Construction is underway on a new 72-story apartment tower, 400 Lake Shore Drive, on the site of the long-stalled Chicago Spire project, signaling growing demand for luxury rentals in downtown Chicago. Developer Related Midwest began leasing units in August, quickly securing over 100 leases within the first six weeks despite the building’s expected completion next spring.
The project, rising 857 feet, will include 635 rental apartments, of which 127 will be designated affordable housing. Residents are anticipated to move in starting in March. Related Midwest also plans to extend the Riverwalk with a new 3.3-acre public park near the site and has intentions to develop an additional 60-story residential tower nearby, though no construction start date has been announced.
Downtown Chicago has experienced a shift from a primarily business district to a mixed-use neighborhood with amenities such as grocery stores, parks, and coffee shops, attracting nearly 50,000 residents, according to the Chicago Loop Alliance. This transformation has driven considerable interest in high-end residential options within walking distance of key attractions like the lakefront.
However, developers face headwinds including elevated interest rates, rising construction costs, and economic uncertainty, which have delayed several planned projects and limited new apartment deliveries. Ron DeVries, senior managing director at Integra Realty Resources, noted that only one other new downtown apartment tower is expected to open this year—a 308-unit building in Fulton Market developed by CRG and Shapack Partners. Nonetheless, an increasing number of office-to-residential conversions, such as the 153-unit project at 111 W. Illinois St. in River North, are bringing additional housing options to the market.
These conversions have seen strong leasing activity. Amy Galvin, CEO of Luxury Living, which manages leasing for 111 Point at 111 W. Illinois St., reported that approximately 100 units were leased within the first 100 days following leasing commencement in April. She attributed this surge in demand partly to the return-to-office trend, with young professionals seeking residences close to their downtown workplaces.
The scarcity of new supply has driven rents higher. Mid-2026 figures show the average monthly rent for Class A downtown apartments at $3,349, marking a 3.2% increase over the past year. Some renters, such as marketing agency owner Ali Tamashiro, express a willingness to pay the premium for centrally located accommodations with desirable amenities and easy access to urban lifestyle offerings.
Looking ahead, DeVries anticipates that over 2,000 new apartments will be completed in the downtown area by next year, including the 400 Lake Shore Drive tower and Commonwealth Development Partners’ conversion of 500 N. Michigan Ave. into 324 units. Yet challenges persist, as investors remain cautious about large-scale new builds due to financial uncertainties, preferring smaller projects or conversions.
To address these market conditions, the city has launched initiatives like the LaSalle Street Corridor Revitalization, a nearly $1 billion public-private effort to repurpose six outdated office buildings into residential and hotel spaces. This program, alongside numerous other conversion projects, aims to increase housing availability in the core business district.
Developers remain optimistic about downtown Chicago’s multifamily prospects but acknowledge some potential headwinds. Matt Wilke, managing partner at LG Group, which plans a 322-unit high-rise with retail space in Fulton Market, noted recent investor concerns over inflation, energy prices, and borrowing costs. He hopes these factors will only cause a temporary pause rather than a setback in ongoing development.
As downtown Chicago continues its evolution, industry stakeholders expect that upcoming projects, coupled with robust leasing activity and new corporate tenants, including Google’s planned occupancy in 2028, will contribute to a significant transformation of the city’s central business district.