Is Uncertainty the Biggest Constraint on Multifamily Development in Chicago?

With headlines predicting that Chicago multifamily construction starts could fall to their lowest level since 2012—and with no shortage of anecdotal feedback from apartment owners, operators, developers, and housing stakeholders—we wanted to better understand what is really holding back multifamily development in Chicago.

Ahead of our Mid-Market Summit, Kiser Group surveyed clients (owners, operators, developers, and multifamily stakeholders) to gather data behind the conversation.

Dozens of respondents completed our Missing Middle Survey.

While public discussions often focus on a single issue—whether it’s zoning, construction costs, financing, or politics—the survey revealed a different reality. The headwind facing multifamily housing today is not one barrier. It is the accumulation of barriers.

The market is experiencing a multi-sided deadlock in which rising costs, lengthy approval processes, regulatory uncertainty, political dynamics, and financing constraints reinforce one another. No single obstacle appears large enough to stop development on its own. Together, however, they create an environment where many projects never move forward.

The Cost of Uncertainty

When respondents ranked development constraints, approval timelines and permitting emerged as the most significant challenge, followed closely by construction costs and zoning restrictions.

“This finding suggests an important distinction,” said Lee Kiser, Principal and Designated Managing Broker at Kiser Group. “Markets can adapt to difficult conditions. Developers can account for higher interest rates, increased construction costs, or changing market rents. What becomes far more difficult is underwriting uncertainty.”

“When investors and developers don’t know how long approvals will take, whether zoning requirements might change, or whether political opposition could emerge late in the process, risk increases,” said Andy Friedman, Partner at Kiser Group. “As risk increases, fewer projects move forward.”

A Systemic Problem, Not a Singular One

Kiser Group’s Missing Middle Survey also revealed that respondents do not believe there is a single solution to increasing housing supply

When asked what would most increase participation in missing-middle housing development, responses were split across several priorities:

• Lower construction costs
• Increased density and upzoning
• Direct public incentives
• Faster and more predictable approvals
• Improved financing terms

Not one option received more than 27% support.

“The survey shows that the multifamily industry does not view today’s challenges as isolated issues,” said Katie LaGrand, Director at Kiser Group. “Instead, participants see development and redevelopment as being constrained by interconnected factors that make projects more difficult to execute.”

The Industry Wants Reform but Lacks Confidence

More than 80% of participants expressed support for some form of state-level intervention to address housing barriers. Yet nearly three-quarters indicated they are not confident that current obstacles can be addressed within the next several years.

Taken together, these responses reveal a significant confidence gap.

“Most people in commercial real estate broadly agree that reforms are needed,” said Jake Parker, Senior Director at Kiser Group. “The concern is whether existing systems can implement those reforms quickly enough to meaningfully impact housing supply.”

Different Perspectives, Same Challenge

The survey also highlighted subtle differences between owners and developers.

Developers identified construction costs as the primary challenge affecting project feasibility. Owners and operators focused more heavily on approval timelines and zoning restrictions.

The distinction makes sense.

Developers experience the direct impact of rising costs and shrinking margins. Owners, particularly those evaluating acquisitions or redevelopment opportunities, often encounter process-related barriers that create uncertainty around timing and execution.

“Different stakeholders may view the problem through different lenses, but both groups ultimately arrive at the same conclusion. Development has become increasingly difficult,” said Mike Mosher, Chief Revenue Officer at Kiser Group.

What We Heard Beyond the Numbers

The open-ended responses revealed several recurring themes.

Participants expressed concern that policymakers often underestimate project feasibility and risk-adjusted returns. Others argued that process risk has become more damaging than any individual regulation.

Several respondents noted that small and mid-sized projects are frequently subjected to approval processes and levels of complexity similar to those faced by much larger developments. As a result, many projects that could add incremental housing supply never move forward.

Another common concern was the loss of naturally affordable housing while public policy discussions remain focused elsewhere.

While respondents disagreed on specific solutions, there was broad agreement that uncertainty, complexity, and unpredictability are making housing production more challenging.

What This Means for Chicago’s Multifamily Market

The findings suggest that no single policy change will solve Chicago’s housing shortage.

Addressing housing supply will require improvements across multiple areas: process, economics, regulation, and political coordination.

For owners, developers, and investors, navigating this environment requires more than transaction expertise. It requires an understanding of how development constraints, local politics, market dynamics, and ownership structures intersect.

At Kiser Group, we operate at that intersection every day.

“Our Missing Middle Survey reinforces something we have long observed in the market. The value we provide our clients is far beyond transacting assets,” said Lee Kiser. “It is in helping owners understand complexity and local nuances to uncover opportunities and create pathways in an increasingly challenging environment.”

The future of Chicago’s multifamily market will be shaped not by any single reform, but by our collective ability to reduce friction, restore predictability, and create conditions where investment and housing production can move forward.

We look forward to continuing the conversation at our Mid-Market Summit and throughout the year with owners, operators, developers, and investors across Chicago’s multifamily market.