Downtown Chicago is being threatened by a real estate crisis (2024)

If US President Joe Biden and his party have chosen Chicago as the venue for the Democratic convention in summer 2024 (August 19-22), it's because it's both the city where Barack Obama was a community organizer and the site of Martin Luther King's civil rights struggles from 1966 onwards, as well as the cradle of anarchism and syndicalism in the 19^th century. Businesses, however, are leaving the city. The reason? Too much crime and too many taxes.

Big business is looking for more favorable venues. Thus, in 2022, Boeing transferred its headquarters to Arlington, Virginia, just across the river from Washington and next door to the Pentagon, which provides it with many military contracts. That same year, Caterpillar, the global construction vehicle giant, moved its headquarters to Dallas, Texas, where the tax code is more advantageous.

In 2023, Citadel, the company founded by financial genius Kenneth Griffin, packed up for Florida. And in 2024, software company Salesforce decided to sublet 13,000 of its 46,000 square meters. As a result of all this, the city where the first skyscraper was built in 1885 now fears becoming a ghost town.

The vacancy rate for office buildings has soared to 16.2%, up from 11.9 % at the start of 2020, according to figures from the CoStar Group. The Midwestern metropolis isn't alone in being hit by the wave of office desertions caused by telecommuting, but it is in particularly dire straits, with the national vacancy average at "only" 13.8%.

Promoting economic development

According to KBRA Analytics, three-quarters of Chicago's securitized mortgages (those listed on the stock market) are at risk of default, the highest level in the country, reports the Wall Street Journal, adding that some premises have been sold for a quarter of their highest estimated value. A ten-story building near the Willis Tower, long the world's tallest skyscraper, was sold in January for $2.5 million (€2.3 million), having been bought for $22.3 million in 2013.

The city's current mayor, Brandon Johnson, a former employee of the radical Chicago Teachers Union, was elected in 2023 on a very left-wing mandate and had said he was keen to make businesses pay. He is now trying to reverse course, like other progressive mayors, particularly San Francisco's London Breed.

"He doesn't want to be the mayor who loses downtown," said attorney David Reifman to the Wall Street Journal. Reifman previously worked as a real estate executive, back when Rahm Emanuel was mayor, from 2011 to 2019 (after serving as Barack Obama's chief of staff between 2009 and 2010). Mayor Johnson has approved a program including the issuance of $1.25 billion to promote affordable housing and economic development.

You have 47.26% of this article left to read. The rest is for subscribers only.