What a difference a year makes.
With a sagging retail market, a turbulent political scene and overall economic uncertainty, local industry pros are feeling a lot less hopeful about Chicago’s commercial real estate market than they did in 2018.
Barely half of those surveyed by DePaul University’s Real Estate Center called the local market “consistently strong” so far this year, compared to about 70 percent who responded to the survey last year, according to RE Journals.
The industry professionals surveyed ranked consistently strong industrial real estate as the most attractive asset class, followed by multifamily, office and not surprisingly, retail last.
The university’s second annual Mid-Year CRE Sentiment Report also logged about 18 percent of respondents who said they felt “bearish” about the local market, compared to just 4 percent last year. And the number of respondents who were “trending toward optimistic” about the second half of the year also dropped: from 21 percent in 2018 to just under 10 percent this year.
Although most investors don’t see a crisis or economic downturn on the horizon, the city’s political and financial tumult create a “significant structural problem,” according to Shane Garrison, chief operating and investment officer of the Oak Brook-based REIT RPAI.
Mayor Lori Lightfoot has already signaled she’ll likely move to raise property taxes this year in order to meet the city’s mounting pension obligations. Combined with higher tax assessments from new Cook County Assessor Fritz Kaegi and a persistent movement to overturn the state’s ban on rent control, some property owners are bracing for big hits. [RE Journals] — Alex Nitkin