Chicago Multifamily Poised For Big Investment Year
Stakeholders in Chicago’s capital markets believe CRE is due for a big year of investment activity in 2026.
Panelists at Bisnow's Chicago Capital Markets and CRE Finance Conference, held at the Radisson Blu Aqua Hotel on Feb. 19, were particularly optimistic about the city’s multifamily sector, with investor sentiment on the rise amid the asset class' high rent growth and attractive cap rates.
Debt is more widely available than in past years, and institutional investors are on the lookout for potential multifamily opportunities, they said.
“I would say that, for the first time in six years, Chicago is no longer a four-letter word, that we're actually seeing institutional capital at least trying to engage in Chicago,” said Susan Tjarksen, managing director at Cushman & Wakefield.
Tjarksen said she thinks the city will see double the transaction volume in the apartment sector compared to 2025. Cap rates are still attractive and may compress further, which may entice investors given where interest rates are and how debt financing looks, she said.
There may be a shift in how properties are identified for investment this year, too, Tjarksen said.
“2025 was the year of the sponsor, and the strength of the sponsor certainly,” Tjarksen said. “In 2026, I think we see that the strength of the actual asset and the productivity of the asset is going to be as equally as important as the strength of the sponsor.”
Heitman Managing Director Emi Adachi said the biggest challenge for Heitman’s business over the past couple of years has been to convince investors that prices have fully adjusted to the impact of higher interest rates, but more people are now listening. Macroeconomic turmoil, largely centered on trade policy, derailed activity for much of 2025, she said.
Overall, Adachi said prices have adjusted after declining by about 20% or so during the Federal Reserve's rate increase cycle. In some cases, indicators suggest they have been coming a little off the bottom, and Heitman is getting more buy-in from investors.
Now, Adachi said debt is widely available for deals, outside of challenging assets in the office sector and low-quality malls, where dealmakers continue to use CMBS loans. She said Heitman tracks the availability and liquidity of debt in each sector every quarter, and it is there across apartments, industrial and many of the alternative property sectors that Heitman is active in.
“We feel very, very positive about the lending picture as a tailwind for transaction market demand this year,” Adachi said.
But the picture in Chicago isn’t as clear as the national trends.
Chicago is rebounding more slowly in transaction activity than on the national level, but fundamentals look promising for what’s to come, Adachi said. In the apartment market, there has been little new supply growth, which has helped Chicago lead the country in rent growth.
Those fundamentals seem to be drawing investors back, Adachi said, particularly in multifamily.
Adachi said Heitman believes CRE is in the early stages of a capital market recovery and that past data shows that after a period of contraction in values, the expectation is a period of three to five years — or possibly more — of strong returns coming out of that.
In 2024 and 2025, Adachi said transaction volumes ticked up about 12% each year, which is a baseline expectation for the improvement in 2026. She said she is hoping for better, and that any increase in activity reflects the fact that there are more buyers and sellers bridging that gap.
“We are eager to deploy in this environment before everybody jumps back into the market,” Adachi said.
If institutional capital returns, that will further legitimize Chicago CRE on a national basis, Tjarksen said. That will help its international profile in turn.
“International money is not stupid,” Tjarksen said. “The first thing they ask always is, ‘Well, who else is invested at this level in Chicago in this asset class?’ And so, you need the national institutional capital to lead that market.”
