Chicago on pace to break multifamily absorption record — 2,560 units already absorbed in 2018

The fundamentals of downtown Chicago multifamily are showing incredible resilience despite delivering almost 6,200 units during the past 18 months. In 2017, a record-breaking 3,509 new apartments were absorbed. And, as of June 30, 2018, the core submarkets have already absorbed 2,560 units. During the same period in 2017, downtown Chicago had absorbed only 1,802 units. We are on pace for another record-breaking year. Of the units delivered in 2017, 78 percent are already occupied. And 39 percent of units delivered this year are already occupied.

Strong Lease-Ups For New Developments

Two new buildings, comprising 581 units, delivered in June. LMC delivered the 176-unit community, Marlowe, in River North. By the end of June, they were already 30 percent leased. Onni Group completed the first phase of Old Town Park, which includes 405 luxury units. Their team hit a home run. Old Town Park was 60 percent pre-leased by opening day and within 30 days was 40 percent occupied.

Overall occupancy of stabilized buildings remains strong at 93.5 percent, and concessions continue to taper off in the prime leasing season, with stabilized buildings offering an average of 2.8 percent and buildings in lease-up offering an average of 5.4 percent rent concessions.

River North Continues to Dominate Leasing Activity

Of all new units delivered since January 1, 2017, 31 percent are in River North, yet the neighborhood has absorbed 41 percent of all new units delivered throughout downtown. We will begin to see this demand shift into other neighborhoods as the influx of River North units reach stabilization towards the end of this year.

Deliveries in 2018 are concentrated toward the later part of the year. There have been 1,671 units delivered in the first half of the year, but there are still over 2,100 units that will deliver before the end of 2018. Most of these deliveries are concentrated in Streeterville, West Loop and South Loop, with a few massive towers adding over 400 units per building in each of these submarkets.

All eyes will soon focus on the West Loop and South Loop, when these submarkets will deliver 1,314 and 2,430 units, respectively, in the next 18 months. The pipeline doesn’t end there, with almost 8,500 that have been approved but have yet to start construction. While these numbers may appear alarming, if demand continues at its current pace, Chicago multifamily will continue to be a sound investment.