June 30, 2025

Chicago Multifamily Market Update: Rent Growth, Capital Trends & Tax Relief | Monday Market Moves

Monday Market Moves | Week of 30 June 2025

Welcome to Monday Market Moves, the weekly series from Essex Capital Markets briefing you on Chicago commercial real estate capital markets. We cover key trends in CRE debt, refinancing, and capital structures to help investors, borrowers, and lenders navigate today’s evolving environment.


This Week: Chicago Multifamily Market Update: Rent Growth, Capital Trends & Tax Relief

Midwest Multifamily Heats Up

While the Sun Belt works through oversupply, the Midwest’s reputation as the overlooked stepchild is finally fading. The Chicago multifamily market continues to stand out, with rents rising 4.2% year-over-year in May — the third-highest increase in the nation. Cities like Indianapolis and Madison are also posting rent growth well above the national average of ~1%.

Sales volume tells the story too: first-quarter multifamily sales in Chicago more than doubled from a year ago, with Class A prices jumping 33% above the recent three-year average. Capital is moving accordingly — Morgan Properties made a $500M Midwest bet this spring, and Clear Investment Group is targeting $300M to expand its workforce housing portfolio.

    Why it matters:
  • The Midwest’s rent growth is anchored by solid job bases and stable demand, not speculative supply.
  • For buyers, acquisitions pencil — especially when stepping into well-located assets with room to unlock value.
  • Limited new supply (just ~1,200 new Class A units projected in Chicago over three years) keeps fundamentals healthy.

  • Nationwide: Normalizing Supply, Steady Demand

    Across the country, supply pipelines are easing back to historical norms. After record completions in 2024, new deliveries are stepping down to 536,000 units in 2025, keeping markets balanced — especially in regions like the Midwest where new starts have been disciplined.

    While national rent growth is moderating at about 1–1.5%, the regional story matters more: SOME underbuilt markets IN like the Midwest continue to outperform, with absorption staying strong and leasing remaining active.

    Well-located, cash-flowing properties remain the preferred play for many private buyers. Transaction volume is measured, but liquidity is ample, and creative buyers are stepping into deals where they can bring fresh capital and operating know-how to stabilize properties and benefit from steady rent growth.

      Why it matters:
  • More balanced supply is creating a healthier environment for acquisitions.
  • Existing multifamily assets provide built-in inflation protection and flexibility to adjust rents over time.
  • Leasing demand remains steady in core Midwest cities — backed by local job bases, not speculative migration.

  • Property Tax Stability Eases Investor Sentiment

    Chicago’s property tax uncertainty is subsiding. The Cook County Assessor reports that estimated commercial property tax rates for 2025 declined, as assessed values have grown faster than levy increases, helping ease pressure on income-generating assets. Additionally, a new $15M Homeowner Relief Fund is in place to support households hit with sharp tax hikes, signaling progress and transparency in the tax system.

      Why it matters:
  • Lower-estimated rates reduce owner expenses and improve NOI outlook
  • Policy shifts toward relief programs gives greater predictability to property-level financial modeling
  • Clearer tax environment supports smoother underwriting and transaction confidence
    • What We’re Watching

  • Investors leaning into “broken balance sheet” deals with healthy underlying assets.
  • Workforce housing and value-add multifamily in Chicago and key Midwest metros remain highly sought after.
  • Resilient rent growth and measured supply are keeping market fundamentals strong for well-capitalized buyers.

  • Final Thought

    For all the noise, the fundamentals remain solid: limited new supply, steady demand, and opportunities for well-prepared capital to step in where others hesitate. From top-tier Class A to workforce housing, the Chicago multifamily market presents a compelling opportunity — and patient capital is taking notice.

    From all of us at Essex Capital Markets — have a safe and happy Fourth of July. Here’s to smart investing, strong partnerships, and a summer of steady growth.

    Sources:
    Bisnow
    YieldPro
    Cook County Illinois


    To speak with our Capital Markets team about how multi family lenders are approaching today’s market, please fill out the form below.

    News & Insights

    Catch up on the latest company news and transactions. Explore the trends and ideas impacting the mid-market real estate financing and investment market.

    VIEW ALL NEWS

    CONTACT US
    Essex Capital Markets, LLC
    2718 W. Roscoe St.
    Suite 100A
    Chicago, IL 60618
    Phone: 773.305.4900
    Fax: 773.305.4901

    MESSAGE US

    I am interested in: *(Required)