Class B and Class C property sales fuel Chicago’s multifamily investment activity

Chicago multifamily market overview

The first quarter of 2026 was a period of healthy performance and fundamental improvements in the Chicago multifamily market. A slowing in the pace of completions in recent periods has contributed to this strengthening, while renter demand for units has continued at a solid clip. Some submarkets that are posting the strongest conditions are also areas where supply growth has been elevated in recent years, including The Loop and Rogers Park. Both of these submarkets were leading areas for both rent growth and vacancy improvement, with combined rents in these areas rising by 3.7% year-over-year, while vacancy improved by 90 basis points. The Lincoln Park submarket was another standout, with rents in this area increasing by 3.0% during the past 12 months while vacancy decreased by 30 basis points.

Multifamily investment activity continued to rise in the first quarter, building upon the momentum created during the second half of last year. There were nearly as many transactions during the first quarter as there were during the entire first half of 2025, making this the strongest start for investment activity in more than a decade. Downtown Chicago is leading the investment activity, while Class B assets have made up half of all transactions, similar to last year. The median price ticked lower to $239,500 per unit, but this was largely a function of an older mix of properties included in the transaction mix at the beginning of this year. Investor demand for Class C properties appears to be elevated; the median sale price for Class C apartments has increased 15% this year to $175,900 per unit.

Looking ahead for the Chicago multifamily market:

The Chicago multifamily market is positioned to post sustained improvement in 2026. With deliveries remaining limited and key demand drivers still in place, the vacancy rate is expected to dip below 5% for the first time in nearly three years. As vacancy trends lower, operators should continue to push rents higher; healthy rent gains in the first quarter are a sign of additional increases likely to come in subsequent quarters. Rent growth is not expected to be completely uniform, however. Vacancy in the Class A segment remains elevated, and operators of top-tier assets will likely prioritize occupancy over rent increases. In contrast, Class B and Class C properties may have more room to raise rents at a faster pace.

Multifamily sales levels in Chicago should remain steady throughout the rest of the year. Following a few years of lighter activity, the transaction count for the full year will likely be back within normal ranges. While the downtown area will continue to contain a significant share of sales, areas such as the North Lakefront and Naperville/Lisle area may begin to record more transactions, as these submarkets have both had limited activity to this point in the year, despite generally being some of the more active areas in the market. Cap rates are forecast to remain close to current levels, assuming the transaction mix of classes, locations and vintages is similar to recent years.

Connect with our Chicago Team Today

For a more complete analysis of the supply, demand, vacancy, rent and investment trends in the Chicago multifamily market, download and read the full report below.

The Northmarq Chicago office provides a broad range of commercial real estate solutions across debt, equity and investment sales. Engage with our Chicago team today.