Chicago Multifamily Market
2024 Investment Forecast
Relocations Spark Luxury Demand;
Education Corridors Draw Investment
Office commitments reflect suburban apartment demand. Corporate relocations and expansions by firms, including Travelers Insurance, AIT Worldwide Logistics, The Federal Aviation Administration and Hartford Insurance, have been apparent in western and northern Chicago suburbs since late last year. These actions are concurrent with a notable amount of employees already living nearby. Meanwhile, those not local to the area may shift to adjacent residential corridors in order to cut down on new commute times, aiding apartment demand this year. The Class A segment is poised to benefit most from this dynamic. Across both North Cook County, west of Arlington Heights, and Oak Brook, luxury vacancies compressed last year, prompting each area to record double-digit segment rent growth. Homeownership challenges are also benefiting demand for apartments here and elsewhere in the metro. As a result of sustained high mortgage rates, the discount of Chicago’s average effective Class A rent relative to the more costly mortgage payment on a median-priced home is near its widest point in more than a decade. Given this dynamic, the local multifamily landscape is well equipped to weather near-term economic softening. In turn, overall vacancy will stand below its historical average of 5.7 percent, supporting a rent growth rate that will rank as the third highest among major U.S. markets in 2024.