Workforce Housing in the Chicago Suburbs: The Underrated Asset Class Investors Shouldn’t Ignore

As we move through 2025, Chicago’s multifamily market continues to outperform most U.S. metros. While the luxury segment grapples with oversupply, workforce housing—aimed at teachers, nurses, city employees, and other middle-income renters—remains one of the most resilient and underappreciated asset classes.

What’s especially noteworthy is how the suburbs of the Chicago MSA are quietly anchoring this narrative. With urban rent pressure, in-migration, and limited new supply, suburban workforce housing has become a compelling investment opportunity.

1. Suburban Multifamily Fundamentals Remain Tight

While the city often grabs headlines, the suburbs display even stronger fundamentals:

• Low vacancy and high absorption: According to CoStar, in early 2025, Chicago’s overall vacancy was 4.8 %, with stabilized properties slightly lower at 4.4 %, both significantly under the national average (CoStar: Midwest’s Tight Apartment Supply Pushes Annual Rent Growth Above US Average). 
• Demand outpacing supply: CoStar reports that over the past 12 months, the Chicago MSA absorbed approximately 11,000 units, nearly double the 6,500 delivered (CoStar: Midwest’s Tight Apartment Supply Pushes Annual Rent Growth Above US Average).
• Strong rent growth & occupancy: CoStar notes that rents in Chicago rose 3.5 % year-over-year, compared to just 1.1 % nationally; stabilized occupancy held at 95.9 % (CoStar: Midwest’s Tight Apartment Supply Pushes Annual Rent Growth Above US Average).
• Suburban rent growth: According to CoStar, year-over-year rent growth in suburban markets was around 4.1 %, with DuPage County at 4.4 %, well above the city’s rate (CoStar: Midwest Suburban Apartment Trends).

2. Migration Patterns Favor the Suburbs

• Higher rent growth: According to CoStar, suburban areas like Lake County/Kenosha, Evanston, and Naperville posted rent gains above 4.8 % year-over-year in Q2 2024 (CoStar: Midwest Suburban Apartment Trends).
• Transit-oriented suburban asset demand: Developments near Metra lines and bus routes continue to appeal to workforce renters, with projects like Station 250 in Mundelein responding directly to this trend (CoStar: Chicago Suburban Transit-Oriented Development).

3. Limited New Supply Strengthens Investor Position

• High barriers to development: CoStar notes that zoning, permitting delays, and resident opposition curb new suburban housing starts (CoStar: Chicago Suburban Development Constraints).
• Balanced market fundamentals: In 2024, Chicago delivered about 9,900 rental units, yet absorption exceeded deliveries by nearly 600 units, keeping vacancy tight (CoStar: Chicago Multifamily Market Overview).

4. Policy Tailwinds Still Matter (Suburban Impact)

• Illinois Affordable Housing Tax Credit Program: Promotes rehabilitation and preservation of workforce-oriented housing in Cook, DuPage, and Kane counties.
• Transit-oriented development incentives: Encourages revitalization near rail corridors in suburban areas.

5. Strategic Advantages for Investors

• Resilience: Workforce renters exhibit stability, keeping occupancy high even if luxury markets soften.
• Value-add potential: Light renovations—kitchens, amenities updates, energy improvements—can lift NOI without displacing tenants.
• Barrier-to-entry advantage: With limited new supply and zoning obstacles, existing properties are positioned for durable returns and appreciation.

The Chicago suburbs in 2025 feature a standout workforce housing narrative: tight vacancy, strong rents, constrained supply, and supportive policy—all converging to create a compelling investment landscape.

At Kiser Group, we see suburban workforce housing not just as overlooked—but as foundational to the region’s long-term stability, offering sustainable, high-quality returns for informed investors.