By Don DeBat

Sep. 2, 2025 – Chicago’s downtown apartment hunters may face sharply higher rents next spring as a result of a plummet in new rental unit construction starts.

Chicago posted the sharpest drop in new apartment construction in the past year, disclosed a new national analysis by Rent Café.

A closer look at the data reveals a group of metros with significantly fewer apartments estimated to open this year compared with 2024.

“In many cases, this pullback is tied to a mix of higher construction costs, tighter lending standards, or the cooling of post-pandemic building booms,” according to the Rent Café analysis based on data gathered by Yardi, a real estate software company.

Chicagoland – where experts say it is already incredibly tough to secure an affordable apartment – tops the national list with the largest drop in new construction, falling by a staggering 60.4 percent to 3,756 units compared with 2024.

36 percent (1,371) of Chicagoland units expected to be built this year will be in the city, with the balance in the suburbs. Photo by Anatoli Igolkin

Many new apartments on track to open across the Chicago Metro area were permitted in 2021–2022 with far fewer projects breaking ground in 2023-2024.

At the same time, local developers are navigating a mix of high labor and material costs, as well as rising insurance premiums, seriously dampening new construction, Rent Café predicted.

Chicagoland doesn’t even rank in the top 30 biggest new rental apartment markets this year, slipping to 33rd place nationwide.

One positive trend is seen in a companion Rent Café survey that lists the top two amenities renters are searching for – reserved or covered parking (40 percent) and fitness centers (32 percent). The rationale is if the property has a fitness center, renters do not have to pay extra for a gym membership, and if you get free parking, tenants don’t have to pay monthly parking garage rent.

Another amenity sought after is coworking and communal space. Renters are attracted by club rooms, spa features, and rooftop swimming pools, Rent Café said.

Same thing happening in nearby Madison

After a strong run of apartments added in recent years, new construction in Madison, Wisconsin, also is expected to plummet by a whopping 59.3 percent, with just 1,664 units expected to open in 2025.

The Madison Metro area remains popular with college students and young professionals, but higher interest rates and a wave of high-end apartments appear to be slowing new projects, Rent Café reported. Here are the facts reported by the analysis:

• Chicagoland ranks fifth regionally in the Midwest, trailing top builder Columbus, Ohio (right), by 3,000 units. Photo by Christopher Boswell

Minneapolis, Indianapolis, and Kansas City complete the top five, with 4,000 to 5,600 units expected to be started in 2025.

• The Midwest is estimated to deliver just 12 percent of the half a million units projected nationwide, while the South claims 52 percent of all apartment construction this year.

• Twelve of the top 20 biggest apartment builders of 2025 are Southern hubs, led by Austin and Dallas, Texas, with 56,000 units between them, followed by Atlanta, Miami, and Washington, D.C.

• For the fourth year in a row, the New York Metro area is the top market for new rental apartments, with around 30,000 units scheduled to open in 2025.