As we move through mid-2025, Chicago’s multifamily market continues to defy national headwinds. While much of the country faces uncertainty around interest rates, refinancing pressures, and shifting investment sentiment, Chicago’s apartment sector stands out with stable fundamentals and a well-balanced capital landscape. Occupancy rates remain strong, rent growth is steady, and both banks and agencies are stepping up with competitive financing options. This article explores current conditions and provides insights investors can use to secure financing, reposition assets, or prepare for maturities.
Market Fundamentals Remain Strong
Chicago’s multifamily market entered 2025 in a position of relative strength. Occupancy remains around 95.6%—one of the highest rates among major U.S. metros—driven by strong rental demand and a continued affordability gap between renting and homeownership. With interest rates still elevated and home prices out of reach for many, renting remains the more viable option for a wide share of residents. This has helped sustain healthy absorption even as other markets across the country face softening fundamentals.
On the supply side, new development activity remains meaningfully below historical norms. While select projects continue to move forward, elevated construction costs, restrictive zoning policies, and more conservative underwriting standards have made it increasingly difficult to bring new multifamily supply to market. At the same time, institutional equity has become more selective, with many investors citing uncertainty around interest rates, property taxes, and the broader political climate as reasons for holding back. This slowdown in both construction and capital deployment is helping to support rent growth across stabilized assets by keeping new competition limited.
Annual rent growth in Chicago sits at 3.3% as of Q1 2025—nearly triple the national average of 1.1%. While growth has moderated from peak post-pandemic levels, the city’s relative affordability, job diversity, and slow development pace have created a supply-demand balance that continues to benefit multifamily owners. Still, if construction remains muted for too long, the metro could eventually face a deeper housing shortage that limits affordability and overall market liquidity.
Lender Activity: Banks and Agencies Take the Lead
The competitive edge in today’s financing market comes from understanding who is lending—and how. Agency lenders remain the most active players for stable multifamily assets, especially those meeting affordability or mission-driven criteria. They offer consistent execution, flexible structures, and highly competitive pricing.
Banks, however, are not just an alternative—they are a primary capital source once again. Strengthened balance sheets and more conservative underwriting over the past two years have put many lenders in a position to grow loan portfolios. Banks are especially attractive to borrowers looking for relationship-based lending, quicker turnaround times, or custom structures outside of cookie-cutter agency boxes.
Financing Landscape: Competitive and Accessible
Interest rates remain elevated by recent historical standards, but the lending environment has improved significantly since 2023. Agency lenders such as Fannie Mae and Freddie Mac are actively quoting five-year fixed rates in the 5.4% to 5.9% range for qualified borrowers. These loans often come with 60% to 75% LTV and offer full-term interest-only structures, especially for stabilized workforce or mission-driven housing.
Banks have also returned to the market after pulling back in 2022 and 2023. Five-year bank loan rates currently range between 5.82% and 7.00%, depending on the borrower profile, asset type, and leverage. What’s notable is that bank spreads have tightened, and many lenders are back in the market—often competing head-to-head with agencies on stabilized mid-sized deals. Local and regional banks, in particular, are showing renewed interest in income-producing multifamily assets in stable markets like Chicago.
Indicative Loan Rates (as of June 2nd, 2025):
– Agency Loans: ~5.65%-6.45%
– Bank Loans: ~5.82%–7.00%
– Life Company Loans: ~5.80%
Note: Rates are indicative and may vary by asset, borrower, and lender.
Loan Maturities: Planning Ahead
According to the Mortgage Bankers Association, approximately $213 billion in multifamily debt is scheduled to mature in 2025. This figure, which represents the largest single-year maturity volume this cycle, reflects the wave of five- and seven-year loans originated during the 2020–2021 low-rate period. As those loans come due, many borrowers will face a refinancing environment with materially higher debt costs than what they locked in five years ago.
However, this is not a distressed scenario—at least not in Chicago. Most lenders and borrowers are approaching maturity events with flexibility and strategy. We’re seeing recapitalizations, moderate equity infusions, and rate buydowns to help make refinances pencil. The key is early engagement with lenders to structure deals that align with both current cash flow and long-term investment goals.
Positioning for Opportunity
Chicago’s multifamily market is not immune to rising rates—but it is built to withstand them. Investors who take a proactive approach to refinancing and engage the right lenders can still secure favorable terms. The key is treating this not as a moment of distress, but one of strategic repositioning.
At Essex Capital Markets, we work with a wide array of lenders to structure debt that meets your investment goals—whether you’re navigating a maturity, acquiring a new asset, or looking ahead to 2026 and beyond. If you’re holding debt set to mature in the next 12–24 months, now is the time to strategize. The market may be changing, but the opportunity is still here for those who move smartly.
Note: All data is based on industry reports and public estimates as of June 2, 2025. Sources include MMG Real Estate Advisors, CBRE, Trepp, Freddie Mac, and MBA.