Why Chicago Suburban Multifamily Continues to Outperform in 2026 with Brian Karmowski

As we enter 2026 and prime leasing season, we often get asked, seemingly daily, how we think the market is performing and what we’re hearing from other owners, principals, and property managers as well as witnessing firsthand in the brokerage world.

Essex Principal Brian Karmowski provides a market perspective on leasing trends, supply dynamics, and investor demand across suburban Chicago.

Key Takeaways from the Chicago Suburban Multifamily Market

• Rent growth is projected in the 3–4% range year-over-year
• Renewal rates remain strong – around 70%
• Suburban occupancy held near 97% in 2025
• New supply remains limited at ~1.1% of total inventory
• Investor demand remains steady, with increased national attention
• Mid-market deals continue to see high tour volume and engagement

Positive Rent Growth in Chicago’s Suburban Apartment Market

Most forecasts for the Chicago metro area project YoY increases in the 3-4% range and this echoes the sentiment of most owners. Furthermore, renewal rates have stayed elevated, and most expect renewal rates around 70%, similar to 2025.

This is a stark contrast to several Sun Belt multifamily markets like Austin, Phoenix, and Tampa currently experiencing negative rental growth (-3% to -6%) and renewal rates closer to 50%.

That said, we have heard of some softening that suggests tenants have reached, or are quickly approaching, their rental limit. The feedback has caused some landlords to scale back renewal increases with a preferred strategy of keeping ‘butts in seats’ to maintain elevated occupancy. This strategy may be more representative in the B and C Class units while A Class continues to outperform.

Strong Occupancy Continues Across Suburban Chicago

We did hear of some negative impacts related to immigration reform and other owners claim the softening job market may also be a factor; however, the Chicagoland job market remains strong with ‘full’ employment aided by our stable workforce – roughly four million strong and highly diversified with no more than 10% of the workforce concentrated in one industry.

To that end, Suburban Chicago maintained a 97% occupancy rate in 2025, and most expect 2026 to be similar. While rent growth renewal rates may slow, there is near universal agreement that occupancy will remain strong.

Limited Apartment Supply Continues to Support Rents

Limited supply continues to buoy rents. In 2025 the share of new units was only 1.1% of the total apartment supply in the suburbs. While up from .71% in 2024, it’s not nearly enough to keep up with demand. The competition for apartments remains fierce, so much so that the Chicago suburbs are competing with Miami and New York for the most competitive rental market, certainly not a sentence I thought I’d write just a few years ago.

National Investors Are Paying Attention to Chicago Suburbs

The Chicago suburban market has started to gain national attention. While the Sun Belt and the coasts have historically been more attractive to institutional investors, the market has started to see new entrants. A good example of this is S2 Capital’s recent acquisition of Ovaltine Apartments in Villa Park. According to S2, the acquisition ‘represented a strategic expansion for S2 into a new major U.S. market following several years of evaluation and underwriting across the Chicago region.’

I wouldn’t be surprised to hear more of this in the coming months as the Chicagoland market continues to outperform. As for the mid-market space, roughly 90% of the interest remains local but investor demand remains steady. Our suburban team recently launched two deals – 84 units in Orland Park and 24 units in Bensenville. Both listings have attracted significant interest with 30+ tours within the two weeks of marketing.

Recent activity highlights:

• 84-unit listing in Orland Park
• 24-unit listing in Bensenville
• 30+ tours within two weeks of marketing
• Approximately 90% of demand remains local

Final Takeaways for 2026

• Suburban fundamentals remain strong, with occupancy expected to hold near 97%

• Rent growth is moderating but still positive, with owners prioritizing retention

• Limited new supply continues to support pricing power across most submarkets

• National capital is beginning to re-enter the Chicago suburban market

• Mid-market deal activity remains highly competitive, driven by local investors

Sources:

S2 Capital
RentCafe
Integra Realty Resources – CAA Preview

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About Essex Realty Group

Since 1990, Essex Realty Group, LLC has served Chicago’s investment real estate market as a top multifamily brokerage firm, specializing in Chicago multifamily for sale properties. The firm focuses on mid-market apartment buildings and has completed over $3 billion in transactions. Essex provides comprehensive brokerage services, including property marketing, market analysis, and transaction execution for private and institutional investors. Learn more at essexrealtygroup.com.