The Chicago apartment rental market faced extra hurdles as the impact of Covid-19 led many residents to move: Inner-city riots, lay-offs, relocation to more affordable markets, moving back in with family… The trends all pointed to apartment renters cutting cost in 2020. Chicago lost 7% of it’s jobs (270,000 jobs lost in the Chicago Market in 2020). On top of that, Illinois had the worst population loss in 80 years, second only to New York.
A decade-long boom in new construction of rental apartments in Chicago met with a newly diminishing demand from renters resulted in a loss of a decades worth of rent growth downtown. With less cohabitation, some of our larger unit configurations (4-5 bedroom units) became impossible to rent in student/roommate markets, but it was the 1 bedroom rents that took the biggest hit downtown. Compared to the national average, Chicago 1 bedroom rents performed very poorly with an 11% decline across the city. Overall, the city of Chicago averaged an 18.4% decrease in net effective rents for Class A and 23.3% decrease in rents for Class B and apartments last year.
A shift in Chicago Rental Apartment Demand:
The Apartment Source observed a shift in demand from it’s rental clients this year. A decrease in demand for our largest unit configurations was met with an increase in more affordable unit configurations that included outdoor space, in-unit laundry and extra work from home space. High-density downtown buildings saw the biggest exodus of tenants as in-building amenities limited capacity or closed entirely during the pandemic. Many of our clients this year moved from these amenity-rich high-rise spaces to larger neighborhood units for the same or a lower price. Overall it seems our clients are looking for less expensive, safer and cleaner living spaces with less cohabitation. Increased workplace flexibility will remain intact for the foreseeable future since many companies transitioned their workforce to remote work in 2020, so units with extra square footage for dens and offices are hotter than we’ve ever seen.
Ready to list your apartment or invest in Chicago multifamily real estate? Call The Apartment Source (773) 404 9900