Chicago Makes Room for More Growth
- Dec 21, 2017
Chicago’s development boom has caught up with demand, leading to flat rent growth, a trend seen in other Midwestern markets. The supply volume has made the bifurcation between rental rates for luxury and working-class units even more distinct. Rents for Lifestyle apartments dipped 0.3 percent, while those in Renter-by-Necessity units increased by 1.8 percent. The pace of new construction is expected to continue. Chicago is slated to add around 9,000 units to its inventory in 2017, marking a post-recession high, up 13 percent year-over-year.
The metro continued to attract companies looking to relocate or expand, producing job gains in high-paying sectors such as financial activities (10,500 jobs) and professional and business services (6,600), followed by education and health services (5,700). Core submarkets are seeing significant growth in office development due to increased demand: The new 59-story skyscraper at 150 North Riverside was 85 percent pre-leased when it opened in the second half of 2017. The rezoning of former waterfront industrial areas close to downtown will add new mixed-use skyscrapers to the skyline, expanding Chicago’s central business district.
Responding to working-class demand, the Chicago City Council approved two three-year pilot programs, which are projected to create as many as 1,000 affordable residential units. Meanwhile, the addition of jobs in office-using sectors is likely to keep upscale demand healthy.