C
hicago's downtown apartment market is showing signs of recovery after a year of slow growth. According to recent data, rents for Class A apartments in central neighborhoods averaged $3.61 per square foot in the third quarter, marking a 2.3% increase from the same period last year. This modest growth indicates resilient demand despite a large influx of new units, with over 3,200 entering the market so far this year.

    Occupancy rates remained steady at 94.7%, suggesting that the increased supply hasn't deterred renters. Integra Realty Resources' Ron DeVries attributes this to several factors, including high interest rates keeping prospective homebuyers in the rental market and concerns about the economy leading others to avoid homeownership commitments.

    Corporate relocations to Chicago have also contributed to downtown demand, while Gen Z's preference for urban living has further boosted rentals. "They like to live in city centers, rent apartments, and potentially rely on their parents for financial support," says KPMG Senior Economist Yelena Maleyev.

    Looking ahead, DeVries expects a significant slowdown in downtown construction next year, with only 500 units in the pipeline. "Hardly any new buildings will come online," he predicts, suggesting that the market may not see a surge of new developments for at least a year.