As the summer comes upon as, one of the busiest rental seasons is expected. With the expected high demand of rentals, developers are rushing to meet the demand. Occupancies in Class A apartment buildings in the Chicago downtown area are hovering around 95% (Appraisal Research Counselors), and developers are more than 7,200 apartments by the end of 2014 to meet demand. Adding unto supply are individual owners unable to sell their home in the current market and investors. Even with the added inventory, rental demand hasn’t decreased yet with market times considerably short in high demand and accessible neighborhoods equating to very short market time and increases in rent prices in some areas.
The real question many are asking is whether demand will hold firm or if demand will shift as the housing market stabilizes, rates remain low and available for-sale inventory remains high in areas offering potential buyers a competitive alternative from renting.
Rents at the high end of the Chicago downtown market have risen 20.2 percent since bottoming out at the end of 2009; the average Class A apartment costs $2,148 a month today vs. $1,787 previously although surging rates could slow as developers complete their projects and add more available inventory in the area.
There are very few large scale projects outside of the downtown area, especially with the financial difficulties that both developers and buyers may face so demand and rates could continue to increase in other areas with respect to overall market rates. The Class A occupancy rate rose to 94.9 percent in the first quarter, up from 94.2 percent from the previous quarter and 93.9 percent a year earlier.