Instead, from a general balance of supply and demand, occupancy has remained healthy and experienced minimal variation. During the past five years, the average occupancy rate has averaged 95.2%. During the second quarter of 2024, average occupancy has matched the five-year average of 95.2%, outpacing the national average by 100 basis points. Class A and B communities have recorded lower occupancy, averaging 94.6%, while Class C apartments average a rate of 96.2% in the second quarter of 2024, as they are much more affordable. Interestingly, submarkets with the highest average occupancy are on the outskirts of the metro. A reason for this trend may be the fact that many manufacturing and distribution facilities are located outside of the city. Another factor is that these submarkets are among the cheapest to live in. During the second quarter of this year, the average monthly rent settled at $2,023, an increase of 4.4% year over year. Due to high demand and occupancy, Class C apartments led all classes with an annual growth rate of 5.3%, followed by Class A at 4.9%, then Class B at 3.0%. By the fourth quarter of this year, rents are projected to finish at $2,030, an increase of 3.1% year-over-year.
RENT & OCCUPANCY
2024 Year to Date*
VOLUME
$391.4M
CAP RATE (AVG)
5.7%
Price Per Unit (AVG)
$280,201
TRANSACTIONS
4
WHAT’S TRADING?*
BUILDINGS (AVG)
5
ACRES (AVG)
10.88
YEAR BUILT (AVG)
1980s
UNITS (AVG)
390
Sources: MSCI Real Capital Analytics; CoStar Group; Berkadia Research
SALES
2024 YEAR TO DATE
DELIVERIES
3,715 UNITS
2024 TOTAL*
ABSORPTION
4,327 UNITS
DELIVERIES
7,432 UNITS
ABSORPTION
4,342 UNITS
Effective rent
Q2 2024
$2,023
4.4% YOY
OCCUPANCY
Q2 2024
95.2%
30 BPS YOY
*$50m+
SELLER
JP Morgan CIM Group Murphy Development Group Integrated Capital Wingspan Development Group
New York, NY Los Angeles, CA Chicago, IL Los Angeles, CA Mount Prospect, IL
LOCATION
Buyer
FPA Multifamily Royal Imperial Group Crescent Heights Continental Properties
San Francisco, CA Chicago, IL Miami, FL Menomonee Falls, MI
Location
Top Buyers*
Top Sellers*
BACK TO TOP
*Projected
Source: RealPage
Y-o-Y Effective Rent Change
0 . 9% - 2 . 5%
2 . 6% - 4. 1 %
4. 2 % - 5. 6%
5. 7% - 7. 2 %
7. 3% - 8. 7%
1. Arlington Heights / Palantine / Wheeling
2. Aurora
3. Bronzeville / Hyde Park / South Shore
4. Central Cook County
5. Central DuPage County
6. Evanston / Rogers Park / Uptown
7. Far Northwest Chicago Suburbs
8. Gary / Hammond
9. Lake County / Kenosha
10. Lincoln Park / Lakeview
11. Merrilville / Portage / Valparaiso
12. Naperville
13. North Cook County
14. North DuPage County
15. Schaumburg
16. South Cook County
17. Southeast DuPage County
18. Streeterville / River North
19. The Loop
20. Will County
SUBMARKET BOUNDARIES
All submarkets in the Chicago metro area posted annual rent growth through the second quarter of 2024. The Lincoln Park/Lakeview submarket posted the highest annual increase in effective rent, at 8.7%. Lincoln Park/Lakeview is a popular area amongst renters, giving residents a dense urban feel while being lakefront with all that the area has to offer. Merrillville/Portage/Valparaiso ranked second with a 5.8% increase, followed by Naperville with a 5.8% increase, Far Northwest Chicago Suburbs and Lake County/Kenosha with a 4.8% increase, and North DuPage County at 4.3%. Besides Lincoln Park/Lakeview and Naperville, the submarkets mentioned that led in annual rent growth were in both the bottom half for average effective rent and the top half for average occupancy rate. The correlation indicates the level of demand apartment operators within the submarkets are experiencing, therefore rents grew the most in these areas.
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
Annual Inventory Change
( 0 . 2 %) - 0 . 0 %
0 . 1 % - 1 . 9%
2 . 0 % - 3. 0 %
3. 1 % - 4. 0 %
4. 1 % - 5. 0 %
1. Arlington Heights / Palantine / Wheeling
2. Aurora
3. Bronzeville / Hyde Park / South Shore
4. Central Cook County
5. Central DuPage County
6. Evanston / Rogers Park / Uptown
7. Far Northwest Chicago Suburbs
8. Gary / Hammond
9. Lake County / Kenosha
10. Lincoln Park / Lakeview
11. Merrilville / Portage / Valparaiso
12. Naperville
13. North Cook County
14. North DuPage County
15. Schaumburg
16. South Cook County
17. Southeast DuPage County
18. Streeterville / River North
19. The Loop
20. Will County
SUBMARKET BOUNDARIES
The submarkets that experienced the highest annual inventory change were a blend of downtown and outlying submarkets. The Loop submarket led all with an inventory expansion of 5.0%, an addition of over 2,000 units in the past year. The Loop is a very popular submarket for renters, with numerous lifestyle and entertainment options while being right in the heart of the city. It is also the second most expensive submarket. The following two submarkets, Aurora and Will County saw the most inventory expansion: Aurora, at 4.3%, and Will County, at 2.3%. Both submarkets are southwest of the city and have seen corporate expansions and openings, increasing demand for housing. The Streeterville/River North submarket showed the subsequent highest increase, at 2.2%, for the same reasons The Loop expanded, quality of life. Streeterville/River North features the highest rents of all submarkets in the Chicago MSA.
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
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© 2024 Berkadia Real Estate Advisors LLC
Berkadia® is a trademark of Berkadia Proprietary Holding LLC Commercial mortgage loan origination and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. This website is not intended to solicit commercial mortgage loan brokerage business in Nevada. Investment sales and realestate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx
The information contained in this flyer has been obtained from sources we believe to be reliable; however, we have not conducted any investigation regarding these matters and make no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. While we do not doubt its accuracy, we have not verified it and neither we, nor the Owner, make any guarantee, warranty or representation of any kind or nature about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example and do not necessarily represent past, current or future performance of the property. You and your advisors should conduct a careful and independent investigation of the property to determine to your satisfaction the suitability of the property and the quality of itstenancy for your records.
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Under Construction/Lease-Up
Lease-Up
Under Construction / Lease-Up
Lease-Up
Deliveries
Absorption
Effective Rent Change
Source: RealPage
Source: RealPage
National Effective Rent
Chicago vs. National Effective Rent & Occupancy
Chicago Occupancy
SUBMARKET PERFORMANCE
Source: Moody’s Analytics
Source: RealPage
Merrillville/Portage/Valparaiso Naperville North Cook County North DuPage County Schaumburg South Cook County Southeast DuPage County Streeterville/River North The Loop Will County
96.2% 95.9% 95.1% 96.9% 95.6% 95.0% 95.3% 94.7% 93.8% 96.1%
30 -10 -40 40 -100 0 -10 -40 -60 -40
$1,346 $1,916 $1,868 $1,616 $1,764 $1,335 $1,765 $2,889 $2,607 $1,723
5.8% 5.1% 2.1% 4.3% 3.9% 0.9% 1.6% 3.1% 4.3% 3.8%
Arlington Heights/Palatine/Wheeling Aurora Bronzeville/Hyde Park/South Shore Central Cook County Central DuPage County Evanston/Rogers Park/Uptown Far Northwest Chicago Suburbs Gary/Hammond Lake County/Kenosha Lincoln Park/Lakeview
95.6% 95.0% 95.1% 94.1% 95.0% 94.4% 96.3% 96.3% 95.8% 95.0%
-20 -50 50 -10 0 50 -20 -30 -40 -120
$1,867 $1,833 $1,666 $1,927 $1,959 $2,182 $1,638 $1,208 $1,693 $2,486
2.7% 3.1% 2.6% 3.0% 2.8% 3.2% 4.8% 3.4% 4.8% 8.7%
Q2 2024 Occupancy
YOY (BPS)
Q2 2024 Effective Rent
YOY
1/2
2/2
ANNUAL INVENTORY CHANGE
DELIVERIES & ABSORPTION
EMPLOYMENT
ANNUAL RENT CHANGE
SALES
RENT & OCCUPANCY
SUBMARKET MID-YEAR 2024 ANNUAL RENT Change
SUBMARKET MID-YEAR 2024 ANNUAL Inventory Change
Deliveries, Absorption, & effective rent change
Market Pipeline
Top submarket pipelines
Under Construction
Under Construction
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Unemployment Rate
Total Jobs
Chicago Effective Rent
National Occupancy
Effective rent and occupancy reflect stabilized properties and does not include preleased units or properties in lease-up. A newly constructed property is considered stabilized once it becomes 85% occupied.
*Seasonally Adjusted
