March 18, 2026

Chicago’s multifamily dealmaking activity climbs past 2024 levels

Q4 2025

Chicago multifamily market overview

The Chicago multifamily market strengthened in 2025, supported by lighter new supply growth. Despite posting a modest decline during the fourth quarter, rental rates are up from one year ago, and vacancy improved slightly from previous levels. This upward momentum was driven largely by accelerating local employment growth and in-migration, combined with limited supply growth and continued absorption. Net move-ins outpaced completions by approximately 100 units during the past year, as supply growth reached a 10-year low in 2025. Class A properties accounted for more than half of the total absorption in the Chicago area this year. Some submarkets in and around downtown generally outperformed the greater market by a wide margin, posting solid rent growth and significant vacancy improvements. These included most of the submarkets within downtown, as well as lakefront submarkets north of downtown stretching from Lincoln Park to Rogers Park.

The Chicago multifamily investment market recorded increased activity in 2025. During the past year, there was a 32% increase in the number of multifamily trades compared to 2024. Pricing decreased during this time, though only slightly, with the median sale price for the full year down 2% from 2024 at $245,200 per unit. This slight reduction was primarily driven by the transaction mix shifting towards Class B and Class C properties, while the share of Class A sales subsided. Despite overall pricing inching lower, pricing for top-tier properties climbed, and many submarkets posted increased pricing. Downtown Chicago contained the greatest share of transactions, and median pricing in this area climbed 30% in 2025. The North Lakefront area, which also contained an elevated share of activity, posted a 20% increase in median pricing during the past 12 months.

Looking ahead:

The Chicago multifamily market is poised for improvement in 2026. As deliveries remain modest and many of the current demand drivers continue to be a factor, vacancy is expected to continue to improve, albeit slightly. As vacancy compresses on a longer-term downward trajectory, more operators are expected to ask for higher rents. Similar to vacancy, rent growth should still be modest in the coming quarters. Vacancy is forecast to continue to perform well in the top-tier of assets. Prioritization of occupancy over rent growth is expected to remain a key factor for Class A operators, while middle and lower-tier properties are expected to be able to raise rents at a steeper clip. Permitting in 2025 was low compared to recent years, so the number of new projects breaking ground should remain relatively light in 2026 and 2027.

Transaction activity in 2026 is expected to increase as the market continues progressing toward pre-2020 norms. Total sales in the coming year will likely reach or exceed the trailing 10-year average. Investor confidence should remain steady as cap rates hold firm, with any movement anticipated to be minimal. Rising property taxes may place added pressure on underwriting assumptions, particularly for older assets or those in municipalities undergoing reassessment. Even so, strengthening fundamentals such as improving rents and tightening vacancy should support increases in net operating incomes. As operating metrics strengthen, investor sentiment should continue to improve, and more owners may be motivated to bring assets to market, helping to sustain a gradual rise in sales velocity throughout the year.