2015 Chicago Apartment Market Data You Need to Know Now
As the top luxury rental brokerage in Chicago, Luxury Living Chicago Realty rents to nearly 1,000 downtown residents every year through our brokerage and exclusive leasing engagements. From construction sites and hard hats to repeat clients and sight unseen rentals, our team has unparalleled knowledge of the multifamily market in downtown Chicago.
We are now offering those insights to our clients and followers with an update on the state of the Chicago apartment market in 2015. The points that follow are a review of the trends we have seen so far this year and expect to see in the months to come.
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Chicago Renters & Relocations
The growth of businesses in downtown Chicago and the relocation of suburban headquarters and satellite offices to the city continues to have strong impacts on the Class A rental market.
There was a slight increase in the number of relocation clients from Q1 to Q2, from 38.5% in January, February, and March to 42.6% in April, May, and June. Traditionally Q1 relocation clients are further along in their career and are searching for an apartment after being transferred or offered a new position in Chicago. Relocation clients in Q2 tend to be recent college or graduate school graduates who are just starting out in their career. The relatively high number of relocation clients in Q2 translates to an increasing number of recent graduates finding high-paying jobs in downtown Chicago.
While the number of relocation clients increased in Q2, there was a significant decrease in the number of renters already living downtown looking for a new luxury home. During the first quarter of the year, 35.6% of our clients were already living downtown but opted to move to one of the thousands of new luxury units being delivered this spring and summer. In the second quarter, that number dropped to 25.3%, in line with similar declines from previous years.
Traditionally renters living downtown start their search in the slower winter months, hoping to capitalize on concessions being offered during the lease-up of properties set to deliver in the spring and summer months. In January 2015, we fielded inquiries from downtown renters who were not looking to move until May or June but had started their search early to get the best possible deal on a new luxury apartment.
The Luxury Living Chicago team will continue to monitor how renewal rates and the number of downtown renters looking for new homes will change as a result of even more units coming to market in 2016.
Chicago Apartment Pricing & Unit Sizes
As expected, the average rental price in downtown Chicago increased from Q1 to Q2, from $2,408 in January, February, and March to $2,661 in April, May, and June.
This number takes into account all unit types and although it is fairly well known that prices tend to increase during the spring and summer months, the average price was also impacted by an increase in the number of larger units being rented in the second quarter. While only 24% of our clients were looking for a 2 or 3 bedroom unit during the first quarter of the year, the number jumped to 37.7% in the second quarter.
This increase can largely be attributed to more renters moving in the spring and summer months, but is also a result of the aforementioned lease-up concessions offered at the start of the year.
In most lease-ups, the first unit types to rent are the smaller studio, convertible, and Jr. 1 bedroom units that – with concession pricing and months free – are a steal for most downtown renters. Once those units are pre-leased at the start of the year, the types that remain tend to be the larger, more expensive 1, 2, and 3 bedroom units.
Factors & Finishes for Downtown Chicago Apartments
In line with previous highlights about downtown renters and concession deals, the number of price conscious renters whose top concern was their monthly rent decrease from 26% at the start of the year to 13.6% in the second quarter.
Renters moving in April, May, and June were more concerned with the surrounding neighborhood of their new home (24.1%), its proximity to their office (16.7%), and the in-unit finishes (14.8%) than the sticker price of their new luxury apartment.
Renters moving in the second quarter know that prices will be a bit higher but are more concerned with how their new home fits with their lifestyle and standards of apartment living.
One interesting insight from our second quarter data is the number of luxury renters with dogs and those whose top concern for their new home was the quality of the pet amenities. The number of pet owners dropped from 31.7% in the first quarter to 18.9% in the second quarter. As for pet amenities, the number of renters who said that pet amenities were an important factor in their new home was – somewhat unsurprisingly – 0.0%.
That’s right, of the 13 factors that Luxury Living tracks for why a client has selected their new luxury apartment, none of them selected a property based on the quality of their pet amenities. As we have reported before, developers would be wise to put the money they invest in dog spas towards small improvements to finishes within the unit to make their property stand out to the greatest number of prospective renters.
Traditionally the apartment market stalls a bit after the 4th of July holiday, as renters settle into their summer plans and put their apartment search on hold. We’ve seen this pattern play out in the past few weeks but expect a surge at the beginning of August in line with previous years.
We expect pricing to drop slightly in the third quarter as a result of concessions being made at new luxury lease-ups trying to capitalize on the waning summer months. We also expect to see in an increase in the number of rentals from Chicago residents not currently living downtown, who are looking to trade their Lincoln Park walk-up or Bucktown brownstone for a luxury apartment downtown. These renters have usually lived in the city for several years and prefer to spend their summers at the beach or at a festival than booking appointments for apartment tours.
Luxury Living will continue to monitor the luxury rental market and feedback from our clients and exclusive properties in the months to come!
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