Downtown apartment occupancy sinks to lowest point in 20 years

Weak Chicago market compares to steady suburban rentals, Q3 report shows

Downtown Chicago (iStock)
Downtown Chicago (iStock)

The Downtown Chicago apartment market continued to struggle in the third quarter, while suburban rentals remained strong.

Occupancy rate for Downtown apartments dropped to 87.1 percent from 93.8 percent in Q3 2019, Crain’s reported, citing Integra Realty Resources. It marked the lowest point since Integra began tracking the downtown market 22 years ago.

As a way to keep tenants in place, landlords slashed rents between 18 and 23 percent from the third quarter of 2019, according to the report.

Sign Up for the undefined Newsletter

Meanwhile, apartments in the suburbs have not seen much change to occupancy and rents.The suburban apartment occupancy rate rose to 95.3 percent in the third quarter, up from 95 percent a year earlier. The median net suburban rent was $1.53 a foot in the quarter, up from $1.48 in the previous year.

Apartment deals have slowed since the onset of the pandemic as investors and lenders remain unsure about demand and pricing for units.

Some developers are still moving forward on deals, betting that the trend of young people moving to central business districts will continue once a vaccine is distributed. Naperville-based Marquette recently broke ground on two apartment buildings that will bring more than 500 units to the Fulton Market District.

[Crain’s] — Keith Larsen