Fundamentals remained firm entering Q1 2026 as leasing demand continued to keep pace with new supply. Vacancy held near 5.0%, remaining well below the national average and reflecting sustained absorption alongside limited inventory expansion. Net absorption remained positive across both urban and suburban submarkets, with Downtown Chicago accounting for a disproportionate share of demand given its role as the region’s primary employment and lifestyle hub. Asking rents averaged approximately $1,950 per unit, with annual growth just above 3.0%, continuing to outperform national benchmarks . Growth was strongest among Class A assets, though mid- and lower-tier properties also recorded steady gains, supported by constrained supply and limited trade-out options. Concession levels remained low, signaling continued landlord pricing power and stable lease-up conditions.

Key Findings

• Chicago remains highly supply-constrained, with vacancy near 5.0% as demand continues to keep pace with annual deliveries.
• Construction remains limited, with ~9,800 units underway (1.7% of inventory), supporting rent growth just above 3.0%.
• Investment activity is stabilizing, with sales volume reaching approximately $6 billion, driven by steady fundamentals and demand for quality assets.

Chicago Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

Chicago Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.3%
• Current Population: 9,395,623
• Households: 3,704,570
• Median Household Income: $94,329

Chicago benefits from a highly diversified and resilient economic base anchored by finance, healthcare, manufacturing, logistics, and professional services. The metro hosts a deep pool of office-using employment, supported by 24 Fortune 500 headquarters and a well-educated workforce, with 39% of adults holding a bachelor’s degree or higher. While broader population growth has been modest, higher-income households continue to concentrate in Downtown Chicago, the North Lakefront, and select suburban nodes. Relative affordability compared with peer coastal markets, combined with proximity to major employment centers and infrastructure advantages, continues to underpin multifamily demand.

Recent Office Expansions in Chicago

Source: CoStar Group, Inc.

• Bain and Company
• PxC
• Medline
• Boston Consulting Group

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

Chicago Multifamily Construction

Construction activity remains constrained entering Q1 2026, with roughly 9,800 units underway, representing a limited pace of inventory expansion relative to market size . Development has slowed due to elevated construction costs, tighter financing conditions, and longer entitlement timelines, all of which have reduced new project starts. Following a surge in deliveries in 2023, recent completions have begun to decline and are expected to trend lower through 2026. New supply remains heavily concentrated in luxury product, with higher-end units comprising the majority of both recent deliveries and the active pipeline. Downtown Chicago continues to account for the bulk of development activity, while suburban construction remains more selective and limited in scale. As a result, the overall pipeline is expected to remain insufficient to meet demand, reinforcing tight vacancy and supporting rent growth.

Units Construction Starts

Source: CoStar Group, Inc.

Units Under Construction

Source: CoStar Group, Inc.

Chicago Multifamily Sales

Investment activity entering 2026 shows signs of stabilization, with annual sales volume reaching approximately $6 billion . While transaction activity remains below prior cycle peaks, deal flow has improved as pricing expectations between buyers and sellers begin to align. Higher interest rates continue to shape underwriting, contributing to modest cap rate expansion and a more selective investment environment. Investors remain focused on well-located, institutional-quality assets, particularly in core urban submarkets with durable demand drivers. Value-add strategies are still active, though underwriting assumptions have become more conservative, especially around rent growth and exit pricing. Chicago’s stable operating fundamentals and relative affordability compared to coastal markets continue to support investor interest. As capital markets stabilize further, transaction activity is expected to gradually increase through 2026.

Chicago Multifamily Sales Volume

Source: CoStar Group, Inc.

By the Numbers

Q1 2026 | Source: CoStar Group, Inc.

• Sales Volume: $1.9B
• Price Per Unit: $229K
• Cap Rate: 6.7%
• Vacancy Rate: 5.0%
• Rent Growth: 3.1%
• Asking Rent Per Unit: $1.9K
• Units Under Construction: 10.4K
• Units Delivered: 865
• Units Absorbed: 989