Apartment rents continued to climb in downtown Chicago during the second quarter, with all seven submarkets posting gains due to “extremely limited supply,” multifamily brokerage Luxury Living reported in its latest market update.
As landlords use revenue management systems to push rents and “test the upper limits of renter tolerance,” leasing activity is beginning to slow, the firm said, adding, “rents have likely reached their peak for the year, and many renters are being increasingly priced out of the market.”
Courtesy of Luxury Living.
Rents, price per square foot both rise
Gross rents — the amount a tenant pays per month to live in an apartment — rose 5.6% from $3,121 to $3,295 on average, according to the report, which tracks roughly 27,500 apartments in 85 class A properties delivered downtown since 2016.
All submarkets saw rents rise, with the Gold Coast/Old Town and South Loop seeing the greatest increases with gains of over 9%. Streeterville was the most expensive submarket by average gross rent, which clocked in at $3,735 after a 1.9% increase.
The average price per square foot (PPSF) rose 4.1% year over year to $4.19.
By submarket, the greatest increase in PPSF occurred in River West, where it rose 8% from $3.64 to $3.92. River West, which had been the cheapest among the submarkets, moved up two spots and is now pricier than the South Loop ($3.91 per square foot) and Loop/Lakeshore East ($3.84 PSF).
River North remained the most expensive submarket on a PPSF basis after a 4% annual increase from $4.35 to $4.51. Rents in the Gold Coast/Old Town, West Loop/Fulton Market and Streeterville rounded out the top four submarkets, respectively.
Courtesy of Luxury Living.
Average size inches higher as absorption slides
Streeterville had the largest apartments by average square feet, which inched up from 864 to 867 square feet. River West, which had the greatest increase in PPSF, saw the largest contraction in average square feet, which declined almost 7% year over year from 767 to 716 square feet, giving it the smallest — and most expensive — apartments downtown. The average square footage across all downtown submarkets was 786 square feet following a 1.3% rise from 776.
Absorption, or the leasing of new or vacant apartments, saw a sharp 8.4% decline from 5,014 units in Q2 2024 to 4,592 last quarter. This decrease indicates limited supply, higher renewal rates and a lack of vacant lease-up units, Living Luxury said. The South Loop took over from the West Loop/Fulton Market as the busiest submarket for leasing activity, while Streeterville and River West had the fewest lease signings.
“Q2 2025 reinforced the strength of the downtown Chicago class A multifamily market, with both gross rents and PPSF continuing to climb due to limited supply,” Luxury Living said. “All submarkets saw steady rent growth despite a slowdown in absorption and fewer active lease-ups.”
Courtesy of Luxury Living.
Full pipeline
Looking ahead, there are currently about 1,200 new apartments in lease-up, 2,700 apartments under construction and 22,000 new apartments set to come on line in 2026 and beyond.
“Seasonality and rising exposure may soften rent growth in Q3,” the firm added, noting that September marks the start of the slower leasing season. “However, with record-high leased percentages and limited new supply, the Chicago’s class A market is likely to stay elevated through year-end.”