While national politics may not always have an effect on local real estate, the Illinois state elections will certainly affect Chicago CRE. Last month, in the midst of what may become the most expensive gubernatorial race in U.S. history, the SIOR Chicago Chapter and AIRE hosted Illinois Governor Bruce Rauner in conversation with David Kahnweiler, SIOR, non-executive chairman of Colliers International.
Governor Rauner discussed his first term as well as plans for a second term if re-elected in November, including attracting and retaining businesses in Illinois. The governor walked the crowd through his progress with education funding, criminal justice reform, Medicaid, mental health services and renewable energy. While many of the governor’s policy wins and future plans will grow business in the state, a couple of them will have direct impacts on office and industrial real estate.
New Chicago tech hub?
One of Governor Rauner’s longer-term goals is making Chicago a U.S. tech hub.
“We should be booming, with our people, location and transportation network,” said Rauner, attributing the state’s slow growth in tech to taxes and business regulation. Chicago, he said, has the innovative research universities and pool of graduating talent from University of Illinois–Chicago, University of Chicago and Northwestern University—but the city has not met the success of Silicon Valley or Boston because it has not been attracting new tech businesses.
To create a Chicago tech hub, Rauner has secured $500 million in funding—now part of the Illinois state budget—through the University of Illinois’ public-private partnership, Discovery Partners Institute. After the hub in Chicago is built, the fund will help additional tech hubs crop up around the state.
Manufacturing loves the Midwest—but skips Illinois
Another sector in which Illinois is lagging, according to Rauner, is manufacturing. Many manufacturing companies are locating to other states in the Midwest, like Wisconsin and Indiana, both states with right-to-work laws.
“We need a balance,” said Rauner about Illinois’ forced union status. “I’m trying to get some counties to not be forced union.” This tactic, according to the governor, could bring in more manufacturing plants, so Illinois would look more like Wisconsin, where the union jobs are increasing and wages are higher.
The CRE Impact
Of course, any time Illinois experiences general business growth, the commercial real estate business also does well. But the tech industry is the largest consumer of office space in the U.S., according to JLL research, so tech company growth in Chicago could bring particularly big opportunities for our market. Additionally, though our industrial market continues to run strong, there is always room for growth for additional manufacturing firms looking to find a home in the Midwest.
About the Author
Daniel Smolensky, SIOR, is the current President of the Chicago Chapter of the Society of Industrial and Office Realtors (SIOR). He is also Founder and Principal of Taurus Modal Group. Based in Chicago’s River West, Taurus Modal Group is a commercial real estate firm focused on tenant-rep projects for office and industrial users.