- Matt Ward
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Downtown Chicago Rental Apartments Thriving
Downtown Chicago apartment buildings – especially Class A properties – are seeing a resurgence in occupancy and rental rates as residents apprehensive about the condominium market choose to rent rather than buy. The average effective rent of downtown apartment buildings climbed to $2.17 PSF in the second quarter, a 2.4 percent increase over the first quarter, according to a report by Appraisal Research Counselors, a real estate consulting firm. During the same time frame, average Class A occupancy rose to 93.4 percent, as compared with 90.9 percent in the first quarter and 91.6 percent a year ago.
The statistics would be even better if there weren’t so many new downtown apartment buildings. More than 2,098 new units have been built downtown since 2008. Add to that the shadow rental market – condominium owners who rent their units when they cannot sell. Many potential buyers are renting for the time being because they are concerned about falling property values and the possibility that they will be unable to obtain a mortgage in a tight credit market.
These numbers show the inherent strength of Chicago’s CBD rental apartment market — proof that downtowns continue to thrive because of the number of highly educated knowledge workers who want to live in the city. As a result, places like River North and the Loop remain highly sought after locations for businesses looking to recruit talent.