Chicago Ties Miami as Top Rental Market in US

Chicago's rising appeal as a rental market is putting pressure on Miami, traditionally a dominant player.

Jordan B. & Han-Gwon Lung
September 27, 2024

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Good morning. Chicago’s rental market is on fire, rivaling Miami in popularity as renters flock to the Midwest for affordability and opportunity.

Today’s issue is brought to you by MHCI Group.

🎙️ No Cap by CRE Daily: Jonathon Barkl, CEO of AirGarage, shares how he went from college student to disrupting the parking industry, evolving AirGarage into a full-stack, tech-first parking operator.

Market Snapshot

S&P 500

GSPC

5,745.37

Pct Chg:
+0.40%

FTSE NAREIT

FNER

835.67

Pct Chg:
-1.06%

10Y Treasury

TNX

3.785%

Pct Chg:
-0.004

SOFR

30-DAY AVERAGE

5.24701

Pct Chg:
0.0%

*Data as of 9/26/2024 market close.

TAKING THE CROWN

Chicago Surges to #1 in RentCafe’s Hottest Rental Markets, Tying with Miami

Rental Competitiveness Score by Region Peak Season 2024

Chicago’s suburban rental market has skyrocketed, tying with Miami for the top spot on RentCafe’s hottest rental markets list after climbing from 16th place last year.

Chicago’s rise: Apartments in suburban Chicago are now being rented within 33 days on average—almost a week faster than the national rate—with occupancy hitting 95.6%. The surge is driven by corporate expansions and relocations, boosting demand and solidifying Chicago’s new #1 ranking.

Miami’s slowdown: While still competitive, Miami’s rental market has cooled. Units are now rented in 32 days, slower than last year, and the average number of applicants per apartment has dropped from 25 to 18. Lease renewals have also dipped slightly, from 73% to 71.5%, as new supply outpaces demand.

Milwaukee heats up: Milwaukee ranks third on the list with an RCI score of 90.7, thanks to high demand, limited new builds, and affordable rent. Apartments here attract 14 applicants per unit, with a 70% lease renewal rate pushing occupancy to 95.5%.

➥ THE TAKEAWAY

Big picture: The rental market is shifting, with the Midwest gaining momentum as renters seek affordability and the Northeast now claiming the most competitive region. Sunbelt cities like Miami are seeing their dominance cool slightly as demand shifts.

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✍️ Editor’s Picks

Dueling outlook: Jamie Dimon still predicts a 65% chance of US recession due to geopolitical uncertainty, while Goldman Sachs (GS) CFO sees progress with the Fed rate cut.
Fear and Greed: The Q224 Burns + CRE Daily Fear and Greed survey results are in. Download your FREE copy to see how sentiment is shifting.
Fiscal warnings: Moody’s warns of a potential US AAA credit downgrade after the 2024 elections due to rising deficits, projecting a 130% public debt/GDP ratio by 2034.
Transform your tech: Whether you are looking to raise capital faster, improve your investors’ experience, or easily manage your active investments, Agora has you covered. (sponsored)
Life science blues: Life sciences space availability reached 30%, with rents down 9%. To achieve nationwide equilibrium, 32MSF of absorption is needed.
City on fire: NYC Mayor Eric Adams is facing down federal corruption charges, raising concerns for his ‘City of Yes’ affordable housing plan.
Economic strategy: Kamala Harris pledges $100B in tax credits to boost US manufacturing and strengthen key developing sectors like AI and aerospace.

🏘️ MULTIFAMILY

Slowing down: After a 14.9% surge in multifamily starts in 2022, activity has sharply dropped, according to NMHC.
Expanding portfolio: Rise48 Equity secured a $21.2M loan to acquire a 144-unit Dallas apartment complex, continuing its growth in the region after a recent rate drop.
Picking up the pace: A 76-unit Burlingame apartment complex in San Francisco sold for $26.3M after over a year on the market, highlighting the Peninsula’s multifamily market resurgence.
Insurance woes: Wisconsin-based Trinity Flood's $24.2M loan on seven multifamily properties in three states was recently transferred to special servicing.
Miami expansion: Omega Real Estate secured a $103M loan for The Gardens Residences, a 358-unit mixed-use project in North Miami, marking the first step in its plan to create a Live-Work-Play district.

🏭 Industrial

Industrial evolution: The recent slowdown in construction has led to a rise in industrial property rents as newer buildings with amenities are preferred.
Warehouse winning: Faropoint's $300M fund has acquired 1MSF in 12 buildings, targeting sale-leaseback deals for industrial properties across the US.
Sector surge: Industrial oversupply has dropped as strong e-commerce persists. However, short-term operational challenges remain, and new supply softens fundamentals.

🏬 RETAIL

Luxury leasing: US luxury retail sales are projected to reach $77.3B in 2024, with nearly half (48.5%) of new stores in malls leasing 360+ KSF.
Dining dynamics: Despite four years of challenges, the U.S. restaurant industry is thriving, projected at $1.1T in 2024 spending, with fast-casual chains leading YoY visit growth.
Reviving retail: Bloomingdale's (M) is planning to build a transformative mixed-use development, The Grove, on 275 acres in Illinois that it acquired for $17M.

🏢 OFFICE

Hybrid work trends: The majority of CEOs foresee traditional office work rebounding soon, with 83% predicting a 5-day in-office workweek norm by 2026, up from 64% in 2023.
Legal clash: Charles Cohen's Tower 57 is back on the market after a court-ordered eviction, following a legal clash with the landowners over $8M in unpaid taxes and office vacancies.

🏨 HOSPITALITY

Culinary haven: Michelin-starred chef José Andrés partners with Thor Equities to open The Bazaar House, a 67-room hotel in DC, featuring multiple food options and a membership club.
Family drama: Aby Rosen's dispute over Gramercy Park Hotel actions questions legitimacy, aiming to postpone $80 M damages amidst family drama.
Lucky bet: Buyers purchased a Chicago hotel near O’Hare airport for $21M, with a $105K per key price, planning a $5M renovation to capitalize on its proximity to the airport and a nearby casino.

📈 CHART OF THE DAY

According to Axios, the share of Florida homeowners paying $3,000 monthly or more for their mortgage in 2023 was a staggering 36.5%, while only 7.9% of homeowners in the Sunshine State paid between $2.5K and $2.99K monthly.

FACT OF THE DAY

The Mall of America in Minnesota is so large that it could fit 7 Yankee Stadiums inside! With 5.6 million square feet of total space, it’s not just a shopping center—it’s a full-blown entertainment complex with more than 500 stores, an indoor theme park, and even an aquarium.