After years of seeing rents rise, renters may be singing “happy days are here again,” according to Appraisal Research Counselors data reported by Chicago Real Estate Daily.
The numbers: third quarter net rents in Class A buildings fell 1.9% from a year ago. Occupancy rates dipped to 92.6%, the lowest level since 2009. The downtown market absorbed 901 units in the previous four quarters, the lowest 12-month number since 2005.
The shifting market isn’t having an across-the-board impact. K2, for example, reported leasing 290 of its units, well above the 175 it had projected by this time. Aqua, on the other hand, saw its occupancy rate plummet from 98.1% a year ago to 86.3% in the third quarter.
Several thousand additional apartments will be coming to market next year and the following year, putting additional pressure on rents and occupancy levels.
One developer said he was “cautiously optimistic” that landlords wouldn’t react to the increased supply by offering rent concessions. We’ve already seen rent concessions at the new buildings, with two months’ free rent offers becoming common.