Like most major metros across the country, Chicago has witnessed a construction boom that’s both reshaped its skyline and delivered thousands of new apartments to its neighborhoods. The trend points to a healthy economy and job market, but it’s also meant increasing demand for apartments in popular neighborhoods, leading to runaway rent prices, an uptick in demolitions, and other indicators of gentrification.
But new data from the Chicago-based apartment site Domu suggests that the hot rental market may be stabilizing, particular in trendy North Side neighborhoods. The shift means more options for renters, who have long felt the squeeze of climbing prices as the economy continues to rebound from the recession.
One takeaway: In reviewing every apartment listing on Domu between the first and third quarters of 2017 and 2018, there was little to no change in average year-over-year rent in hot North Side neighborhoods, including Logan Square, Lincoln Square, Andersonville, Humboldt Park, and Ukrainian Village.
Booming neighborhoods outside the North Side, however, including Hyde Park, Kenwood, the West Loop, and River West, saw significant upticks in average rent. (Q4 data for 2017 was omitted because Q4 2018 has not ended.)
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While rent prices did fluctuate from quarter to quarter due to seasonal demand and the number of active listings, prices overall remained steady throughout much of the North Side. According to Rory Keane, Domu’s Director of Communications, the stabilization could reflect supply catching up with up with demand in trendy neighborhoods. Renters in those areas don’t just have more choices than ever, he says, but a variety of housing types, from micro-apartments to two-flats to luxury units.
“In many areas, renters will breathe a sigh of relief,” Keane says. “Landlords are saying that it’s taken longer for some properties to lease up this year because renters are feeling this downstream effect of rents stabilizing.”
The influx of amenity-rich apartments to the North Side may also be pushing independent landlords to spruce up their existing units. “It’s not as cost prohibitive now to make modest upgrades — things like in-unit laundry and dish washers — as those investments are paying off,” says Keane.
In the past, comparing downtown rentals to those in the neighborhoods was like mixing apples and oranges. But the flood of upscale apartments along the Blue Line and in the downtown outer ring has changed Chicago’s rental landscape, says real estate broken Aaron Galvin.
“It used to be that in order to live in a high-end amenity-rich building, renters had to go downtown,” Galvin says. “But that’s no longer the case. These renters can now live in Wicker Park, Lincoln Park, and Logan Square, and we haven’t seen a slow down in those neighborhoods.
“In fact,” he continues, “high-end rental buildings in these neighborhoods are competing in price with downtown apartments.”
Other reports suggest that the downtown rental market is still growing. But even as thousands of new downtown apartments lease up each year, concessions remain common. “As we get into the fourth quarter, demand ticks down,” says Downtown Apartment Company managing broker Ben Creamer. “You’ll see one to two months free concessions, which has been pretty common in new downtown construction.”
If job growth continues in Chicago, the thousands of new apartments currently under construction downtown will likely be absorbed, Creamer and Galvin say. But according to Keane, landlords in neighborhoods where rents have stabilized may shift their focus. “In areas where rents have been steady, landlords may lean towards the thought of trying to keep a reliable, stable renter versus entering the market.”
That, says Keane, indicates a shift toward a renter’s market.