Chicago’s Class A apartments – resilience during the last downturn
Despite the recession’s impacts, Chicago did not fall as far and recovered more quickly than most major markets
June 08, 2020
2.1 average percentage point decline in occupancy
6.4% average decline in effective rent
27.5% average rent rebound
- In the last cycle, Chicago’s Class A occupancy peaked at 92 percent. That was at the end of 2007.
- The Great Recession resulted in 266,000 Chicago jobs lost between 2007 and 2009, or 5.6 percent of the job base.
- This slowdown resulted in occupancy declining over the next quarter to hit 89.7 percent at the beginning of 2008.
- This 2.3-point drop was in line with most markets and not as serious as what Seattle, Phoenix, or the Bay Area saw.
- These softer Chicago conditions did cause effective Class A rents to retrench. It took 6 quarters for Chicago to hit bottom, compared to 7 to 13 quarters for several major markets.
- From this peak to trough, Chicago lost 3.6 versus 6.4 percent for the major markets. This made Chicago one of the most resilient markets with only a $72 drop in monthly effective rent.
- It took until early 2011 for Chicago rents to recover to their prior peak. While 5 quarters may seem long, many major markets took 13 to 18 quarters.
- Led by its stronger economy, 2011 saw Chicago rents rebound before most markets. Since bottom, Class A rents are up 23.2 percent, only slightly behind the average of the major markets.