Chicago needs to incentivize, not mandate, affordable housing, developers say

The burden of creating more affordable housing should be shared by the city and developers, panelists said

Chicago /
May.May 30, 2019 04:00 PM
From left: Ben Brichta, Peter Ousley, Shaylyn Cullen, and John McLinden

From left: Ben Brichta, Peter Ousley, Shaylyn Cullen, and John McLinden

After years of a booming multifamily market in Chicago, the political headwinds toward such development may be changing.

Housing advocates like Byron Sigcho-Lopez and Daniel La Spata are now aldermen, and new Mayor Lori Lightfoot was no darling of the real estate industry as a candidate.

But instead of working to keep things they way they were, developers will benefit from working with the city to solve its housing issues, panelists at Bisnow’s Chicago Construction & Development forum said Thursday.

“There’s been a shift in Chicago,” said Peter Ousley, business development director at local construction firm d’Escoto Incorporated. “Those changes should create more opportunity for development outside the central business district.”

One of the biggest issues facing the real estate industry and Lightfoot’s new administration is how to boost affordable housing. Developers have been vocal about their opposition to Chicago’s affordability requirements, saying affordable housing can be boosted only if the city is willing to help out.

“We need to have more affordable housing, but who pays for it?” said John McLinden, managing partner at Hubbard Street Group. “The entire burden is on the developer.”

McLinden said other municipalities, like in Arizona and Washington, D.C., have offered tax incentives for affordable housing, programs that could be a model for Chicago.

Ben Brichta, managing partner at Property Markets Group, said city officials should get more creative with ways to boost density. And he doesn’t mean just residential density. Allowing for dense office uses also will boost neighborhoods, he said.

“The focus needs to be on ways to add density, especially in currently low-density neighborhoods that are feeling the pressures of gentrification,” Brichta said. “Any way you are able to bring office density to what has traditionally been more of the neighborhood environment, I think those are really really valuable.”

Not all changes or initiatives the city undertakes to boost affordable housing will be painful to developers.

Bisnow’s forum was held Thursday at the new Skender modular factory on the city’s Southwest Side. The facility, which opened this week, will construct pre-fab housing units that can be assembled on site. Skender has partnered with Sterling Bay to construct pre-fab three-flats as affordable housing units on the West Side.

Increased use of technology in construction and design, plus better project planning and management, will make development of housing more affordable, said Shaylyn Cullen, founder of Cullen Construction Management.

“We’re seeing a larger trend of getting the right people to the table early on,” she said. “That’s become increasingly important.”

Use of new technology and building practices in Chicago is being boosted by the city’s first overhaul of the building codes in more than 70 years. On top of allowing for new building methods like pre-fab construction, the new building codes seek to remove the financial and bureaucratic hurdles to neighborhood development, said Judy Frydland, commissioner of the Chicago Department of Buildings.

“The code … allows companies like Skender to make good, safe housing,” Frydland said. “We want to make it easier for people to build here.”


Related Articles

arrow_forward_ios
A photo illustration of Cook County (iStock)
Cook County friendlier to homeownership than other markets
Cook County friendlier to homeownership than other markets
11 E Walton Street apartment 5800, 4002 and 3101 (Zillow, iStock)
Three condos listed at Waldorf Astoria in Gold Coast
Three condos listed at Waldorf Astoria in Gold Coast
Bears George McCaskey with Soldier Field
Minor league baseball complex aired for new Chicago Bears stadium
Minor league baseball complex aired for new Chicago Bears stadium
Compass' Robert Reffkin, @Proerties' Mike Golden and Berkshire Hathaway's Diane Glass (iStock, Getty Images, @Properties. Berkshire Hathaway)
@properties, Berkshire brace for cooling market
@properties, Berkshire brace for cooling market
801 South Financial Place (Alta Rosevelt. iStock)
South Loop apartment tower trades in largest downtown apartment sale of 2022
South Loop apartment tower trades in largest downtown apartment sale of 2022
Fritz Kaegi (iStock)
Chicago Assessor Kaegi wins primary, fending off trade union challenge
Chicago Assessor Kaegi wins primary, fending off trade union challenge
The John Buck Company's chairman and CEO John A. Buck II in front of a rendering of the planned two-tower office building project at 655 West Madison Street (The John Buck Company, Juan Gabriel Moreno Architects, iStock)
John Buck shifts to two-tower plan for West Loop project
John Buck shifts to two-tower plan for West Loop project
Kohl's ceo Michelle Gass, Hubbard Street Group’s John McLinden and 1293 East Higgins Road, Schaumburg, IL (Loopnet, Kohl's, Hubbard Street Group)
McLinden’s Hubbard Street lands Kohl’s for suburban Chicago store
McLinden’s Hubbard Street lands Kohl’s for suburban Chicago store
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...