As Chicago landlords prepare for shifts in the rental market, staying ahead of rising rents and changing trends is essential.
New data indicates that rents could increase in 2025 and 2026 as the rental market transitions from an oversupplied state to a potential shortage. This blog explores what landlords in Chicago need to know and how partnering with the best property management company for your needs can help you navigate these changes successfully.
National Rental Trends and Their Impact on Chicago
The CoStar Group, a leader in real estate data analytics, forecasts an increase in rents nationwide. Key insights include:
Rents are rising again: After declining in early 2022, growth is expected to return to historical averages of 3.5% annually in 2025 and 2026, up from a low of 0.9% in Q3 2023.
Decreasing supply: Multifamily property completions are set to drop from 588,000 units in 2023 to just 250,000 units by 2026, creating a significant supply gap.
Construction declines: New construction starts have fallen sharply, from 210,000 units in Q1 2022 to only 63,000 units in 2024, further constraining future inventory.
While these trends are national, they mirror what’s happening locally in Chicago’s diverse rental market.
Chicago’s Rental Market: A Unique Landscape
Chicago stands apart from other major U.S. cities like New York or Los Angeles due to its blend of affordable housing options and thriving demand. However, local landlords are starting to feel the pressure as supply decreases and demand grows. Understanding the dynamics of investment property in Chicago is crucial for landlords looking to increase their returns in this competitive market. Here’s how the market in Chicago compares:
Supply Shortages:
Similar to national trends, Chicago is experiencing slower construction starts. Rising costs and regulatory challenges are deterring new developments, creating tighter conditions in the rental market.Growing Demand:
As homeownership becomes increasingly out of reach due to high mortgage rates, more Chicagoans are choosing to rent, further driving up demand.Neighborhood Variability:
Popular neighborhoods like Lincoln Park, River North, and the West Loop are likely to see the steepest rent increases. Meanwhile, emerging areas on the South and West Sides offer more affordability but are also experiencing rising rents as renters search for value.
Rent Forecast for 2025 and 2026
As we look ahead to 2025 and 2026, there are tools for rental property owners and Chicago property management teams aiming to make informed decisions. These platforms offer a comprehensive rent forecast, providing a detailed analysis of current market trends, including rent prices, rental comps, and property taxes. You can try our free rental analysis calculator on our website to get data within minutes!
Users can stay ahead of the curve by adjusting their investment strategies based on reliable predictions derived from historical data and market trends. This foresight allows property managers and real estate investors to increase their rental income and maintain a competitive edge in the market for their investment property. By leveraging insights, you can ensure your properties are priced optimally, aligning with future market conditions and enhancing your overall investment strategy.
Why Partner with Property Management Companies in Chicago?
As rents rise and the market tightens, professional property management becomes increasingly important. Leading property management companies in Chicago, like Landmark Property Management, provide expert services through their experienced Chicago property manager team, ensuring landlords stay ahead of these changes. Here’s how:
Optimized Rent Pricing: Local property management companies know the market best and can analyze local market trends to set competitive rents, ensuring you maximize profitability while remaining attractive to potential tenants.
Tenant Retention Strategies: Rising rents can lead to tenant turnover, but professional property management can help by offering lease renewal incentives and proactive tenant communication.
Compliance with Local Laws: Chicago landlords must navigate ordinances like the RLTO and Just Housing Ordinance. Property management companies ensure you stay compliant, avoiding costly legal issues.
Maintenance and Upgrades: Chicago property management services handle repairs and recommend upgrades that justify higher rents, helping you stand out in a competitive market.
How Chicago Ranks Among U.S. Rental Markets
Chicago remains a more affordable rental market compared to cities like Los Angeles and New York. but this could change as rents rise. For example:
Los Angeles: Double-digit rent increases are becoming common in luxury apartments as supply tightens and demand remains strong.
New York City: Record-high rents in Manhattan and Brooklyn show how tight inventory drives prices.
Chicago: Rents are increasing and new supply slowing, the city is becoming a more competitive rental market. That said, Chicago is still much more affordable than some of the other major markets (ie. LA, NYC, Seattle, Boston, Miami, etc).
Maximizing Rental Income
Maximizing rental income is a top priority for property managers and investors. There are platforms that provide accurate rent estimates and rental comps, offering a deep understanding of local market trends. This enables users to fine-tune their pricing strategies to reflect current and future market conditions.
These also help identify new investment opportunities, allowing for data-driven decisions that can significantly boost rental income. By offering a comprehensive analysis of property taxes, real estate rental prices, and local market trends, this business knowledge ensures that users can optimize their rental income while providing quality service to their tenants. This holistic approach not only enhances profitability but also ensures tenant satisfaction, creating a win-win scenario for all parties involved. Calculate your ROI and money flow today.
Preparing for Rising Rents: What Landlords Can Do
With 2025 and 2026 bringing higher rents, here are some actionable steps for Chicago landlords:
Update Rent Pricing Regularly
Use market data to adjust your rent pricing and stay competitive. Utilize tools like Rentometer or RentCast to get an accurate rent estimate, ensuring your pricing remains competitive and reflective of current market conditions. Property management companies in Chicago can also provide regular analyses to ensure your property meets market demands.Focus on Tenant Experience
Retaining high-quality tenants is critical. Offer incentives like small rent discounts for early renewals or upgrades to enhance the tenant experience.Invest in Strategic Upgrades
Upgraded appliances, fresh paint, or energy-efficient systems can increase your property’s appeal and justify higher rents.Partner with Property Management Experts
Navigating Chicago’s rental market can be challenging without professional support. The right property management company will help you manage everything from rent collection to tenant screening, freeing up your time while increasing profitability.
Why Choose Landmark Property Management?
At Landmark Property Management, we specialize in helping landlords in Chicago thrive in a dynamic rental market. Whether you own a single property or a portfolio, our tailored property management services ensure you’re prepared for the rising rents in 2025 and 2026.
Expert Rent Analysis: We’ll help you optimize your rent pricing to capture the market’s full potential.
Compliance Made Easy: Our team ensures your properties adhere to Chicago’s unique rental laws (ie. RLTO), giving you peace of mind.
Stress-Free Tenant Management: From marketing your property to tenant screening and maintenance, we handle it all.
Ready to Succeed in 2025 and Beyond? A Guide for Real Estate Investors
As rents rise and the market evolves, partnering with a trusted property management Chicago team is the key to staying competitive. At Landmark Property Management, we’re committed to helping you grow your investment while providing a seamless experience for tenants.
Contact us today!
Visit us at chicagospropertymanagement.com
We can help you navigate Chicago’s rental market with confidence!
