Chicago Lease Renewal Rates Decline
Chicago's multifamily lease renewal rate fell to 68.2% in 2025, down from 77.5% in 2024, and is projected to drop further to 65% in early 2026. The decline is attributed to more aggressive rent increases, which averaged 6.7% in 2025 compared to 4.4% the previous year. Single-family rentals showed more resilience, with a 76.5% renewal rate, outperforming multifamily and condo properties.
- While renewal rates are declining, Chicago's multifamily market fundamentals remain strong with a vacancy rate of 5.0% at the end of 2025, significantly below the national average. This tightness is driven by a decade-low number of new construction starts, positioning the market for continued rent growth. - A major source of new apartment inventory is adaptive reuse projects, with 806 units scheduled for delivery in Downtown Chicago in 2026 from office-to-residential conversions. Key projects are underway at 135 S. LaSalle St. (the Field Building), 65 E. Wacker Place, and 111 W. Illinois, transforming the Loop and River North. - Across the Midwest, investor transaction velocity is shifting toward Class B and C workforce housing. These assets are in high demand due to their affordability and durable income streams, with Fannie Mae and Freddie Mac requiring 50% of their lending to be directed toward affordable housing. - For investors, going-in capitalization rates for Chicago multifamily properties averaged 6.7% in the fourth quarter of 2025. Buyers are currently underwriting stable, occupied Class B buildings at cap rates between 6.4% and 6.8%. - Real estate investment firms in Chicago seeking to hire analysts prioritize candidates with 1-3 years of experience and strong financial modeling skills, including cash flow analysis and calculating Net Operating Income (NOI), Internal Rate of Return (IRR), and Debt Service Coverage (DSC). Proficiency with software like Microsoft Excel and Argus is also a common requirement. - Industry professionals frequently follow publications like *Midwest Real Estate News* for regional insights and utilize resources from BiggerPockets for networking and educational content on building a portfolio.
