Downtown Chicago apartment rents for top-shelf property climbed in the fourth quarter, buoyed by a lack of new supply entering the market.

Net monthly rent at Class-A downtown apartment buildings was $3.60 per SF in Q4, an increase of 2.6% from the same time frame in 2023, Crain's Chicago Business reported, citing Integra Realty Resources data.

Landlords should anticipate the trend continuing, as the construction pipeline is bone dry, the data shows.

There are only about 1,200 Class-A multifamily units under construction in the city set to deliver in the next three years, well below historical averages, according to a January report from Luxury Living. Years of minimal supply coupled with consistent demand will likely continue to drive rents up, Aaron Galvin, founder and designated managing broker of Luxury Living, previously told Bisnow.

“The goal is that the capital markets start to see Chicago as a viable investment again and we start to have investment back into Chicago and are able to deliver brand-new luxury apartments in the way that we have, starting probably in 2027,” Galvin said.

Integra projects developers will deliver fewer than 300 units downtown this year, the fewest new apartments to come online annually in more than two decades, Crain's reported. Two buildings are set to open in the South Loop this year: Straits Row, an 18-story tower developed by Q Investment Partners and Melrose Ascension Capital, and a 149-unit development at 1717 S. Michigan Ave. from CMK Cos.

Just three submarkets have average gross rents higher than $4 per SF: West Loop/Fulton Market, Gold Coast/Old Town and River North, according to Luxury Living.

The stubbornly high cost of capital is restricting developers' ability to start on new projects, Integra Senior Managing Director Ron DeVries told Crain's.

“There’s a pause in the market with the cost of capital and the ability to attract equity,” DeVries said. “So if you own buildings right now, it’s all great news, right? You’re trying to build a building, that’s not great news. Our pipeline is broken.”