Thousands of new apartment units are expected to hit the Downtown market, potentially slowing what has been a steady rise in rents and occupancy rates.
The average monthly rent at Class A apartment buildings Downtown was $3.05 per square foot in the third quarter, up 7.7 percent year over year, according to data from consulting firm Integra Realty Resources reported by Crain’s.
The strong Downtown job market has helped drive demand for apartments, raising the occupancy rate for those newer apartment buildings to 93.7 percent, up from 92 year over year, the report said.
Developers were set to deliver 2,800 new apartments this year, down from a record of more than 4,300 last year. But the dip in new supply is only temporary: Some 4,400 new apartments are expected to hit the market next year, with another 4,000 delivered in 2020.
“We’re going to get back into more supply that will likely exceed demand, so we don’t expect to see much upward movement in rents next year,” Integra senior managing director Ron DeVries told Crain’s.
Landlords in the South Loop will feel the new deliveries the most, DeVries said, as developers complete more than 2,200 units in the neighborhood. The new NEMA Chicago and Essex on the Park complexes alone near the south end of Grant Park are set to deliver almost 1,300 apartments.