Multifamily N Illinois

An analysis of multifamily concessions in Chicago

An analysis of multifamily concessions in Chicago,ph2
SixForty North Wells in River North.

Chicago’s core neighborhoods observed a number of multifamily deliveries over the past few years, a trend that should continue through 2020. According to a blog post by Laura Ballou, senior associate—market analytics at KIG CRE, these new deliveries as well as upcoming units should support the recent trend for concessions.

There were 4,600 units delivered in 2017. Per the KIG CRE analysis, there should be 3,700 units coming online this year and up to 7,700 units in 2019. This added supply should continue the concession trend well into 2020.

“While the most extensive concessions are found at buildings in lease up, we are now seeing stabilized buildings offer concessions just to keep their market share,” Ballou wrote. Buildings in lease consistently offer up to two months free. Stabilized buildings, however, generally cap such exemptions at one month.

“In addition to free rent, ‘ghost concessions,’ such as waived pet fees, free parking or bonus gift cards, are also being used to entice prospective residents at new buildings,” wrote Ballou.

River North’s rental market has proved particularly strong. Over 2,000 units were delivered to the neighborhood between 2016 and 2018, but the average concessions offered in lease up are less than that of other core submarkets. The South Loop and West Loop submarkets—where up to 3,800 and 2,900 units, respectively, will be delivered over the next two years—will continue to see concessions.

An analysis of multifamily concessions in Chicago,ph1
Courtesy KIG CRE.