On a weekday afternoon, residents at a sleek glass high-rise in River North could be found lounging poolside or working on laptops on a deck with sweeping views of the downtown skyline.

It was a relaxing scene for a sunny day, though what people pay to rent there might be eye-popping to some. Rents at the two-tower complex, which includes One Chicago and 23 West, start around $2,700 for a studio and go up to $13,192 for a three-bedroom, according to the property’s website.

Apartments at top-of-the-market buildings in Chicago keep getting more expensive, boosted by a muted construction pipeline and a growing pool of renters willing to pay top dollar for the nicest buildings in the trendiest neighborhoods. Meanwhile, Chicago’s more attainable housing stock is slipping away, and the city’s overall affordability could be dwindling.

The cost of apartments is going up in most big cities across the country, but Chicago is leading the pack: Rents here grew more than in any other metro area in October, with the typical asking rent rising 6% year over year, according to a report from online real estate marketplace Zillow. The metro area ranked 39th out of the nation’s 50 largest metro areas on Zillow’s affordability index as of October, compared to 38th the previous year.

And rents are poised to keep climbing as Chicago stares down a major supply shortage: About 9,800 rental units are under construction, accounting for about 1.7% of the metro area’s total inventory, with just 1,500 units expected to be completed by the end of the year, according to data from real estate information provider CoStar Group. For a metro area of about 10 million people, that’s not much.

Other factors are boosting rental demand in addition to the supply crunch. People are renting for longer — the average age of a first-time homebuyer in the U.S. has risen to an all-time high of 40, according to the National Association of Realtors — and amid economic uncertainty and still-elevated interest rates, the financial flexibility of renting is more appealing.

Renting for the long haul
Demand for apartments of all types is high, and the demand for luxury apartments keeps growing. The average gross rent for the Class A market downtown, which covers 28,500 units across 85 properties built since 2016, was up 6.3% year over year in the third quarter, rising to $3,228 a month, according to data from Chicago-based brokerage firm Luxury Living.

River North, which is home to some of the priciest rental buildings in the city, saw the biggest bump, with the average gross rent rising 13% year over year, to $3,738 a month. So who’s affording these apartments? While the city’s high-rises are home to a mix of demographics, the average luxury renter in downtown Chicago is someone who makes more than six figures, has likely been renting for at least three to five years, and is “in it for the long haul,” Luxury Living founder Aaron Galvin says. While they’re still young professionals who want to be close to work as well as restaurants and nightlife, they’re likely not on their first job.

“They are not necessarily interested in becoming a homeowner anytime soon, and they are looking for the newest, nicest property they can find in the best location with extraordinary amenities,” Galvin says.

He also notes that a significant proportion of downtown luxury renters are people coming from out of state, mainly from New York, California, Florida and Texas, who work remotely and have flexibility regarding where they can live. Even as rents get higher here, Chicago’s still an attainable prospect compared to more expensive cities like New York and Los Angeles. 

High-end apartment buildings are springing up in the suburbs, too, and they’re serving a more varied group. One Winnetka, a development in the North Shore suburb’s downtown targeted for completion in January 2027, where monthly rents will range from $7,000 to more than $12,500, has dozens of prospective renters of various ages on its waitlist, according to developer John Murphy.

“There’s no consistent profile — some are in their 40s and 50s, they’re transitioning out of larger homes and want more simplified living, and apartments do it,” the CEO of Murphy Development Group told Crain’s in June.

Rents have been on the rise across the suburbs as well as in the city, with demand boosted by limited construction, work-from-home flexibility and homeowners taking advantage of higher prices in the for-sale market and renting while they determine their next move, according to a third-quarter report from appraisal and consulting firm Integra Realty Resources.

Attainable housing’s vanishing act
While the high end of the market keeps getting higher, the middle is going away.

Newly delivered apartments are in most cases going to be at the top of the market price-wise, and they’re especially pricey since there are so few of them. And facing higher construction and borrowing costs, developers often have to pass on those increased expenses to renters as well.

Meanwhile, Chicago’s supply of what’s known as naturally occurring affordable housing — units that rent for below market rates without being subsidized — is disappearing due to market pressures, without a clear way to replace it, says Geoff Smith, executive director of the Institute for Housing Studies at DePaul University.

Two- and four-flat rental buildings in affluent neighborhoods such as Lincoln Park, Lakeview and North Center are being bought and turned into multimillion-dollar single family homes. And when longtime landlords sell multi-unit buildings in popular neighborhoods, like Logan Square, the transaction gives the buyer an opportunity to renovate the apartments and charge higher rents based on what the market will bear.

“What we’ve seen is an erosion of the low-cost rental supply, and that just means to the extent that renters need affordable housing, they’re having a harder and harder time,” Smith says.

Owners of naturally occurring affordable housing may try to keep their rents attainable, but with such high demand for apartments across the city among renters who can’t afford the luxury high-rises, pricing is a “moving target,” Silver Property Group Managing Broker Ron Abrams said at a real estate industry panel earlier this month.

“Look, it’s shooting fish in a barrel right now,” said Abrams, whose firm owns and manages buildings across the North Side. “We’re full. I set the rents at a certain level, we rent it out, and then my partners tell me I’m an idiot and I should have tried to get more money,” 

So what does that crunch mean for Chicago? Rents here are unlikely to surpass those of the pricer coastal cities — an apartment that costs $3,200 in downtown Chicago is still $5,000 in New York, Galvin notes — so the city could maintain its affordability edge there, at least for high earners.

But the Chicago area isn’t seeing as much growth in its wages and labor market as it is in its rents. Data from the Bureau of Labor Statistics shows that year-over-year wage growth for private industry workers in the Chicago metro has been trending downward since mid-2023. Private industry employment in the Chicago area has also been slow-growing over the past couple of years, according to BLS.

“If that trajectory continues, it’s going to make it more and more difficult for renters over time,” Orphe Divounguy, senior economist at Zillow, says. “I think the big question is, will Chicago continue to attract talent if it loses its relative affordability?”