Chicago’s multifamily fundamentals strengthened through year-end 2025 as leasing demand continued to exceed the pace of new supply. Vacancy declined to 5.0%, materially below the national average, reflecting sustained absorption and limited inventory expansion. Net absorption remained positive across both urban and suburban geographies, with Downtown Chicago accounting for a disproportionate share of demand due to its role as the region’s primary employment and lifestyle hub. Asking rents averaged $1,900 per unit, with annual rent growth of 3.4%, exceeding long-term averages and significantly outperforming national benchmarks. Growth was strongest among Class A properties, though mid- and lower-tier assets also posted healthy gains, supported by constrained supply and limited trade-out options for renters. Concession levels remained subdued, signaling continued landlord pricing power and disciplined lease-up conditions.

 

Key Findings

• Chicago remains one of the most supply-constrained multifamily markets nationally, with demand continuing to outpace new deliveries and vacancies compressing further through 2025.
• Muted construction activity and a pipeline concentrated in high-end product are reinforcing tight fundamentals and supporting sustained rent growth across asset classes.
• Investment activity is stabilizing after recent declines, with improving liquidity supported by resilient operating performance and stable pricing for quality assets.

 

Chicago Multifamily Supply & Demand Dynamics

Source: CoStar Group, Inc.

Chicago Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 5.0%
• Current Population: 9,577,092
• Households: 3,791,492
• Median Household Income: $92,999

 

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

Chicago’s development pipeline remains exceptionally limited relative to its size, reinforcing the market’s long-standing supply constraints. As of Q4 2025, approximately 8,600 units were under construction, representing just 1.5% of total inventory, well below the national average. This level of activity marks one of the lowest points in the city’s construction cycle in more than a decade. New deliveries totaled roughly 1,300 units during the year, while the majority of the active pipeline is concentrated in luxury assets, particularly in Downtown Chicago. Elevated construction costs, tighter financing conditions, and lengthy permitting processes continue to suppress new starts, suggesting that development will remain below historical norms. As a result, near-term supply pressure is expected to remain minimal, supporting further vacancy compression.

 

Units Construction Starts

Source: CoStar Group, Inc.

 

Units Under Construction

Source: CoStar Group, Inc.

 

Chicago Multifamily Sales

Multifamily investment activity in Chicago showed signs of stabilization in 2025, with total sales volume reaching approximately $1.9 billion. While activity remains below the 2022 peak, transaction momentum improved relative to prior years, reflecting increased buyer confidence in the market’s long-term fundamentals. Average pricing reached $228,000 per unit, supported by stable cash flows and expectations for continued rent growth. Activity remained concentrated in core submarkets, particularly Downtown Chicago and the North Lakefront, which together captured the majority of transaction volume. Private capital dominated the buyer pool, while institutional participation remained measured amid ongoing macroeconomic and regulatory uncertainty. Cap rates have largely stabilized, indicating that pricing has found a near-term equilibrium as investors adjust underwriting assumptions to reflect higher financing costs and property tax considerations.

 

Chicago Multifamily Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q4 2025 | Source: CoStar Group, Inc.

• Sales Volume: $1.9B
• Price Per Unit: $228K
• Cap Rate: 6.7%
• Vacancy Rate: 5.0%
• Rent Growth: 3.4%
• Asking Rent Per Unit: $1.9K
• Units Under Construction: 8.6K
• Units Delivered: 1.3K
• Units Absorbed: 82