Chicago mid-2023 apartment market outlook

Chicago mid-2023 apartment market outlook

The Chicago apartment market entered 2023 with impressive annual rent growth. But with the current economic climate, prudent multifamily investors will plan for a rocky rest of the year. Victor Calanog, Ph.D., Commercial Real Estate Economist, shares his take, citing data from Moody's Analytics CRE.

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Chicago entered 2023 on strong footing 

Vacancies held steady for Chicago apartments in Q1 2023, ending the period at 4.7%. That is a full 60 basis points below pre-COVID vacancy levels of 5.3%. 

Furthermore — though slightly off record numbers from 2021 — annual asking and effective rent growth of 8.6% and 9.2%, respectively, for all of 2022 reflects stellar performance for the city’s apartment market leading into the first half of 2023.

Economic uncertainty weighs on the local multifamily market

But some clouds darken the horizon. Continued geopolitical uncertainty, turbulence for smaller banks and fears of an economic slowdown all weigh on overall prospects for the economy, and the impact is being felt in multifamily real estate, Calanog says. 

Chicago’s asking and effective rent growth turned negative in Q1 2023 for the first time since COVID. Asking and effective rent levels both declined 0.5%. The Lincoln Park submarket led the way for rent declines, posting negative growth of 2.5% and 2.6% for asking and effective rent, respectively.

While this pullback might be seasonal, it is prudent for multifamily investors to plan for a rocky rest of the year. 

By the editorial team at Story by J.P. Morgan

What’s the multifamily outlook in other U.S. metro markets? Watch our mid-2023 analyses for more cities across the country. 

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