Renting In Chicago: Downtown Apartment Rents Surpass Pre-Recession Peak

As Chicago's real estate market continues to turn away from condominiums and toward apartments, demand for (and, therefore, the price of) apartments in the city's downtown area has surpassed its pre-recession boom.

As Crain's reports, based on new data released Monday by Appraisal Research Counselors, the average net rent at high-end ("Class A") apartment buildings downtown hit $2.43 per square foot in this year's second quarter -- an increase of 6.1 percent over the first quarter and 9.5 percent over the previous year.

The previous peak in net rent -- $2.35 per square foot in the third quarter of 2007 -- was also toppled by the consultants' latest finding.

And prices are expected to head even higher since demand for premium downtown rental real estate also has been on the rise, the Chicago Tribune reports. By the end of June, 5,600 more renters were living in the city's downtown area than was the case three years earlier. Construction is now underway on five projects (offering just over 1,700 new units) to attempt to satisfy additional demand.

Rent increases are not only impacting fancy downtown dwellings, too, the Tribune notes. So-deemed "Class B" apartment buildings downtown have also seen rent increases, while a survey of suburban Chicagoan apartments revealed rents have increased an average of 5.2 percent over last year.

The new findings mesh with new data on average neighborhood rental prices released earlier this month by Domu, a Chicago-based apartment-finding service. The service identified downtown or downtown-adjacent neighborhoods including River North, Gold Coast, the Loop, West Loop and South Loop. When it comes to spaces as large as a three-bedroom apartment, the average rental price in the Gold Coast (just over $6,300 a month) is almost four-and-a-half times higher than the cost for a similarly sized apartment in Logan Square (approximately $1,340). Logan Square, incidentally, was recently pegged by Vogue as "a happening 'hood … that’s evolving this very minute" as part of their "Destination of the Month" feature on the Windy City.

Photo by Mike McCaffrey via Flickr.

Comments

[Myshkin57]

02:53 PM on 08/17/2011

I find the ratio of the Gold Coast to Logan Square questionable. If you're comparing similar apartment to similar apartment, I'd say it's 2-to-1 maybe. I've been looking recently and Logan Square is not as cheap as it used to be. I dare you to find more than a handful of 3-bedrooms that cheap. And only the nicest 3-bedrooms in the Gold Coast go for anywhere near $6000. I used to live there just two months back and you could get a 3-bed most places for $3000-4000. I doubt rents have gone up 50-100% in a few months.

[gemini68]

10:36 AM on 08/17/2011

This isn't a surprise. Home purchases are down and renting is up. Which means demand is up- so prices go up. But also factor in that downtown real estate is more expensive overall. It caters to a certain pay grade so it stands to reason that rent would be more expensive. I personally would never want to live downtown. Everything costs more downtown.

[SellPuts]

01:57 AM on 08/17/2011

the rents are high because no one is buying and people would rather rent.. this is nothing new.. personally i think rents are ludicrous for this city.. terrible climate, terrible taxes, terrible representation for tax dollars spent.

[alley boy]

10:50 PM on 08/16/2011

This was expected. Formerly these curent renters would have been condo owners, but now they're rent.

How about Crain's filling us in on what's happening to condo sales and prices. I think they are both lower, see:

http://www.calculatedriskblog.com/2011/08/lawler-early-read-on-existing-home.html

[ChicagoKnowsBest]

03:29 PM on 08/16/2011

And we are becoming the next Detriot right Drudge report?

[Ronny Roger]

03:59 PM on 08/16/2011

Yep, according to Grudge and its clueless followers that posts on here.