Crain’s ran a story last week on the rental market in downtown Chicago, highlighting that rents and occupancies dropped off in the third quarter. But when you look at the long term trend you can see that as the housing bubble burst and people found it more difficult and less appealing to buy rents actually skyrocketed in downtown Chicago. Rents are up almost 33% since 2004, which is a 3.6% annual rate. The third quarter headline results are really nothing more than a normal blip in highly volatile data.
According to the Crain’s article developers are planning to add 5600 new units by the end of 2014, which looks like a lot by historic standards. The question is whether or not the Chicago rental market will be able to absorb all these units. If it can then rents will remain fairly stable or increase, which argues in favor of real estate investments and buying vs. renting.