Marcus & Millichap

Chicago Multifamily Market Report

Chicago Metro Area, Fourth Quarter 2017

Access Full Report Subscribe

Booming Construction Pipeline Edges Apartment Vacancy Up

Apartment conversions bring new life to old office buildings. Led by numerous corporate relocations from the suburbs, job growth in Chicago’s core has ignited apartment construction as young professionals seek an urban lifestyle. Development remains significantly elevated above the previous five-year average and will peak in 2018, placing upward pressure on vacancy metrowide. While many high-rise structures will be added to the skyline, several developers are repurposing old office spaces into rentals amid limited land availability in the core. The Century & Consumers Buildings and the Insurance Center Building are two of several projects slated to bring hundreds of apartments of converted office space online.

Vacancy tightens in northern Chicago suburbs. A wave of deliveries during the third quarter outpaced net absorption, lifting vacancy up in suburban Chicago. Despite the increase, vacancy is tight and has remained below 5 percent since 2008, highlighting steady demand in the suburbs. A few submarkets defied the trend to register vacancy declines during the last 12 months, including the Far Northwest Chicago Suburbs and Lake County/Kenosha. Few completions and healthy demand led to a vacancy rate in the mid-2 percent area in both submarkets.

Access Full Report Subscribe