What I Don’t Understand About Chicago Today

By Edward M. Bury, APR (aka The PRDude)

There’s doom and there’s gloom.

And, lately, both have been applied literally and figuratively to the fortunes of my home town of Chicago. Want proof?

Yesterday, Mayor Rahm Emanuel announced a proposed whopping $500 million-plus property tax hike and other taxes to fund pensions and keep the city from falling into the proverbial financial abyss.

(One might say Chicago is facing a “public relations crisis,” but I think that phrase better fits Volkswagen given its troubles.)

Would you pay $315 million for this building? Someone plans to.

Would you pay $315 million for this building? Someone plans to.

As a homeowner in Chicago, my bi-annual payment to the Cook County Treasurer will escalate significantly should the tax plan get City Council approval. The same, of course, will happen to every other property owner.

But the tax increase, which was reported in the news several days ago, should have prompted a mass exodus of investment from Chicago; so far,  the prospect of higher taxes apparently hasn’t swayed interest in a long-term investment like Chicago real estate.

Consider these two news items from today:

  • In the heart of downtown, there’s big news on the commercial office front; as reported in Crain’s Chicago Business, two separate properties each are being purchased by out-of-town buyers for around the same price — $315 million. (An aside: I worked in one of these buildings, and yes it was a nice property. But $315 million?)
  • Close to home, a developer has received approval to break ground this fall on the so-called “Twin Towers” apartment project of more than 200 units in the increasingly hip Logan Square neighborhood.  (An aside: This is among a half-dozen or so similar hipster-focused apartment developments slated for the area, all a mile or so from our humble Avondale home.)
The guy on the right is committed to Chicago. So things can't be that bad.

The guy on the right is committed to Chicago. So things can’t be that bad.

Yes, these are just two examples; if you’ve followed the Chicago real estate market (like I do), you’re cognizant of the fact that there’s tremendous investor and developer interest in Chicago for multifamily, office, industrial, retail and hotel properties.

What’s more, Chicago is slated to be the site for some rather noteworthy cultural properties: The Obama Presidential Library and Museum and Lucas Museum of Narrative Art.

So, that’s what I don’t understand: If Chicago is in dire financial straits, why is there continued activity in purchasing parcels?

Rest assured, this Chicago guy is staying put.  At least for a while.

Want evidence of my commitment to my home town? We’re getting a new roof on the garage.