The rate of distressed commercial real estate loans is surging nationally with Chicago the worst, having almost a quarter of its commercial real estate loans delinquent or troubled.
That’s according to a September 11 analysis of America’s 15 biggest cities by Kroll Bond Rating Agency, as reported in The RealDeal and elsewhere.
Nationally, the rate of delinquent or specially serviced commercial mortgage-backed securities (CMBS) rose to 6.8 percent in August, up from 4.5 percent last June, the report says.
Chicago’s rate for troubled loans is at the bottom at 22.7 percent. It is followed by Denver at 19.1 percent, Philadelphia at 14.2 percent and San Francisco at 13.9 percent.
The primary causes undoubtedly are empty office space and soaring interest rates.
Actual use of Chicago metro office space is currently 53.6%, according to widely followed card swipe data published by Kastle Systems. That’s a bit better that the national average for big metro areas, which is currently 50.3%.
A stunning $1.5 trillion of commercial real estate loans are renewing nationally over the next three years in the face of that empty space and higher rates. A “doom loop” therefore looms for Chicago and many other cities: Commercial leases don’t get renewed, leading to slashed commercial property tax valuations, forcing a higher tax burden on homes, reducing the value of nearby commercial property and so on.
-Mark Glennon
Earlier Wirepoints columns on the commercial “doom loop”:
- Chicago’s Empty Downtown Offices Are a Frightening Problem for all Chicagoans
- Back-to-office trend fades, worsening potential ‘doom loop’ for big downtowns like Chicago’s
- Chicago’s commercial ‘doom-loop’ could result in a property tax hike on homeowners as large as 22%
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
City Forced To Pay Restaurants To Open Downtown – Loop North News
Chicago sucks now ,,once a great city is av toliet bowl .. wont even risk taken my fam there anymore
IL-EXIT/CHI-EXIT UPDATE: Chicago Office Occupancy Drops Again — Occupancy As Low As 29 Pct On Weekdays, Lower Than Any Other Major City Besides New York, San Francisco, Or San Jose – Kastle Systems
Let blacks control the city and guess what happens
@Alexander Brunacct 🙄 “ As IF It was so much better under the corrupt white ‘ Machine ’ and ‘ The Families’ before. ”
It’s not because they are black. Poor management and corruption occurs under all skin colors. The problem is that ‘the blacks’ that control Cook County have a mindset that black and brown people are victims of a systemically white racist system, and whatever they can do to destroy that system is the goal. Black and brown people, in their minds, can do no wrong: muggers are kids being silly, smash & grabs are just parents stealing food for their families, teachers are trauma healers rather than educators, whites are rich and should be punitively taxed for stealing black labor, a… Read more »
Someone said “solving” the commercial real estate market problem… What exactly does that mean now? What would that market look like when the so-called “problem” is “solved”? In detail please, what exactly is the end result if “solved”. And solved for whom? Companies and employees seem to be handling WFH just fine, so is the “solution” really just a govt directed subsidy for building owners?
Work from home is not working well….unless you call it what it is…..not working. There is a reason midday tee times at golf courses are exploding. Nobody works anymore. Workers would scream and yell so much if it was just a matter of working in the office versus at home. It’s because most of their time is now spent not doing work while getting paid the same thing, so they will fight to the death to keep it. Be my guest…just accept this 50 percent pay cut. The funny part not many people talk about, is that the work from… Read more »
This “Rick” is not me the original poster, the usual Rick thats been posting here for many years. It’s obviously someone trying to confuse. I’d ask Mark to please delete my entire post due to the lack of authenticated user id’s on this web site. And this identity theft. Its about time users started having to log in with unique id’s in order to post to Wirepoints.
Deflate and retrench. Start with pensions and retiree health and begin laying off public employees. Perhaps the judges or should be first to go. Laws aren’t enforced anyway.
You can’t “start” with pensions and retiree health. Not sure what you mean. Go ahead and lay off public employees. Those should be tier 2 members that pay more into the system than they get out. Not sure that saves you any money.
No seniority BS.
Use da rank and hank system like most Fortune 500 companies use.
If you are rated in the bottom 10% kiss jo arse goodbye!!
Nope. That won’t happen as these are union jobs. Union employees collectively bargain and aren’t subject to the system you so desire. It would be the lowest paid employee removed from the payroll. Also a tier 2 member. The 40k/year teacher would be in the unemployment line while the 120k teacher will still be getting paid.
Covid lease moratoria established that contracts can be suspended for emergencies. Just watch it happen when tax revenues shrink toward zero. You think legislators will take pay cuts to continue paygo pensions for retired superintendents? Time to show us your desperation moves.
“Covid lease moratoria established that contracts can be suspended for emergencies.” During the Great Depression, for example, the city of Chicago omitted from its annual appropriations for 1932, 1933 and 1934 a portion of the funds necessary to pay the full salaries of the chief justice and 36 associate judges of the city’s municipal court…….. In rejecting the city’s position, we acknowledged that legitimate efforts to relieve the city’s difficulties were commendable. We held, however, that any departure from the law is impermissible unless justification for that departure is found within the law itself. Exigent circumstances are not enough. The Illinois Supreme Court… Read more »
you said it! get rid of fatcat judges who make up the laws as they go. No justice and leeching off the taxpayers to fund extravagant lifestyles
Commercial is the sector that Kaegi was going to tax into oblivion so that all his preferred homeowners would get property tax relief. If it tanks, there is nowhere else to go. If you think middle/upper class homeowners are paying through the teeth now, wait til next assessment cycle.
Kaegi won’t be satisfied until every 1960’s split-level north of I-90 and an $18,000 property tax bill. That’s equity.
Brandon, tony, jb & the gang better hope the whole house of cards doesn’t come tumbling down til after dem convention time….that’s all they care about
If the people in Chicago and surrounding areas want to save themselves and the city, they’re going to have to rise up. They can’t wait for it to get better on its own because it won’t. Fight back or lose it all. Why not fight back? They’re in a no win situation. Fight back and lose everything, or sit back and wait and let the government take everything? THIS is something worth fighting for.
Have your driven through the suburbs? There aren’t enough of us left to fight back. At best, we can hope that the normie Democrat ‘fights back’ by voting in the primary for a normie Democrat candidate but that’s not happening at all. The progressives hijacked the party-machine apparatus, the combine as Kass referred to it, and now they are in control. It’s not like normie Democrats can just flip a switch and bring things back to 2015. We are stuck in this new normal of insane progressives who just want to burn it all down, very quickly. And by the… Read more »
Sounds like you better just give up then.
debtsor is the Wirepoints MVP that consistently scores in the wrong basket. What are the odds?
David, You claim to be so correct but you are consistently naive. Have you looked at history what it takes to stop revolutionary movements like this? These people are *never* going to admit they are wrong. They believe in their own delusions that the world is looking at them with awe for the No Cash Bail Law. Actually, no, the world is NOT looking at you in awe, they are looking at you with bewilderment that sub-90 legislators passed a law so stupid. History shows that it takes really, really bad things in supposedly democratic countries to reverse the march… Read more »
Back to the article lede. What positive events will happen in Chicago or Illinois in the next 10 years to solve the commercial real estate crisis? As @debtsor has repeatedly pointed out, and it’s all indisputable, Republicans cannot win majority elections in Illinois, taxes are going up, crime is going up, and good people are leaving and taking their high incomes and wealth with them. Hence the commercial real estate debacle leading the nation. Three office buildings I worked in on LaSalle Street have been given back to their lenders because the numbers no longer work. Downtown Chicago has no… Read more »
Nice try debstsor. We all know it’s you.
Sorry dude, I live in NC, pay low taxes, and haven’t shoveled snow in years. Would love it if @debtsor was my neighbor down here.
Focus your attempt at supposition on listing the positive events that will happen in Illinois to turn things around. Got any?
Giving up is the wrong attitude. You’re better off moving to a purple state like WI and trying to turn it red because IL is a lost cause. At best you can maybe control your ward’s alderman, maybe the mayor. The schools boards all went completely blue the last time around. All four seats in my purple suburb flipped hard core dark blue, crazy person blue, by a 60/40 margin. Do you really believe we can just undo the SAFE-T Act, or the abortion laws, or the gay stuff in school, just like that? Just like one election, you can… Read more »
Crazy person blue! I love it!
Neighbor to the south sold his house and is renting now. He’s a cop, votes red and is tired of the way cops are treated. He’s moving in two years to Tennessee when he can collect his pension. His real estate tax bill is $16,000.
Liberal neighbor to the north votes blue but is moving to Florida, hates Trump hates DeSantis. Doesn’t understand the consequences of his voting.
If his real estate tax is $16,000 in Illinois, it will be around $5,000 in Tennessee.
Marie, the fight is already over. The other side won. It’s time to implement plan B and leave Illinois.
You must be one of those “bad actors” or “trolls” I hear about. How dare you offer up differing advice from the approved propaganda. lol
Where are you going to go? Did you see the Ken Paxton interview? There are dirty politicians everywhere. The grass isn’t greaner on the other side of the tracks. Stand up and fight!
https://www.youtube.com/watch?v=Mkyitd6mG3U
If you think the whole country is messed up like Illinois, you are simply mistaken. It is extremely rare that anyone that leaves Illinois regrets it.
Are you a travel agent? Are you a political operative? I’ve never seen such passion on a political non sequitur.
Too bad so many are under the mistaken assumption that other states are as f’ed as IL. They really don’t get that the tax evader is striving to make Illinois Moscow of the Midwest and will persue every leftist idea, no matter how outrageous, to achieve his goal of running for president. The duplicitous trust fund baby has big ideas , ideas that are screwing taxpayers.
PPF – I read an article on this site that referenced that 80 percent of Chicago’s property tax receipts are spent on pensions. 80 percent. The state of the commercial real estate market as reflected by this post is perilous to say the least, and we have a mayor who pledged not to raise residential property taxes as he likely fears people will flee. This is an unfair question because the problems are immense. What taxes does Chicago raise at this point? A real estate transfer tax in this market? It may raise revenue for the homeless but not that… Read more »
The state and city are happy people are leaving, even if they leave with their money. Only MAGA Republicans would ever leave a progressive utopia and the state wants them gone anyways. They hate you and they want you gone, deplorable.
It’s difficult to fathom that our leaders are hateful people who would burn it all down rather than compromise with the deplorables, but that’s exactly what they intend to do.
Fill up LaSalle St with the Venezuelans that are wandering about everywhere downtown. It’s going to get cold soon.
Sorry, but who said the fight is over?
The last election was the final nail in the coffin.
Why are there no “I give up” white flags flying in Chicago? Sounds like there should be lots of them.
Just leave. There is no way to solve the problem. Only 1 out of 20 blacks in CPS has reading and math skills at grade level.
Having recently relocated to Florida I noticed something interesting where I live. There is an excellent food truck that parks down at the auto parts store all week long. Food is good and prices are actually reasonable. The truck operator does not have a store front as most places do. This is the wave of the future and should scare the hell out of developers that built a place and think “build it and they will come.” That has been set on its head. I also spent a few years in a city with a park dedicated to food trucks.… Read more »
As new Floridian myself for 6 months and a day per year the food scene in South FL is far superior to Chicago’s, better priced and none of the ridiculous overhead that the commies in IL mandate on small businesses which keep prices affordable, even at the high end. I have yet to see a vacancy in the strip malls near me, yet in N. IL it looks like a retail apocalypse. IL is truly fubar. NY can always rely on being the historic center of finance and CA will always have the weather but IL? Nothing but taxpayer tit… Read more »
PFF is a ‘zir’, not a him, her or it. Now that we have his pronouns cleared up, N. IL is a retail apocalypse as I’ve stated before because the new residents don’t have the incomes to support local businesses. Taxes and regulation doesn’t help either but I don’t think that’s the primary reason. It’s money i.e. they don’t have any. The new residents are lactose intolerant, so they don’t order much pizza, and the pizza joint goes out of business. When they do eat out, which is rare, they eat only hispanic or other ethnic food, once in a… Read more »
A lot of the overhead is rent. It’s not free to operate a truck but much more reasonably priced. And if we have lockdowns again the owner can just stay home-no monthly rent payment for a shuttered business. They have a city sticker and are inspected. They can even be found on Google Maps.
Chicago is the new ‘mistake by the lake’.
BLM BJ will buy a distressed office building and turn it into either a home for illegals or Cabrini Green 2 for his homies.
The vast majority of Chicagoans care more about their pitiful football team than the coming collapse of their city, to be followed by the collapse of their state. By the time they wake up from being woke, they will realize most of the country has left them behind. They will eventually be buried in their old, worn out, beloved Bears jerseys, their lives forfeited for a false ideology.
Exactly right, and nicely said.
The Bears dig is really good – totally agree. However, Denver Broncos is giving the Bears a run for their money as the most dysfunctional pro football team.
I disagree. Chicago doesn’t give two craps about the Bears. No one wants to keep them downtown and other cities are lukewarm about wanting a stadium. Nobody wants to give them any subsidies. I went to a family afternoon pizza party yesterday in someone’s suburban backyard. No Bears game on. We briefly talked about the game, looked up the scores on our phone, but the game wasn’t on. 40 men and women, plus children, all ‘Bears Fans’ and no one wasted their time watching the Bears game. No one in my fantasy leagues watched the Bears game, we all laughed… Read more »
You sound like you have met my in-laws!
Don’t worry, JB has based the Illinois economy on wokenomics. What could go wrong?
Don’t worry all the illegals will generate revenue, in the form of votes for are dictators.
Nothing but a house of cards. Going to fall down and take a lot of others with them.
It may come back but not in your lifetime.
Microsoft sent me a survey asking how I liked using Microsoft Teams. Questions about, video and sound quality, features, connectivity, etc. Then a place to enter a comment. My comment was to the effect that I like Microsoft Teams because that program single handedly made office buildings obsolete. It also is the program that enables businesses to hire talent globally, instead of from the people that happen to live close to a building. I also told Microsoft that they single handedly destroyed the commercial real estate market, not that that is bad or good, just an observation.
What a great time for an added ‘bring home chicago’ realestate transfer tax to instantly devalue downtown comercial realestate further…way to go CTU/Brandon!!!🤩🤩🤩👍
Chicago’s dying downtown is especially bad because so much of the city’s tax revenue is generated by downtown
Giddyap – you are correct. It is also why lowering violent crime the downtown area is a vital objective.
Unfortunately I don’t see that happening given the lack of support for police and the permissive justice system.
As in the 79-80 CPS funding crisis, eventually banks will stop fronting the operating expenses against the expected property tax revenue. When this happens, it’s over. I believe it will occur before Brandon J. finishes his term.
Absolutely correct. Boneheaded Democrats will snark “States can’t declare bankruptcy” and Illinois Cities can’t declare bankruptcy”. Leftist Socialist Progressives cuddle their security blankets and suck their thumbs on these statements but…..when the creditors shut off the credit cards it’s game over. City and state won’t make payroll or pay bills. They will be financially frozen worse than that darned illegal bankruptcy and will scream to have that legal option. Let’s hope that this occurs when we have a Republican congress and presidency. Otherwise the vermin Democrats will try to force my elderly mother in Ohio to pay for their Chicago… Read more »
The question for today: Do two people with 70 IQ scores equal one with a score of 140?
Be careful there. You proudly claim to be a teacher’s union member and my experience is that most teachers union member’s IQ hover in the low double digits. Word of advice: Save up some cash for the soon to happen Chicago and Illinois credit freeze. Obviously you are unclear on the relationship between property values, property taxes and your public sector paycheck.
Wrongo even in your first assumption. I’m not at all financially illiterate either. I’m more astute than you portray. Better luck next time.
Where I come from, we call this whistling past the graveyard.