Two years ago, something new began taking shape on the site of the abandoned Chicago Spire project.
Developer Related Midwest launched construction of a 72-story apartment tower, a project it has dubbed 400 Lake Shore Drive, filling a 76-foot-deep hole left by the failed Spire. Construction is ongoing, but when leasing started in August, renters eagerly began signing leases for units they won’t see for months.
“In the first six weeks, we leased more than 100 units in the building,” said Curt Bailey, president of Related Midwest. “We’re delighted by it, but not really surprised.”
As downtown Chicago continues its transformation from a business-focused district into a mixed-use neighborhood with grocery stores, parks and coffee shops, there is huge demand for luxury rentals with amenities and proximity to attractions like the lakefront.
Nearly 50,000 people now live in downtown Chicago, one of the city’s fastest-growing neighborhoods, according to the Chicago Loop Alliance.
But high interest rates, rising construction costs and other economic uncertainty have forced downtown developers to delay breaking ground on many proposed apartment towers. On the rare occasions when new units pop up, applicants flood brokers with requests.
“There is a lot of pent-up demand in our city given the dearth of new deliveries,” Bailey said.
Henry Stein said he had to move fast to snag the best unit.
More Top Picks Dji Mavic Pro
“Our Realtor called at 9 a.m. and said 400 Lake Shore was going to start leasing that morning, and by noon I was already looking at apartments,” he said.
The semiretired Chicago native lives in Minneapolis with his wife, Robin Stein, and they plan to move to downtown Chicago early next year to be closer to their daughter, who lives in the suburbs and is pregnant with twins.
“We like the urban lifestyle,” he said. “We’ve lived in downtown Minneapolis for years, so being within walking distance of amenities like the Riverwalk and the lake are a must-have. On every visit to our daughter, we’d end up downtown anyway, and usually at the Riverwalk.”
The 857-foot tower will provide 635 rental apartments, including 127 units of affordable housing, and will open to residents in March. Related Midwest also plans to extend the Riverwalk into a new 3.3-acre park open to the public, and break ground on a 60-story residential tower just to the south, but hasn’t set a start date.
Only one new apartment tower near downtown — a 308-unit building developed by CRG and Shapack Partners at 220 N. Ada St. in Fulton Market — will open this year, said Ron DeVries, senior managing director at Integra Realty Resources. But several hundred other units are becoming available as office buildings are converted into residences, including a complex at 111 W. Illinois St. in River North.
The pace of downtown deliveries will pick up next year, DeVries added. Developers will finish more than 2,000 apartments, including 400 Lake Shore Drive and Commonwealth Development Partners’ conversion of 500 N. Michigan Ave., a 24-story office building, into 324 units.
But that’s still not enough to satisfy the appetites of the many people who prefer new luxury apartment towers in the downtown core, DeVries said. Investors remain leery of pouring equity into massive rental projects, and are more likely to fund smaller apartment buildings or cheaper conversion projects.
“The (downtown) occupancy rate is about 96%, but it’s still really hard to put together a large deal,” DeVries said. “With interest rates pretty high, and the difficulties on the equity side, it’s going to be a bit longer before we see a big change in new supply.”
Developers are seeking other opportunities to satisfy the hunger for new downtown units.
The city launched the LaSalle Street Corridor Revitalization, a nearly $1 billion public-private partnership to convert six obsolete downtown office buildings into residences and hotels. Several dozen more privately financed conversion projects have also gotten underway.
Tenants are snapping up these units just as quickly as the Steins did at 400 Lake Shore Drive.
“We leased about 100 units in the first 100 days,” said Amy Galvin, CEO and co-founder of residential broker Luxury Living, which handles leasing for 111 Point, the upper floors of 111 W. Illinois St. in River North, which were converted into 153 units by developers Path Construction and WindWave Real Estate. The office building was previously occupied by Salesforce and WeWork.
Leasing started in April, and the building open in May, she added. Office workers are commuting more, and those who want apartments within walking distance of their downtown jobs played a big role in quickly filling 111 Point.
“The return-to-office is real,” Galvin said. “As you move to the center of the city, it is young professionals coming here who want the downtown lifestyle.”
The lack of new supply also means downtown renters are paying more, she said.
Average monthly rent for a Class A downtown unit hit $3,349 by mid-2026, a 3.2% rise in the past year, according to a market update from Luxury Living, which collects data on 29,000 downtown units.
Ali Tamashiro said she doesn’t mind paying downtown rents. The marketing agency owner and Streeterville resident recently agreed to rent an apartment at 400 Lake Shore Drive. She made the decision as quickly as the Steins.
“I’ve been familiar with this site since it was a hole in the ground,” she said. “I took a virtual tour, and saw all the finishes and details I was looking for in my next home, so I applied within 24 hours.”
More Top Picks Kettlebell
Tamashiro often works remotely, but most of her clients are downtown, so living in a central location makes life easier.
“I love being in the heart of everything because I walk everywhere, and if I want to go to a restaurant in Fulton Market, it’s just an Uber ride away,” she said.
Tamashiro took a west-facing unit with a river view, and said she wasn’t worried about not being able to see it beforehand.
“I’ve seen units in (Streeterville’s) One Bennett Park,” another Related Midwest development, “and that made me comfortable with it.”
Before the pandemic, Galvin said, downtown Chicago often saw more than 3,000 new residences delivered in a year. She said she hopes the rapid lease-ups at 111 Point and other properties, along with downtown Chicago’s increasing rents, will show potential investors that funding new multifamily projects in the central business district can generate big returns.
“In the last couple of years, other markets were popular to build in, and Chicago got kind of written off for a while,” she said, but with the pick-up in the apartment sector, and Google delivering a jolt to the office market when it occupies the James R. Thompson Center in 2028, “I think we’re about to see a real transformation of the central business district.”
Luxury Living will also handle leasing for 1221 W. Washington St., a 19-story, 287-unit apartment tower built by Chicago-based Focus, and Pearl Fulton Market, a 494-unit building developed by Vista Property. Both will open in 2027.
“The interest list for Pearl is already over 1,000 people,” Galvin said.
LG Group Managing Partner Matt Wilke said the company will soon start construction in Fulton Market on 170 N. May St., a 322-unit high-rise with a Trader Joe’s grocery store on the ground floor. He agrees downtown’s multifamily market has solid long-term prospects.
But Wilke also sounded a more cautious note. He said in the last week some potential investors seemed increasingly worried about higher inflation and oil prices, along with a recent jump in borrowing costs, and those fears could delay some of LG Group’s unannounced projects.
“There is still a lot of positive momentum in the city, so we’re hoping this will mean just a pause, and then everything will start moving again,” he said.