Chicago urban and suburban area apartment rents continue to rise, even after a record bump the prior year. According to an article in Crain’s Chicago Real Estate Daily* net rents were up; 

another 4.8% compared to the same period the previous year. The apparent preference of millennials wanting to rent and not all that ready to buy and own is helping fuel the market and lining the pockets of landlords. The average occupancy rate in suburban areas for example rose to 96.7 percent in 2015 came in at 96.3 percent for Q1 2016. There are now more millennials than baby boomers and the demographic most likely to rent rather than own. Millennials are the age group born roughly between 1980 and 2000. Downtown Chicago area rents also hit another high in Q1 2016, up 4.56 percent from Q4 2015.

The hesitancy to buy appears to be more than just flexibility but for this demographic it has a significant impact. For those just entering the workforce or having been employed a short period of time, it’s very likely younger workers have yet to find their ideal job fresh out of college or just entering the employment circle and as such are more concerned about where they live and not focused on creating personal wealth over time owning real estate. Even as financing costs are very near record lows and in many cases rental rates are more expensive than a mortgage payment, flexibility remains king.

At the same time, millennials watched the stock market crumble in 2008 and witnessed the foreclosure wave sweep the country and the Chicago area was certainly not immune. Savvy developers have recognized this opportunity and are acquiring and rehabilitating apartment buildings and benefitting from the consistently high demand for rental properties. For the foreseeable future, it appears extremely low vacancy rates will be the norm, continuing to prop up rental rates for landlords.

 

*Crain’s Chicago Real Estate Daily, May 2016