In Carl Sandburg’s lauded poem of his hometown, he describes a city that—beneath a veneer of sweat and soot and vulgarity—thrums with vitality and swagger, too ambitious to be wary of any roadblocks ahead. A century after Chicago‘s publication, does this poem still depict its eponymous source?
That was the theme for the opening panel at last week’s Commercial Real Estate Forecast conference, the 18-year running industry kickoff event for Chicago. Over 900 professionals sat in on Chicago: Big Shoulders. Big Deals. Big Plans, a discussion moderated by Kathryn Kovitz Arnold, practice group chair and partner at Taft, Stettinius Hollister, LLP.
“The one thing about Chicago that you can count on is that nothing ever stays the same,” said Lori Healey, president, Clayco—Chicago. “You hear our mayor talk about diversity, equity, inclusion and transparency and that’s a lens that everyone in this room really needs to be cognizant of and view their projects through.”
Healey, who has a storied past in both the public and private sector, noted that in addition to a new administration under Mayor Lori Lightfoot, Chicago also has a new planning commissioner in Maurice Cox, Cook County has a new assessor in Fritz Kaegi and the state has a new governor in J.B. Pritzker. All of these changes bring a fair amount of uncertainty to the near future of real estate and require new thinking.
“It’s important that the clients that are coming to us have some certainty as to what’s going on and how the process works,” said Jack George, partner, Akerman, echoing this sentiment. “Developers need to have some certainty not only for themselves, but also the lenders that may be involved in the project. They want to know how long it will take and what the procedure is for getting it done.”
According to Brian Atkinson, leasing director at Hines, the multifamily market is still reacting to the prior administration’s affordable housing requirements, though he notes there is a task force in place to help crystalize the city’s guidelines. Whether (and where) multifamily development picks up in Chicago, he notes a larger concern among investors.
“The biggest driver right now in the capital markets—and it’s no secret there haven’t been a lot of trades this year—is uncertainty,” Atkinson said. “There’s uncertainty with what happens with the taxes, with the assessor’s office and in the affordable market. And investors are reacting as such.”
Jim McDonald is executive vice president at Ryan Companies, a national firm that, according to him, is looking for more and more opportunities in the Chicago market. With the aforementioned concerns, along with state budget issues and the pension crisis, any action has to be calculated and sure footed.
“These challenges haven’t changed. Will they change soon? I don’t know,” said McDonald. “We’re trying to be laser-focused on opportunities. We have to be flexible when buying a piece of property, allowing ourselves the time to execute.”
Chicago may no longer be “Hog Butcher for the World,” as Carl Sandburg wrote. But the city still has plenty going for it. It remains the “Nation’s Freight Handler;” robust industries include healthcare, pharmaceuticals and agriculture and the local restaurant scene is so esteemed, Healey noted, that Chicago took over hosting duties for the James Beard Awards from New York several years ago. Chicago’s economic diversity is a strength not apparent in many other markets around the country. For the near future, there are plenty of opportunities here for those with the will to act on them.