Although an apartment bubble for downtown Chicago seems ready to burst at anytime, the demand for high-end rentals in the city still seems to be as strong as ever. Over the next two years, roughly 9,000 more apartments will be added to the marketplace, giving renters an abundance of choices all over town.
In 2016 alone, developers will be completing 4,000 new units—a record for Chicago—and nearly 5,000 more later on in 2017. According to Appraisal Research Counselors, that’s almost a 28% increase in supply, leaving many to believe something has to give at some point.
Despite the overwhelming jump in supply, however, the strong job market in downtown Chicago along with what appears to be a lack of demand in buying downtown condos seems to have others in the industry saying the demand will maintain and rents could even rise between 1 and 2% before the end of the year.
Also noted by Appraisal Research Counselors, rents in Class A downtown apartment buildings increased to $2.81 per square foot in the 4th quarter of 2015, up over 3% from a year prior. Furthermore, occupancy rate for such buildings is also hanging strong despite all the new inventory, with the latest stats showing a 93.5% occupancy rate during the 4th quarter of 2015 compared to a 93.6% occupancy rate a year earlier.