By Shubhra Jha, Standard Real Estate Investments
Chicago was not on many investors’ bingo cards. However, consistently popping up in the top five apartment markets nationwide for rent growth and occupancy outperformance is changing that perception.
Metro Chicago boasts relative affordability compared with its coastal counterparts, a range of job opportunities at all skill levels and the ongoing need for attainable housing. These factors create a multifamily investment landscape poised to deliver steady, long-term returns driven by resilient and stable demand.
Economy, affordability
Chicago is a diversified and consistent economic powerhouse, counted as the third largest major metro area in the United States and the largest non-coastal city. Its geographic location in America’s heartland combined with its historic strength in a wide array of sectors ranging from agriculture/food processing and finance/commodities trading to manufacturing, transportation/logistics and education play an important role in the metro’s resilience throughout economic cycles. Notably, there is no singular industry dominating the economy.
Looking ahead, sizeable investments in quantum computing, life sciences and fintech will build on Chicago’s historic advantages in finance, trading and education.
Despite its diversified and steadily expanding economic base, Chicago remains an affordable city for its residents. Median home prices in the Chicago MSA are approximately 7 percent lower than the U.S. national average and 50 to 60 percent lower than Los Angeles or New York City MSAs, per Zillow. Chicago is also more affordable for renters — average rents in Chicago are at a 40 percent discount to coastal cities such as Los Angeles, New York City and San Francisco.
This housing affordability is as important as the steady economic engine that keeps Chicago attractive to both employers and the top talent needed to fill the jobs created by those employers. Chicago remains a magnet for young graduates from around the Midwest and increasingly other coastal cities for its jobs and attainable cost of living.
Multifamily sector is hot
Per Rent Café data, Chicago was the second hottest rental market in 2025, with suburban Chicago markets placing third, both ahead of Manhattan and behind only Miami. Chicago’s mix of big city credentials, good transit system and affordable, well-connected suburbs, make its affordable housing market even more attractive to employees.
Chicago’s appeal to renters is evident by how its rental market has tightened considerably in recent years and the consequent rent growth. Vacancies have dropped to historic lows with stabilized vacancies (excluding projects in lease-up) at 4.5 percent and overall vacancies at 4.9 percent, the lowest in 25 years. Compare this to the U.S. average at 8.5 percent, 360 basis points higher.
At the same time, a tough lending environment has made the supply pipeline with units under construction at multi-year lows. They are the lowest in more than a decade, resulting in virtually no supply overhang.
Despite rent growth clocking in among the top three markets nationwide, rents remain affordable — spending on rent in the Chicago MSA (city and suburbs) is 24 percent of median household income. This affordability metric is better than during the post-Great Financial Crisis decade where it hovered in the 27 percent range — primarily due to gains in income levels outpacing gains in rent levels — keeping overall rents affordable.
Demand for apartments is expected to moderate back to pre-pandemic levels, but the good news is that the forecast for supply is not onerous. As such, apartment market fundamentals are projected to be in balance for the near to medium term, positioning the region for positive rent growth, even if not as robust as in the last five years, when it averaged about 4.4 percent per year, handily beating the national average at 3.2 percent per year.
Western suburbs shine
Within the expansive Chicago MSA, the western suburbs are popular with employers and employees. Ease of access to the downtown core via the Metra BNSF and Union Pacific West commuter rail and connectivity to O’Hare and Midway airports make the office and industrial stock in the western suburbs attractive to renters.
Chicago’s western suburbs hold 175 million square feet, or 35 percent, of greater Chicago’s office stock and 823 million square feet, or 60 percent, of its industrial stock. The employment base runs into the hundreds of thousands with employees that need attainable housing in the collar counties.
What makes the western suburbs a magnet for residents is the abundance of small-town charm and easy access to the city in communities stretching from Oak Park to Naperville and beyond. These areas are known for their historic architecture, walkable neighborhoods and strong public school systems. Key towns include Naperville, Wheaton, Downers Grove, Hinsdale, Glen Ellyn, Oak Park, Elmhurst, La Grange and Western Springs.
Home prices in DuPage and Kane counties are 34 percent and 11 percent higher, respectively, than Cook County, making them slightly less affordable for residents who want to access the jobs, good schools and suburban environment of the western suburbs.
Rents, on the other hand, are more affordable — 40 percent less than downtown Chicago and 15 to 20 percent less than northern suburbs well known for high-end single-family homes. And, because of difficulty in building new rental housing due to restrictive zoning in many locales, rental housing stock is low. This creates tight market conditions and, consequently, favorable market conditions for investors.
As market conditions stay stable and affordable despite tight market conditions, the need to preserve affordable housing is top of mind for many stakeholders. This is a driving tenet at Standard Real Estate Investments and its capital partners. It is especially important in neighborhoods with good schools, diversity of housing stock at all price points and attractive quality-of-life markers.
To keep housing attainable for those earning 80 to 120 percent of median household incomes, the acquisition and preservation of existing affordable housing presents a viable solution that addresses affordability while providing steady returns for investors.
Shubhra Jha is a principal with Standard Real Estate Investments. This article originally appeared in the March 2026 issue of Heartland Real Estate Business magazine.