First Half Multifamily Sales Activity in Chicago Doubles Year-Over-Year

Operating conditions in the Chicago multifamily market continued to perform well during the second quarter. To this point in the year, projects totaling approximately 2,000 units have come online, lagging the heightened pace recorded in the same period of last year by 61%. Slower completions have helped keep the vacancy rate steady after it was pushed higher in recent years by elevated deliveries. Stable vacancy and slower inventory growth have supported rent gains so far this year. A handful of submarkets recorded exceptional performance in recent periods, with areas like City West and The Loop posting rent growth of over 12% during the past 12 months. The Lincoln Park submarket continues to be one of the top performers, with asking rents rising 6.6% over the past 12 months while the vacancy rate dipped by 40 basis points.

Transaction volume in the Chicago multifamily investment market has increased in recent quarters. During the past year, total sales surpassed the light levels recorded in the preceding 12 months by 65%. Still, sales activity is lagging the peak volumes posted in 2021 and 2022. The mix of properties that have changed hands in 2025 is closely tracking trends recorded last year. To this point in 2025, most sales have involved Class A and Class B properties, which made up 32% and 45% of transactions, respectively. Sales have been concentrated Downtown and in the North Lakefront submarket through the first half of the year, consistent with 2024 trends. Pricing has risen in both areas during the past six months, but overall pricing is down slightly from levels recorded last year due to some due to some lower cost deals in outlying areas.

Looking ahead

Completions are projected to remain modest through the end of the year, as projects totaling 4,000 units are expected to come online, down 44% from 2024. With inventory growth slowing, the positive market performance posted in the first half should carry over through the end of the year. Rent increases will likely accelerate, bringing annual gains in line with levels recorded during 2024. Vacancy is expected to improve, with the rate forecast to close 2025 at 5.0%, matching the trailing 10-year average. Permitting trends signal that supply-side pressures will ease beyond 2025 and into 2026. Developers are projected to pull permits for only about 6,500 multifamily units in 2025, compared to an average of 8,200 units annually over the past decade.

The continued improvement of multifamily operating conditions should drive further increases in transaction volume during the second half of the year. Investor sentiment has already improved in recent periods, and as rents continue to rise and the vacancy rate trends lower, more deals will pencil for prospective buyers. While the Downtown Chicago and Northside areas are expected to lead the market in transaction volume, there may be an uptick in activity in South Shore area, as a large share of multifamily properties that are publicly listed for sale are in this submarket. Most of the properties listed for sale in the South Shore area are lower-tier assets, which may balance out the top-tier-heavy mix of properties that have sold so far this year.

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