Owners of big apartment towers in downtown Chicago have flooded the for-sale market with more than 4,200 units in recent months, betting that strong rent growth in the nation's third-largest city will help overcome the drag of high borrowing costs on dealmaking.
Thirteen major properties ranging from 148 to 502 units have been put up for sale since April, according to brochures from large commercial real estate brokerages, with industry professionals expecting plenty more to come as the city ranks high nationally in rent growth and low in new supply.
Those figures include only towers within the Loop business district and in immediately surrounding neighborhoods, including Streeterville, Fulton Market and River North. Beyond those tight geographic boundaries, there are even more options for investors around the country interested in Chicago as they wait out a glut of new construction in fast-growing areas of the United States, such as the Sun Belt.
Among the downtown offerings are renewed efforts to sell some towers after previous attempts fell short, along with some properties hitting the market less than two years after their previous sale. The large volume could be viewed as a sign of confidence in a market that CoStar recently ranked as No. 2 among the nation's 50 biggest for rent growth.
"Investors are going to spend time in markets where they can get deals done," said Jason Buchberg, a Chicago-based vice president at Miami-based multifamily developer and investor Crescent Heights. "Deals are clearing in Chicago, for better or worse."
Industry professionals also say the flood of available Chicago properties can be viewed as an acknowledgement of the staying power of broader market conditions, such as high interest rates, that a number of would-be sellers previously tried to wait out.
Rent growth prompts
Crescent Heights is looking to sell the 398-unit North Water Apartments within the 50-story residential and hotel tower in Streeterville. The development firm put the property at 340 E. North Water St. on the market less than two years after buying it for just over $173 million in 2023.
Buchberg said Chicago is busy because it's "a top performer in the country" with rent growth ranking second among the top 50 markets, according to a CoStar analysis. That is the result of a historically low construction pipeline, which has allowed landlords to gradually push up rents because of the limited supply.
The Chicago area has the lowest supply growth as a percentage of inventory among the nation's major investment markets, according to a report from real estate services firm Newmark. A separate recent CoStar analysis pointed out how a dwindling construction pipeline is resulting in a tighter market among Chicago's premium apartments.
The dearth of new towers and the recent city history of completed deals have led to clarity on expected capitalization rates, or rates of return, on sales, Buchberg said.
"Some people are chasing deals where there's been crazy rent growth in the Sun Belt," he said. "In Chicago, slow and steady wins the race."
Buchberg said buyers' and sellers' expectations are more aligned in Midwestern markets than in other parts of the country.
"In Chicago, there have been enough transactions that buyers and sellers understand where cap rates need to be for a deal to happen," he said. "There's no supply, so I think we're positioned for a really healthy next part of the cycle."
Cap rates have been in the low to mid-5% range after falling into the mid-4% range before a series of interest rate increases started more than three years ago, industry professionals say. Lower cap rates mean higher profits for property sellers, and higher cap rates signal lower returns.
"Cap rates are higher, but with all the rent growth in the market these properties are generating more net income," said Ron DeVries, a Chicago-based senior managing director at residential market research firm and consultant Integra Realty Resources.
"That higher rent is producing a higher price even with cap rates higher," DeVries added. "Sellers are thinking, now we can make this work.
"Some deals may have been upside down, and now they can finally sell at a profit or not have as much of a loss as they would have."
Frozen market
The U.S. Federal Reserve raised interest rates 11 times between early 2022 and mid-2023 to try to cool inflation. High borrowing costs, in turn, caused many real estate investors to pause.
The overall volume of multifamily deals in the Chicago area fell from $6.3 billion in 2022 to $4 billion in 2023 and $3.9 billion last year, according to CoStar data.
So far in 2025, there have been a combined $2.7 billion in completed deals.
Much of that volume has been in Chicago's suburbs, including the recent sale of the 640-unit Fifteen 98 complex in Naperville, Illinois, for $136 million. Late last year, the E2 complex in Evanston sold for $148 million, a record for the suburbs.
There have been fewer large transactions completed downtown, where sales have included a $170 million deal for the 375-unit Fulbrix tower in Fulton Market and a $122 million sale of the 298-unit Millie on Michigan at 300 N. Michigan Ave.
Properties on the market now include the two-tower, 346-unit Grand Central property in the South Loop that Waterton bought less than two years ago, and the combined 502-unit Sky55 apartment tower and neighboring senior housing building that Brookfield is now making a second effort to sell along Grant Park.
The 481-unit Streeter tower in Streeterville, the 451-unit Left Bank tower in the Fulton River District and the 332-unit tower at 73 E. Lake St. near Millennium Park are also among the properties for sale.
"I suspect some of these sellers are just testing the waters again, and they may not sell," DeVries said. "Depending on where pricing settles, you could see more sellers bringing assets to the market if it is producing prices that are within their tolerance level.
"I still think there are a lot of unknowns. We've had some transactions, but there's still not real clarity on pricing. These next few transactions may bring that clarity."
Rising rents
There are a range of reasons for selling, including loan maturities, timing of funds and changing investment strategies. Improved market performance can also lead more owners to test the market.
CBRE Executive Vice President John Jaeger is predicting at least one more big wave of deals coming to market in 2025.
"It's going to be a very active year for the city of Chicago," Jaeger said.
Jaeger said today's occupancy rates and rent growth are the strongest he's seen in more than three decades in real estate, with little upcoming supply to upturn the trend.
"It's not just going to be 2025, it's going to be '26, '27 and '28," he said. "It's really all about rent growth right now."
Industry professionals said they are seeing trade-outs range from 3% to 12%. Trade-outs are the change in rental rate from one lease to the next, a key metric for apartment investors.
Amid those improved metrics, Newmark Senior Managing Director Chuck Johanns said, industry professionals are awaiting the effects of a long-anticipated reduction in interest rates on sale prices.
"The on-the-ground rental metrics in the market, I've never seen stronger occupancy and rent growth with very limited concessions," Johanns said. "So much is dependent on cap rates and borrowing costs that the strength of the rental market is not enough to drive a massive increase in pricing."
After a slowdown starting in 2022, Johanns said, he is encouraged by first-time buyers in Chicago. That includes U.K.-based financial services firm Legal & General's more than $113 million deal for the 350-unit Arkadia West Loop tower late last year. It was Legal & General's first U.S. multifamily deal for its institutional retirement business.
Despite that deal, industry professionals say many large institutions have remained on the sidelines. Taking their place are the likes of John Schreiber, the former Blackstone real estate executive who has teamed up with local firm JDL Development to buy the 227-unit Parker Fulton Market tower and the 292-unit Cobbler Square Lofts complex in Old Town for about $180 million combined since late 2024.
"We're seeing a lot of new buyers and a lot of out-of-towners," Jaeger said, marking a change from "institutional capital to high-net-worth investors and family offices. The exciting thing about that is they're not buying just one building. We've had multiple first-time buyers become second- and third-time buyers. Some aren't stopping at two or three."