Chicago’s New ADU Ordinance Explained By A Real Estate Professional
March 03, 2021

Chicago’s New ADU Ordinance Explained By A Real Estate Professional

For the first time since 1957, the Chicago City Council Committee on Housing and Real Estate has approved an ordinance legalizing accessory dwelling units, also known as ADUs. Accessory dwelling units are conversion units or coach house units. A conversion unit is considered a unit located in either the basement or attic of a building. Many property owners are excited by new laws set forth in the ADU ordinance because adding an apartment unit to an existing property can increase property values over time.

ADU Overview

We recently met with Chicago Cityscape owner and ADU expert Steven Vance to learn more about the ordinance in detail. We summarized a few key points below. For additional details head to their ADU portal.

  • An ADU is allowed at properties that fall within an R-zoning district (except RS-1) AND within one of the five pilot areas;
  • There are no additional parking requirements;
  • To add a conversion unit your building must be 20 years or older, coach house units however will be allowed as part of new construction;



  • What does “affordable” mean? The exact rules will be set forth between now and May 1st, 2021, the date the city will begin accepting ADU applications, but they generally follow the rents set within the current ARO (affordable requirements ordinance) rules;
  • If your property is located within one of the west, south, or southeast zones there are some additional modifications to the general ordinance. Some of the modifications include: vacant lots cannot be improved with a backyard house first, buildings with between 1-3 units must be owner-occupied, and only two permits may be approved per block per year.


Broker Perspective

We spoke with a few brokers at Essex to learn more about how their clients are navigating this new ordinance.

Director Jordan Multack said, “The property owners I have spoken with are excited about the new guidelines set forth in this ADU ordinance. Owners are looking forward to adding units to their current properties as this will likely have a positive impact on property values. Plus, adding additional apartment units could also be a way to manage the continuous rise of taxes while also providing more housing across Chicago's many neighborhoods.”

With overall housing inventory low, the city hopes this ordinance will help solve some of Chicago’s housing problems by offering not only more housing units but also more affordable housing units. However, Essex Principal Jordan Gottlieb wonders whether the cost to build will prevent many owners from starting an ADU project. “What will be interesting to watch over the next year is the city’s response in managing these buildouts. If the city adds a number of required building updates on top of an ADU build-out, these might be too expensive to build. If the costs are manageable these are going to become very popular and hopefully will solve some of the city’s affordable housing problems,” says Gottlieb. When asked what he is communicating with his clients, he continues, “to help mitigate some uncertainty we are sharing rent surveys with our clients now to make sure they have a clear understanding of the current rental market as they assess whether or not to add ADU.”

Essex Principal Jim Darrow plans to add an ADU to one of his properties located within one of the five pilot areas. “I am planning to tear down an existing three-car garage and replace it with a 650 SF loft-style coach house unit that will sit atop a three-car parking pad. I am working with a hybrid pre-fab construction company on this project. It is great to see innovation stem from the passing of the ordinance. New companies are popping up to creatively help property owners build these units and maximize their standard Chicago city lots.”

Our Essex brokers are talking with property owners each and every day. Please reach out to an Essex multifamily broker today if you have questions about how many units you might be able to add to your lot.




Since 1990, Essex Realty Group, Inc. has served Chicago's investment real estate market as a top multifamily real estate brokerage firm. Contact us to learn more about our recent Chicagoland multifamily and mixed-use property sales and talk to a Chicago multifamily broker today.

Tagged in this post: Jim Darrow, Jordan Gottlieb, Jordan Multack