This month, Mayor Rahm Emanuel announced the installation of the 60th operating tower crane in 2017, as well as another post-recession record of building permits issued in a single calendar year.
The numbers may seem wonky to those outside of the construction industry, but Chicago’s ongoing construction boom translates to thousands of available units for downtown renters and increasing competition among developers to ink new leases. Downtown Chicago renters have more options than ever, and thousands of new apartment units for the city’s dense central neighborhoods are in the pipeline for 2018 and 2019.
But is it too much?
In a guide published earlier this year highlighting new residential construction—specifically rental developments—brokerage Luxury Living Chicago estimated that roughly 6,600 new apartments were slated to be delivered in 2017 alone. The majority of these new rental developments have been completed in recent months, while the remainder should be available to lease by early next year, according to Luxury Living's CEO and founder, Aaron Galvin.
“We’re at a point that when we hit March 2018, we will see the highest vacancy of new downtown apartments since this development cycle,” Galvin says. “We’re expecting to see roughly 5,000 vacant apartments in downtown Chicago in the first quarter of 2018.” By "vacant," he clarifies, he means brand-new apartments—it's possible some of them are leased out already.
But there is one indicator that people aren't snapping up these new rental units as quickly as developers might hope: Some are offering one to two months free rent and immediate move-ins. In fact, apartment guide YoChicago has advertised some developments that are offering three months of free rent to new tenants.
Downtown developments currently offering free rent concessions include 640 North Wells in River North, Optima Signature in Streeterville, Emme in the West Loop, The Lex in the South Loop, and the Linkt Apartments on Milwaukee Avenue.
What does that mean for the construction boom? Galvin says that developers will shift their efforts attention away from River North, where the glut is worst, to other downtown neighborhoods like the West Loop and South Loop. He predicts that developers will continue moving up Milwaukee Avenue toward Wicker Park and Logan Square, to lure upscale renters who prefer to live in the neighborhoods.
Even with major concessions from developers, Galvin says that free rent isn’t going to be the only thing that attracts and retains renters. “Those that are going to win are the ones offering the highest level of service,” Galvin says. “It’s about how you’re working with renters, emphasizing the amount of choice they have, the amenities being offered, and the authenticity of providing a home—because these new apartments are going to be people's homes.”