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Demand for downtown office space resumed its post-pandemic plunge in recent months after signs of stability to start the year, leaving landlords wondering still when their streak of futility will end.
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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My wife works for an international accounting firm. Their office used to be in a building in front of Chase tower. They had a space suitable for 100 employees. During the pandemic, everyone, except for a half dozen or so, were working from home. After a year or so, the partners of the firm were surprised that the performance of the employees improved. They actually worked longer as they didn’t have to deal with the hassle of commuting. Many employees requested permanent remote work status. When the firm’s lease came up for renewal, the moved to a space half the… Read more »
Who will make up the tax collection decline when these buildings are reassessed?
The owners of residential real estate
They thought they were being cute by collectively playing politics and closing it all down during covid. Karma can a real pita.
The article discusses companies scaling back their office footprints with work-from-home as a contributing factor to the increased vacancy. Although true, it ignores the elephant in the room: rising crime and downtown becoming much less safe than it was prior to 2020. Nobody wants to work where you have to worry about being mugged or carjacked or attacked while on the streets or riding public transportation. Most legacy media, including Crain’s, ignore this simple truth, and they will undoubtedly continue to express bewilderment over downtown’s office decline.
I remember when working in downtown Chicago in the 90s and 00s how cool it was to go out for lunch there. We never thought about being mugged.
I remember those times as well and like you don’t remember worrying about being mugged. The thing is, when you compare crime stats now to the 90’s, it was actually worse than it is now. How much of your “non-worry” feelings were about youth and invincibility? I know several 20 year olds that live and work in the city after college. Those 20 year olds aren’t worried one bit yet their parents have different feelings. For reference, in 1992 Chicago had 948 homicides compared to last year of 573. The 90’s in Chicago were definitely not safer. It started declining… Read more »
Perception rules nearly everywhere as it certainly does here among Wirepoints fans as well. It’s essentially the continuing war between facts and the more recent “alternative facts,” the set that is of more importance to most people these days.
Perceptions are really all that matter. If our caveman ancestors did not act on their perceptions, we would not be here today.
The cavemen who did not perceive very well do not have any living ancestors.
I think I smell another perception in your first sentence.
It’s a fact.
Most of those murders back then were on the South and West sides, but people felt safe downtown. When you are in an area that you feel safe in, the number of murders in other less safe neighborhoods is irrelevant to you. Today, even though there’s less overall murders in the city, people no longer feel safe downtown. That’s all it takes to tank the downtown. People don’t feel safe so they don’t want to be there, whether it’s for work or for entertainment. All of the vacant real estate proves this. Perception matters, and the incompetence of city leaders… Read more »
Yes, let’s not forget that young tourist woman who got beat brain dead in mid afternoon on Michigan Avenue. Several cases like that as well as muggings on the CTA heading downtown. And don’t forget some teen takeovers and street car races that pop up. It’s not just murders and crime statistics, it is the perception of lack of safety. One more thing, law enforcement has a habit of downgrading or ignoring incidents to make things look less threatening.
You are correct. Our caveman brain recognizes the real threat that exists downtown, and the threat is that we don’t want to be the one that’s unlucky and gets picked off from the herd, no matter the odds. This is a core human fear that has existed since humans were tribes of hunter-gatherers. I can go to a suburban downtown and never worry about this. But if I go downtown, the caveman brain asks “Are you sure you want to do that?” Bottom line, I’ll hang out in the suburbs with my tribe. If your tribe is in the city,… Read more »
Maybe my small area of downtown Chicago that I carved out for work and lunch was safer than it is now. Anyway, I like to think my not being mugged during that period was due to my first evaluating the safety of the area. However, to your point, it could’ve been good old dumb luck as to why I didn’t get mugged.
I’d like to go the rest of my life without getting mugged; sort of a bucket list thing.
PPF, there was a similar trend in Detroit in the 70’s. At one time Detroit was the Murder City and lead the country. No pun intended.
Eventually homicides decreased and Chicago is in 1st place now. My theory is you eventually run out of naive people to rob as well as potential bystanders, employees, residents and commuters and the homicide rate goes down and pols celebrate the reduction in crime in their vacant downtowns!
Loving the explanation in your second paragraph. Yep, from the pols’ perspective, all we need to be aware of is that crime has lessened, not why.
Yup, crime in the Loop and on the Mag Mile are much worse now, ever since Pritzker and Lightfoot sanctioned the ‘Summer of Love’ to honor the career criminal and doper. Citadel started a rush for the exits.
Yep, I remember parking close to Argyle and riding the Red Line to Wrigley Field.
Why in the world would any well-run business choose Illinois — let alone Chicago — as a place to be.
High taxes, excessive regulation, hostile courts, anti-business legislation, corrupt Democrat politics, socialist rule of Chicago, crooked unions that control all levers of power, bad schools, high crime, and a population collapse.
If it wasn’t for a fixed income tax rate (for now), Illinois’ current steady flow of business exits would turn into an all-out jailbreak.
The sales tax on services + income tax applied to pensions will be the coupe de grace for Chicago as well as Illinois. Abe has fallen a long way.
And even then the public union Bosses and their shills won’t be happy.
The worse is still to come, much, much worse. Buildings are being sold at 10% to 20% on the dollar. The new buyers will lower their rents and others will have to follow and go bankrupt.