Speculators who snapped up real estate in Chicago’s South Side, betting on a rapid increase in property values after completion of the $830 million Obama Presidential Center is complete, are in for a shock: Rents aren’t covering their mortgages.
That’s only part of the problem, according to Crain’s. The center – a museum, library and community center – was long billed as a transformational project for the South Side in general and the area around Jackson Park in particular. Yet out of town developers haven’t maintained buildings, locals struggle for housing loans and few people trust what the future will bring.
In some buildings, trash is accumulating and requests for repairs are ignored, Tonya Trice, executive director of the South Shore Chamber of Commerce, told Crain’s.
“Outside investors aren’t maintaining the properties the way they should,” she said. “There are growing concerns around management, upkeep of the buildings and the eviction rate of South Shore residents.”
Construction of the center, announced in 2016 and approved by the city in 2018, began last September and is set to be finished in 2025.
Pangea Properties, one of the largest landlords in South Shore and Chatham, is among local investors that have also drawn criticism. Pangea CEO Peter Martay told Crain’s the REIT has invested $400 million in the past 13 years on properties in underserved neighborhoods.
It’s not just a residential issue. Many stores on 71st Street are empty while landlords collect a state tax break and await higher rents.
Some residents are finding ways to redevelop housing stock and maintain affordable rents. Over the past two years Leon Stenneth, a South Side entrepreneur, bought two buildings in Chatham that were previously owned by out-of-town investors and needed repairs. Stenneth, who works as an tech engineer, made the repairs and was still able to make a profit while charging affordable rents.
One way to improve the housing stock is to provide access to credit for residents and landlords who need to buy or renovate buildings, Crain’s reported. Money from the American Rescue Plan Act can be allocated to smaller landlords, for example.
“We used to build housing for working people, and we don’t do that anymore,” Nick Brunick, an attorney at Applegate & Thorne-Thomsen who specializes in affordable housing, told Crain’s.
Housing advocates also recommend shared ownership, in which residents pool their money to buy property, and citywide gentrification protection like those the City Council established in Woodlawn to include affordability requirements for developments built on city-owned land.
The South Shore still has plenty of abandoned buildings.
“Some of the buildings are encumbered with debt,” Chicago Housing Commissioner Marisa Novara said. “It’s not our goal for out-of-town investors to maximize profits on these buildings.”
[Crain’s] — Miranda Davis
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