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Chicago Has Fewer Burdens To New Construction Than Other U.S. Metros

The first phase of 5050 North Broadway

Builders and other stakeholders in Chicago often complain about the difficulties of constructing new housing here. Whether it is the rising cost of construction, the many hoops developers have to jump through to get approvals from local aldermen and community members, or meeting affordable housing requirements, getting projects underway can sometimes seem daunting.

But Chicago may not be as bad as developers think, at least when compared to other parts of the country.

The National Apartment Association just released its U.S. Barriers to Apartment Construction Index, a study on key factors that complicate new construction in 58 major U.S. metro areas. The association found that although Chicago was one of the worst cities when it comes to land availability, overall it is one of the easiest cities for apartment builders.

“Chicago faces fewer barriers than cities such as New York or San Francisco, but developers still face issues with density restrictions and strong influence from local councils,” NAA President and CEO Robert Pinnegar said. “These factors can significantly delay the construction of much-needed apartments, especially in the urban core of Chicago.”

NAA surveyed real estate professionals active in each city on 10 factors, including land availability, entitlement processes, approval timelines, infrastructure constraints and affordable housing requirements. In most categories, Chicago’s barriers were close to average or even below average, giving it an overall rank of ninth out of the 58 metros.

Albuquerque ranks first overall, making it the easiest city for apartment builders, and San Jose, one of the nation’s most expensive markets, came in 58th.

Several moves by former Mayor Rahm Emanuel and Mayor Lori Lightfoot may further ease Chicago burdens. The Emanuel administration spent the last several years modernizing the city's archaic building code, and Lightfoot has said she will implement those changes over the next year. The new mayor has also curtailed the power of individual City Council members to block new development.   

There is a real need for new Chicago apartments, according to NAA.

Currently, 44% of Chicago residents face a high rent burden, the association found, and the city needs more than 35,000 apartments by 2030 to meet the growing demand.

“Chicago has a serious shortage of available land, driving up the cost of construction and contributing to the high rent burden we see across the city,” Chicagoland Apartment Association Executive Vice President Michael Mini said.