Chicago skyline with cranes and a new rental tower, reflecting a slowdown in apartment starts and a shift toward transit-oriented projects.
Chicago metro, September 2, 2025
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.
In 2025, Chicagoland posted the steepest drop in new apartment construction among large markets, with a 60.4% decline versus 2024 and an estimated 3,756 new units for the year. Of those, roughly 36% are slated for the City of Chicago, while the rest would be built in the surrounding suburbs. The numbers come from a national analysis that tracks construction through data gathered by a major real estate software firm. The slowdown comes as developers confront higher labor and material costs, stricter lending standards, and rising insurance premiums, all of which have dampened activity after a burst of post-pandemic building in earlier years.
The region’s market position has shifted accordingly. Chicagoland slipped to 33rd among the biggest new rental apartment markets in 2025 and sits fifth regionally in the Midwest, trailing Columbus, Ohio by about 3,000 units. Across the Midwest, builders are projected to deliver roughly one-tenth of the nation’s expected apartment supply in 2025, with the South accounting for more than half of national production. In the top 20 metro markets for 2025, twelve are in the South, with Austin and Dallas leading Southern output. The New York Metro area remains a dominant force with around 30,000 units scheduled in 2025.
Industry observers note that much of the recent pipeline was permitted years earlier—during 2021 and 2022—and that far fewer projects advanced to groundbreaking in 2023 and 2024. The slowed pace in 2025 reflects a combination of higher construction costs and a cooling of post-pandemic booms, alongside shifts in capital availability and market demand. A companion survey around amenities shows renters are prioritizing reserved or covered parking (about 40%) and fitness centers (around 32%), with interest in coworking and communal spaces, club rooms, spa features, and rooftop pools continuing to rise as attractive extras.
A five-unit residential project has been permitted for construction at 1361 West Chicago Avenue in Noble Square, directly across from Eckhart Park. The site sits on a vacant parcel between older three- and four-story buildings. The permit, filed April 30, 2025 and issued August 28, 2025, calls for a four-story structure on grade with no basement and five dwelling units located on the upper floors. The ground floor will contain a single 807-square-foot retail space and the residents’ entrance. A rear setback reduction from 30 feet to 3 feet is part of the approved variation. Two covered parking spaces will be accessed from the alley, with five bicycle spaces inside the building. The project team includes Guider Group LLC as the architect of record and Erex, Inc. as the general contractor. Because the site is vacant, no demolition permit is required before construction begins. The presence of nearby transit options is noted, including CTA service on the 1300 block of West Chicago Avenue, the Blue Line approximately six blocks away, and multiple bus routes in the vicinity.
The 1000M project sits on Michigan Avenue as a tall, high-rise rental tower with 738 units and a reported height of 805 feet. The tower has become a touchstone for how developers react to market forces: it began as a condo project, but the financial environment and changing demand led Time Equities and JK Equities to pivot to luxury rentals. The pivot followed a pause during the pandemic and the death of a key architect, with design shifts made to maximize light and a sense of openness. The building opened to renters last spring, and occupancy has been strong enough to support premium rental levels. The project is credited with bringing modern wellness and mobility features to its residents, including energy-efficient systems, extensive bike storage, and electric-vehicle charging stations, as well as facilities like a fitness center, yoga studio, and outdoor terrace. The financing journey included a shift in lender support and an unusual equity structure designed to attract tax-focused investors while accommodating a lower return profile. The development also benefited from the city’s willingness to adjust the historic district to accommodate the tower’s approved height. A 2025 CoStar Impact Award recognized 1000M for multifamily development in Chicago.
Key numbers for readers: construction started in December 2019 with foundation work; early pandemic financing was cut from a planned $300 million condo loan to about $200 million before the pivot; the project later secured additional financing to bridge gaps. The leasing and marketing plan targeted young professionals, empty nesters, and eco-conscious renters, using a mix of social media, renderings, virtual tours, and sneak-peek tours to attract tenants. Industry observers praised the project for its emphasis on light, mobility, and sustainability, noting the many professionals who contributed to bringing the development to completion.
In July, the city council enacted an ordinance to eliminate parking minimums for new projects within half a mile of a CTA or Metra line or within a quarter mile of a bus line. The reform is part of a broader push to remove zoning rules that block new housing, a move aimed at speeding development while addressing affordability and supply needs. The change is often discussed in the context of community meetings and ward-level tweaks to land-use rules, a process that can influence whether proposed housing moves forward. The report notes that parking facilities in many apartment buildings are generally less attractive than in earlier eras, which can affect how developers plan site features and transit-oriented strategies. The historic Marina City area is cited as part of the ongoing conversation about parking and urban density in Chicago.
Overall, the market in 2025 reflects a blend of delayed construction starts, shifting capital strategies, and city-level reforms intended to unlock housing supply. The data draws from multiple sources that track projects, permits, and market signals across the region, highlighting how a few large projects and policy moves can influence the broader pattern of new housing development in a major city and its metro area.
| Feature | Details |
|---|---|
| Market trend | Strong slowdown in new apartment construction with a 60.4% drop year over year |
| Total projected units (2025) | Approximately 3,756 units across the Chicagoland area |
| City vs. suburbs | About 36% of new units in the City of Chicago; remaining in suburban areas |
| Major project spotlight | 1000M on Michigan Avenue; 738 rental units; 805 feet tall; opened to renters in spring |
| Permitting case study | 1361 West Chicago Avenue, Noble Square; five units; four stories; ground-floor retail; $1.2 million |
| Policy change | Parking minimums removed for projects near transit lines to promote faster development |
| Regional context | South accounts for about half of national 2025 apartment construction; New York Metro leads; Midwest sees significant activity in multiple metros |
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