Chicago metro, September 2, 2025
News Summary
New apartment starts across the Chicago metro plunged sharply as rising construction and insurance costs, higher labor expenses and tighter lending undercut the post-pandemic building boom. The region saw a steep year-over-year decline that pushed it down national rankings and shifted growth toward other metros. Roughly a third of the limited new units remain inside the city, while large projects pivoted from condos to rentals and small infill permits continue in neighborhoods. Local policy changes removing parking minimums near transit aim to reduce costs and encourage denser development, even as builders prioritize amenities tied to mobility and wellness.
Chicago Apartment Construction Plunges in 2025; Local Permits, Zoning Reform and High-Rise Pivot Illustrate Pressure
Top line: New apartment starts across the Chicago metro area fell sharply in 2025, with estimated starts down 60.4% compared with 2024, leaving roughly 3,756 new units expected to come online this year. That steep pullback reflects rising costs, tighter finance conditions and a wider regional shift of multifamily activity to other U.S. metros.
What happened and why it matters
The most recent national data compilation, drawn from industry project-tracking and software records, shows Chicagoland experienced the deepest year-over-year drop in apartment construction among U.S. metros in 2025. Only about a third of those expected units — roughly 1,371 — are slated inside the city limits; the rest are in surrounding suburbs.
Developers and analysts attribute the downturn to a combination of factors that make new projects harder to launch: higher labor and material costs, sharply increased insurance premiums, and tighter lending standards. Many projects opening this year were permitted back in 2021–2022; far fewer projects actually broke ground in 2023–2024, a lag that is showing up now in lower 2025 starts.
How Chicago compares regionally and nationally
On a national scale, Chicagoland slipped out of the top 30 new-rental markets and landed around 33rd in 2025. Within the Midwest, the metro ranks roughly fifth, trailing the regional leader by about 3,000 units. The Midwest as a whole is expected to deliver about 12% of roughly a half-million new rental units forecast nationwide for 2025. By contrast, the South is projected to capture a majority of new builds, accounting for roughly 52% of national production, with a few Southern metros together starting tens of thousands of units.
What renters are looking for
Surveyed renter preferences show strong interest in reserved or covered parking and fitness centers, with other sought amenities including coworking and communal spaces, club rooms, spa-like features and rooftop pools. Those amenity demands affect design and operating costs as developers try to win tenants in a challenging market.
Local policy shifts: parking minimums and transit
The Chicago City Council moved in mid-2025 to remove citywide parking minimums for projects located near public transit. The reform eliminates minimum parking requirements for developments within a half-mile of rail transit or Metra, or within a quarter-mile of a bus line. The policy is intended to reduce zoning barriers that can raise project costs and block housing production near transit-rich locations.
Examples on the ground: a small Noble Square project
A recently issued construction permit on a vacant lot at 1361 West Chicago Avenue in Noble Square illustrates small-scale infill activity that continues despite the wider slowdown. The approved plan calls for a four-story building with five dwelling units above a ground-floor retail space. The project shows features increasingly common in new small multifamily work in the city: limited automobile parking, dedicated bicycle storage and alley access. Specifics include:
- Four-story structure on grade with no basement and five residential units.
- Ground-floor retail of about 807 square feet and residents’ entrance at street level.
- Two covered parking spaces accessed from the alley and five bicycle spaces inside the building.
- Approved reduction in the rear setback to bring the residential floors closer to the property line.
- Reported construction cost near $1.2 million, with a permit issued in late August 2025.
Large-scale pivot: a luxury tower switched to rentals
A high-profile downtown tower planned originally as a condominium project pivoted during construction to become a full rental tower, highlighting how market conditions can force major changes in development strategy. The project, completed and opened to tenants last spring, totals roughly 738 units and rises more than 800 feet. The conversion unfolded amid pandemic-related financing changes and sales slowdowns; developers ultimately repositioned the building to capitalize on demand for luxury rentals. The building reports full occupancy and includes amenities aimed at wellness, mobility and sustainability, plus storage for bikes and electric vehicle charging points. Monthly rents range from lower-end studio pricing in the low thousands to premium multi-thousand-dollar units for large floors.
Where this leaves the market
The steep drop in new construction starts will likely tighten supply growth for rental housing in the near term, potentially keeping upward pressure on rents in desirable neighborhoods. Local zoning reforms that reduce parking burdens and make transit-adjacent building easier could help some projects pencil out in the future, but broader cost and financing headwinds remain the dominant forces shaping development in 2025.
FAQ
Common questions about Chicago’s 2025 apartment market
Q: How big was the drop in new apartment starts in Chicagoland in 2025?
A: Starts fell about 60.4% year-over-year, leaving an estimated 3,756 new units expected to open in 2025.
Q: Where will most of the new units be located?
A: About 36% of the expected new units are in the City of Chicago; the remainder are in suburban areas around the metro.
Q: What are the main reasons for the slowdown?
A: Higher construction labor and materials costs, rising insurance premiums and tighter lending criteria have made new projects harder to finance and build.
Q: What is the city doing about parking rules?
A: The city removed parking minimums for projects near rail or bus service, eliminating those minimums within a half-mile of rail or a quarter-mile of bus lines to encourage transit-oriented development.
Q: Are any new projects still being permitted?
A: Yes. Smaller infill projects continue to be permitted, such as a recently approved five-unit building in Noble Square with limited car parking and bike storage.
Key features at a glance
| Feature | Details |
|---|---|
| Total 2025 Chicagoland starts | Approximately 3,756 units |
| Year-over-year change | -60.4% |
| Share in city | About 36% (1,371 units) |
| Midwest rank | Roughly 5th |
| Major headwinds | High labor/material costs, insurance, tighter lending |
| Local policy change | Parking minimums eliminated near transit (half-mile rail / quarter-mile bus) |
| Sample small project | 5-unit, 4-story building in Noble Square; $1.2M estimated construction cost; 2 covered parking spaces; 5 bike spaces |
| Sample large pivot | Luxury high-rise converted from condos to 738 rental units; opened to renters in spring 2025; reported full occupancy |
Deeper Dive: News & Info About This Topic
Additional Resources
- Chicago YIMBY: Five residential units, one commercial unit permitted at 1361 West Chicago Avenue
- Wikipedia: 1361 West Chicago Avenue
- Bloomberg: Chicago zoning reform targets parking rules to boost housing
- Google Search: Chicago zoning reform parking minimums 2025
- CoStar: Apartment tower clears obstacles to 73-story tower over Grant Park
- Google Scholar: Grant Park apartment tower 73 stories 2025
- Bisnow: The convoluted start-stop process that birthed $1000M Chicago apartment tower
- Encyclopedia Britannica: 1000M Chicago apartment tower
- WTTW: Developer moves forward on Lincoln Park apartment complex
- Google News: Lincoln Park apartment complex developer 2025
Author: Construction CA News
CALIFORNIA STAFF WRITER The CALIFORNIA STAFF WRITER represents the experienced team at constructioncanews.com, your go-to source for actionable local news and information in California and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rose Parade, Coachella, Comic-Con, and the California State Fair. Our coverage extends to key organizations like the California Building Industry Association and Associated General Contractors of California, plus leading businesses in technology and entertainment that power the local economy such as Apple and Alphabet. As part of the broader network, including constructionnynews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic landscape across multiple states.
