Supply stalls; developers look elsewhere
Reporting shows Chicago’s apartment pipeline has thinned—new deliveries amounted to roughly 0.8% of existing inventory over the past 12 months—and developers are increasingly focusing on other markets as permits, taxes and financing tighten. ( )
Chicago is adding apartments at one of the slowest rates among big United States cities, and some longtime developers are moving their money to other states instead. (therealdeal.com) New apartment completions over the past 12 months equaled 0.8 percent of existing inventory, according to CoStar data cited by Bloomberg and The Real Deal. Chicago’s average rent reached $1,956 a month at the end of 2025, up 9.5 percent over three years. (bloomberg.com; therealdeal.com) Bloomberg reported that Belgravia Group chairman Alan Lev, after nearly four decades building apartments only in Chicago, has spent most of the past five years investing in Arizona. He cited affordable-housing requirements, unpredictable taxes and weak population growth. (bloomberg.com) The supply squeeze is showing up in the pipeline as well as in recent deliveries. Matthews said about 11,000 market-rate units, or 1.9 percent of inventory, were under construction in the third quarter of 2025, the lowest level since 2012. (matthews.com) MMG Real Estate Advisors said the number of units under construction at the end of 2024 was 61 percent below the prior peak and 50 percent below the market’s 10-year average. The firm said construction starts fell to 3,625 units in 2024, down 35 percent from 2023. (mmgrea.com) Permits have weakened more broadly. A Real Deal analysis of Chicago building permits said applications for more than 7,000 construction projects filed from January 2, 2025, to January 22, 2026, were down nearly 6 percent from the prior year. (therealdeal.com) Chicago officials say they are still pushing housing projects forward. The city’s Department of Housing announced a $300 million affordable-housing investment on March 18, 2026, and says it offers financing programs and developer resources. (chicago.gov) Developers and city officials are arguing over the cause. Developers interviewed by Bloomberg and The Real Deal pointed to permitting delays, taxes, financing costs and affordable-housing rules, while the city has expanded subsidy programs and approval support for mixed-income and senior projects. (bloomberg.com; therealdeal.com; chicago.gov) For renters, the near-term picture is a market with fewer new buildings opening just as demand stays firm. Matthews said Chicago absorbed 7,400 units over the year through the third quarter of 2025 while delivering 4,800, a gap that helps explain why rents kept climbing into 2026. (matthews.com)
