Demand remains strong and rents are still rising in Chicago’s multifamily market, even as this sector faces increasing concerns in other parts of the country.
That’s the takeaway from Cross Street’s recently released 2026 Second Quarter Chicago Multifamily Market Report, which tracks apartment rents, vacancy rates, concessions, leasing activity and development across Chicago’s downtown and neighborhood submarkets.
In its report, Cross Street found that the average effective apartment rent in the city increased 4.3% on a year-over-year basis in the second quarter, reaching about $1,974 a unit. At the same time, the city’s average multifamily vacancy rate held steady at 4.4% during the quarter, the same level recorded in the second quarter of 2025.
Part of the reason for these strong numbers? The supply of apartment units in the Chicago area remains relatively modest when compared to demand for this space.
Cross Street credited this combination of limited construction and strong demand for keeping vacancy rates below the national average. Recent deliveries have modestly outpaced absorption, but the development pipeline remains limited, supporting above-average rent growth and favorable long-term fundamentals, Cross Street said.
The average effective rent for Chicago-area Class-A properties reached $3,285 a unit in the second quarter, up 5.4% from a year earlier. Class-B apartments averaged $1,956, an increase of 4.1%, while Class-C properties averaged $1,355, up 3.4%.
Downtown Chicago is particularly strong. Cross Street reported that effective rents downtown rose 4.6% year over year to an average of $3,000 a unit, or $3.88 per square foot. The report also showed average effective rent-per-square-foot rising 6.8% on a year-over-year basis to $4.08.
Streeterville commanded the highest average rent among downtown submarkets, at $3,368 a unit, Cross Street reported. Fulton Market posted the highest rent growth, at 9%. At the unit level, Streeterville had the highest average studio and one-bedroom rents, while Gold Coast led for two-bedroom apartments with an average monthly rent of $5,113.
And in more evidence of the strength of Chicago’s multifamily sector? Cross Street reported that concessions are down, too.
In downtown submarkets, average concessions declined slightly, from 1.25% of rent in the second quarter of 2025 to 1.18% in the second quarter of this year. That represented an average concession of $37.22 a month, compared with $39.58 a year earlier.
Chicago’s neighborhoods are showing a similar pattern. Cross Street found that vacancy generally remains below 5% across most neighborhood submarkets, with Lincoln Square, Wicker Park and Lake View among the tightest markets. Occupancy was above 93% in every neighborhood tracked by the report.
Lincoln Park and West Town had the highest average effective rents, at $4,096 and $4,128 a unit, in the second quarter. Avondale, North Center and Ravenswood were fully leased in the second quarter, according to Cross Street.
Average neighborhood concessions fell to 0.60% in the second quarter from 1.03% a year earlier.
Leasing activity has helped drive those results, Cross Street said. Monthly leasing exceeded 2025 levels throughout the first half of 2026, even though activity followed the usual seasonal pattern of increasing through the spring before easing in June.
The most important factor boosting the local multifamily market? Cross Street pointed to supply.
As of June 30, downtown Chicago had 5,278 apartment units under construction, 12,242 units approved but not yet permitted and another 9,106 units publicly proposed. Developers delivered 843 units during the first half of 2026, with another 861 units expected to deliver during the second half.
Streeterville leads the downtown market in units under construction, although Cross Street noted that more than half of those units are concentrated in a single building. Fulton Market and West Loop together account for 31% of the downtown units currently under construction. The Loop is also seeing increased construction activity as adaptive reuse projects move forward.
This is important: Adaptive reuse is becoming an increasingly important source of new apartments.
Cross Street estimates that adaptive-reuse projects will account for nearly 44% of all downtown Chicago apartment units delivered this year. The Loop is leading that activity, with 117 units already delivered this year, 823 under construction, 1,303 approved and another 1,029 proposed.
Overall, Cross Street is tracking 109 downtown projects in various stages of development, representing 44,921 potential units. That includes 28 projects under construction, 48 approved projects and 33 publicly proposed developments.
The neighborhood pipeline is smaller. Cross Street is tracking 1,685 units under construction, 3,305 approved but not permitted and 2,576 publicly proposed. Another 381 units were delivered during the first half of 2026, with 385 more expected by year’s end.
For Chicago’s apartment market, that limited supply could prove to be an important advantage. While demand remains healthy, concessions are shrinking and rents continue to climb, the city also isn’t facing the wave of new apartment construction that has created challenges in other markets across the country.
The once downside here? Cross Street said that in a market where new construction remains difficult, adaptive reuse may increasingly become one of the few practical ways to add meaningful apartment supply to downtown Chicago and beyond.
