Strong demand for apartments has driven rent back up to pre-pandemic levels in Chicagoland. In the second quarter, tenants rented 10,000 additional units, the most in ten 10 years. The rental activity was concentrated in the suburbs, as households continued to seek larger, lower-cost apartments. The average rent in Chicagoland is $1,550/month, and the average vacancy is 5%. Average pricing is a cap rate of 7% or $150,000 per unit.
Chicago’s industrial market is on track for another exceptional performance. The rise of e-commerce is driving demand as tenants and buyers seek logistics-related properties. Vacancy fell to 6.2% in Q2, as tenants leased more than 15.5 million SF – the most ever in a single quarter. The industrial space leased this year is one of the most rapid expansions in U.S. commercial real estate history.
Chicago’s retail sector continues to recover from the disruption caused by the pandemic. Greater consumer spending has lifted demand for retail space over the past three quarters, boosting annual absorption to its highest level in three years. The rebound in demand has helped keep vacancy relatively flat. Average retail asking rents increased by 2% year over year in Chicagoland. New construction is at a 15 year low, suggesting that market fundamentals will continue to improve.