Northern exposure: Why Chicago’s Northwest suburbs are a bright spot for new multifamily development

Prospective Chicago-area renters struggling to find suitable housing know all too well that the suburbs are red-hot, with rents on the rise and 16 people ready to sign a lease for every one apartment, according to a recent study from RentCafe.

While more than 11,000 new multifamily units have been built in Chicago’s suburbs since 2020, vacancy remains low — just 4.4%.

The Northwest suburbs particularly are hot, with average rent in Mount Prospect, for example, up 6.1% since last December, according to Apartments.com.

Suburbs such as Niles, Des Plaines, Buffalo Grove, Palatine, Wheeling, Elk Grove Village and Rolling Meadows no longer are flying under the radar. And based on strong supply-demand fundamentals as well as greater municipality support, the future looks even brighter for new rental options in the Northwest suburbs.

All are welcome

Who is driving demand? In today’s market, everyone.

While those starting their careers continue to make up the bulk of renters, Gen Xers and baby boomers also are drawn to the maintenance-free and resort-like lifestyle renting offers them at a time when they are looking to downsize and enjoy retirement.

And with high interest rates and low for-sale housing inventory, even 30- and 40-year-olds who are in the thick of raising children and typically gravitate to single-family homes have turned toward renting in recent years — both out of necessity and choice.

The city of Chicago’s uncertain political environment and higher taxes also have increased the suburbs’ draw for some people, with rental communities near Metra stops or major expressways providing an appealing alternative for professionals who prefer the slower pace of the suburbs while still enjoying an easy commute.

And while there are suburbs hesitant to embrace rental housing, a growing number of municipalities understand the many economic benefits of new, high-quality rental options — such as increased foot traffic in their downtowns and activating underutilized sites.

As such, we’ve seen some suburbs rezone areas or update ordinances to, for example, address overburdensome parking requirements that had precluded large multifamily developments, and others create tax increment financing (TIF) incentives to encourage investment in hopes of establishing vibrant, walkable live/work/play downtowns.

More rentals, more options

For decades, living in the suburbs was synonymous with living in a single-family home. But today’s suburbanites have a far more exciting and flexible palette of housing options to suit their lifestyle, including luxury apartment towers, build-to-rent homes, townhouses and more.

This broad range of living options means those who want a housing option beyond a traditional single-family home no longer need to leave their suburban hometown in search of rental housing.

One of the fastest-growing segments of suburban rentals is class A housing. These luxury properties often are in a suburban downtown or near mass transit and offer amenities like state-of-the-art fitness centers and posh resident lounges, as well as pools, gourmet community kitchens and coffee bars.

Residents of these high-end projects are renters by choice (they could afford to buy a home but prefer the lifestyle and ease of renting) and often view the area surrounding their building as an extension of their home, enjoying access to dining options, entertainment and other attractions.

As evidenced by the rising number of people who prefer to rent rather than own, the American dream is not one-size-fits-all.

For many, achieving this dream is not about homeownership but rather the freedom of choice — the freedom to relocate for a job opportunity or to spend money on travel and experiences rather than be tied down with a mortgage.

The changing face of the Northwest suburbs

Probably no Northwest suburb has enjoyed a “glow up” as quickly as Mount Prospect.

In 2019, Wingspan Development Group opened 20West, a 71-unit, Class-A, transit-oriented development near the Metra station and downtown Mount Prospect’s first new apartment building in 40 years.

Flash forward to today and 20West is more than 94% leased and is one of six class A rental communities in downtown Mount Prospect. The other properties include HQ Residences, Prospect Place, 10 North Main Apartments, Maple Street Lofts and most recently, The Dawson — the latter two also developed by Wingspan.

In addition to supplying much-needed housing, the Maple Street Lofts building also is home to Angelo Caputo’s Fresh Markets, the first downtown grocery store in decades and one with a growing customer base living nearby. All told, nearly 600 units have been added to downtown Mount Prospect in five years.

Elk Grove Village also is getting in on the multifamily action. The suburb recently approved $24.5 million in tax increment financing to develop The Vue at Elk Grove Village, a 10-acre, mixed-use property that will offer retail, parking and 287 residential units, including row homes and apartments. In addition, the community will feature a full suite of hospitality-style amenities, including a luxurious multistory clubhouse, resort-style pool, secluded dog park, grilling stations and a private courtyard.

And in nearby Skokie, more than 600 rentals are planned near the Edens Expressway and Old Orchard Road. Just west of the interchange, our Wingspan team is working with Tucker Development on The Henry at Harms Woods, a community with 245 luxury apartments, 49 rental townhouses and about 13,000 square feet of commercial space that will provide direct access to the Harms Woods forest preserve.

The Henry already is vertical with a completion date scheduled for the third quarter of 2025. To the east, the Old Orchard Shopping Center soon will see a mix of retail and residential. A multiphase reimaging of the iconic shopping mecca includes the delivery of 400 new apartments in 2027.

While apartment development has cooled in the Sun Belt and other regions, watch for continued steady demand and growth in Chicago’s Northwest suburbs in 2025 and beyond. Whether renting because they have to or because they like the lifestyle, more people are saying yes to suburban rental communities.

• Christopher Coleman is vice president of development for Wingspan Development Group.