Q2 2025 Chicago Multifamily Market Report
Key Findings
- Chicago boasts one of the lowest vacancy rates of any large U.S. market, outside of Southern California and New York. The rate currently stands at 4.7%.
- With around 8,300 units currently under construction, development activity has significantly decreased. However, the pace is projected to expand existing inventory by 1.4%.
- The market experienced the highest annual rent growth of 3.9% in Q2 2025. Due to its size and slow inventory expansion, the region has consistently performed well in recent years, a trend that intensified approaching 2025.
By the Numbers
- Sales Volume: $918M
- Average Sale Price Per Unit: $217K
- Cap Rate: 6.8%
- Vacancy Rate: 4.7%
- Rent Growth: 3.9%
- Average Market Asking Rent Per Unit: $1.9K
- Units Under Construction: 8.3K
- Units Delivered: 1.4K
- Units Absorbed: 2.5K | Q2 2025 | Source: CoStar Group, Inc.
Chicago Demographics
- Unemployment Rate: 5.3%
- Current Population: 9,598,536
- Households: 3,818,223
- Median Household Income: $90,542
Chicago’s demographics reflect a dynamic shift from its blue-collar industrial roots to a highly diversified, knowledge-driven economy. Today, no single industry comprises more than 15% of the city’s economic base, thanks to its world-class infrastructure, financial hubs, and renowned academic institutions. The region’s highly educated population, 43% of residents hold a bachelor’s degree compared to the national average of 25%, supports an average household income just under $90,000. This includes affluent pockets like Downtown and the Northshore reporting figures up to $250,000. Despite a shrinking population in certain neighborhoods, often tied to perceptions of crime and outdated office space, Chicago remains a logistical powerhouse and a center of corporate activity. The city’s resilient multifamily market and strong tenant demand stem less from raw population growth and more from its concentration of high-income earners, cementing Chicago’s standing as a major metropolitan anchor in the U.S.
Market Performance
In Q2 2025, Chicago’s multifamily market remained one of the tightest in the nation, with vacancy rates dropping to 4.7%, well below the national average and continuing a downward trend from a peak of 5.7% in early 2024. This tightness was driven by strong demand and sluggish construction activity, with just 5,341 units delivered over the previous 12 months compared to 9,742 units absorbed, reinforcing a significant supply-demand imbalance. Rent growth followed suit, posting a robust 3.9% annual increase, outpacing the national average of 1.0%, and reaching 4.4% for high-end 4 & 5 Star properties.
Construction levels remained muted, with only 8,100 units underway—about 1.4% of total inventory—marking the lowest development pace in more than a decade. The majority of these were luxury units, contributing to elevated vacancy rates in that tier, although those rates improved from over 9% at the start of 2024 to 6.4% by Q2 2025. In contrast, 3 Star and 1 & 2 Star properties saw consistently lower vacancies below 5% and modest but steady rent increases (3.5% and 3.6%, respectively).
Performance By Class Sector
Source: CoStar Group, Inc.
| Vacancy Rate | Units Under Construction | Asking Rent | |
| Class A | 6.4% | 5,617 | $2,774 |
| Class B | 4.3% | 2,500 | $1,700 |
| Class C | 4.1% | – | $1,241 |
Chicago Multifamily Supply & Demand Dynamics
Source: Real Page
Chicago Properties Under Construction
Source: CoStar Group, Inc.
Chicago’s multifamily construction activity remained historically subdued, with only 8,100 units under construction —representing just 1.4% of the region’s total inventory. This marked the slowest pace of development in over a decade, reflecting the lingering impact of reduced starts in prior years and tighter capital conditions. Most ongoing projects were concentrated in the luxury Class A segment, which accounted for approximately two-thirds of the units underway, signaling limited relief for the broader market’s supply-demand imbalance. Notably, submarkets like Downtown Chicago and North Will County led construction activity, each with over 1,000 units underway. With few new starts to replenish the pipeline, 2025 was on track to see just 4,900 new unit completions, amplifying future supply constraints.
Under Construction
Source: CoStar Group, Inc.
Sales
Multifamily sales activity in Chicago remained muted, with only $1.6 billion in transactions recorded over the previous 12 months—a level nearly 50% below the metro’s historical average. Just 65 properties changed hands during this period, reflecting ongoing investor caution amid high interest rates and economic uncertainty. The average price per unit dipped to $186,000, down from the 2022 peak of over $220,000, while cap rates held steady at 5.4%, slightly above the national average. Institutional buyers largely pulled back, with private capital dominating acquisitions, especially for 3 Star assets, which comprised most of the quarter’s transaction volume.
Chicago Multifamily Sales Activity
Source: CoStar Group, Inc.
Buyer Composition
Source: Real Capital Analytics
