-- Connecting the dots between our economy, government and business --
Market Street this month surrendered the 12-story building at 209 West Jackson Boulevard through a deed-in-lieu of foreclosure. The lender on a $25 million debt tied to the property will now take ownership of the asset, while Market Street evades foreclosure litigation. It’s the latest sign of office distress in Chicago. The remote work movement, augmented by the pandemic, already dealt a huge blow to office landlords. More recently, high interest rates, banking failures, company layoffs and fears of a possible recession have compounded the issue.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Cutting and running and taking the hit is now the best financial option in commercial office buildings. Homeowners have been doing this for a number of years already. Goodness.
The McKinlock Building, 209 W Jackson, was built in 1894. It survived the long depression, the great depression, world wars, riots, recessions and everything in between. What it couldn’t survive was Lori Lightfoot’s Summer of Love. Remember folks, Communism Destroys!
History may not always repeat but it often rhymes — today’s office foreclosure mess is eerily reminiscent of the subprime mortgage crisis that began in 2007.
https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#:~:text=The%20United%20States%20subprime%20mortgage,and%20many%20businesses%20going%20bankrupt.
Every semi-vacant office tower foreclosure or deed forfeit is another significant dent in downtown central business district tax-roll valuation. Lower assessment valuation, based on diminished market-value and absent rent income, results in lower tax bill for that office building, and commensurate higher tax bills for Chicago individual residential-property homeowners,