T
he tug-of-war between renters seeking affordability and landlords chasing profitability is set to escalate as the supply of new apartments begins to plateau. According to reports from Crain's and the Daily Herald, the dynamics at play in Chicago's rental market present a complex picture, with varying implications for city and suburban landlords.

    In downtown Chicago, rent growth for top-tier apartments has slowed significantly. Net monthly rent averaged $3.75 per square foot in the second quarter, down 0.27 percent from the same period last year. Despite this slowdown, building owners remain optimistic due to strong demand and recent projects quickly leasing up. However, the stagnation is largely attributed to the influx of new supply, with over 3,500 units expected to be delivered by the end of the year.

    The absorption rate has been encouraging, with 1,792 units leased in the second quarter alone, the highest quarterly absorption since mid-2021. New developments such as the Saint Grand and Arthur on Aberdeen are seeing rapid leasing, with both buildings nearing full occupancy within months of opening. However, concessions like free rent for a month are becoming more common as landlords compete to fill units.

    In contrast, the suburban market faces its own challenges, particularly high demand and a tight supply. With only 2,500 Class A units expected to come online this year compared to 3,500 last year, developers are struggling to keep pace with demand due to high construction costs and tighter lending conditions. Suburban rents have reached $2.50 per square foot, making it difficult for tenants to afford.