Here’s what real estate wants from Chicago’s next mayor
Wish list includes tax relief and crime control
While Chicago may go through a runoff before its residents decide its next mayor, much of the real estate industry is already in agreement on at least one issue: property taxes are too high.
Whether it’s ultimately a reelection for Mayor Lori Lightfoot or a win for one of the other eight candidates, brokers and building owners who spoke with The Real Deal want to see relief and consistency when it comes to taxes, collaboration between the administration and the business community, and a city that feels safer.
The industry hasn’t coalesced behind a single candidate, though Lightfoot has received financial support from trade organizations including $150,000 from the carpenters union last quarter. She also got $25,000 from the chair of the nationwide commercial brokerage Marcus & Millichap, while former Chicago Public Schools CEO Paul Vallas got $100,000 from billionaire real estate mogul Sam Zell.
Other candidates include U.S. Rep. Jesus “Chuy” Garcia, activist Ja’Mal Green, Ald. Sophia King, businessman and philanthropist Willie Wilson, state Rep. Kam Buckner, Ald. Roderick Sawyer and Cook County Commissioner Brandon Johnson. The election is Feb. 28, with the runoff set for April 4 if no one candidate gets 50 percent of the first vote. Early voting got underway Thursday at the Chicago Board of Elections’ Supersite and office downtown at 191 North Clark Street and 69 West Washington Street, and will open in ward-specific sites on Feb. 13.
Between getting office workers back downtown, revisiting the city’s recent increase of affordable housing units it requires for new development, and transforming the Central Loop into a market of more than offices, here’s what Chicago real estate professionals want out of the mayor’s office.
High tax rates are limiting Chicago’s ability to bring investment into the city, real estate professionals said. Though a property’s assessed value for tax purposes is set at the county level, the city’s special taxing districts add to what property owners pay in taxes.
“Our tax policies limit our ability to recruit and develop more investors and businesses and grow our tax base to relieve pressure from the city’s taxpayers,” said Amy Masters of Chicago’s chapter for the commercial landlord group Building Owners and Managers Association.
Tax policy is also a top issue for the Neighborhood Buildings Owners Alliance, a coalition of more than 600 landlords, which says it impacts their ability to provide affordable housing.
“It leads to higher rents, leads to owners like me making a decision” on whether to raise prices, alliance board member Andrew Levin said.
It’s also difficult — if not impossible — for building owners to plan business moves if property taxes are unpredictable and subject to change, he said. Much of the uncertainty is driven by the fact that large rises in tax value can take place between reassessments because the assessor’s office only sets new values every three years for most properties.
While the Board of Review that decides on appeals of assessed values can save owners on taxes — and it has lately been friendly to commercial real estate players seeking to roll back jumps in tax values that Assessor Fritz Kaegi has set — there’s no guarantee of winning a break from the agency. Some investors pass over buying Chicago properties because they can’t predict one of their biggest costs in property taxes with reasonable accuracy.
“We just need to come to the table and talk about it and figure out what works,” Levin said. “All these additional expenses drive out the mom and pop (landlords), and mom and pop is where affordable housing has resided forever in Chicago.”
There should be consistency with regard to taxes, perhaps stemming from a cap on yearly increases in property tax bills, Berkshire Hathaway HomeServices Chicago broker Mario Greco said.
“Ideally, one needs to know that the worst it’s going to be next year is X plus whatever percent, so there aren’t any surprises,” he said.
Address barriers to building
Some real estate industry heads want the mayor to address the difficulty of building in the city, including analyzing the impact of certain regulations and making the permitting process more efficient.
Levin would like to see the city make it easier for builders to add more housing units, including on vacant lots.
“The less resistance, the less barriers there are to new construction, the more you’ll get,” Levin said.
Thad Wong, co-founder and CEO of the city’s top residential brokerage @properties, said the city could revisit or revamp its Affordability Requirements Ordinance, which in 2021 was updated by the city council to mandate 20 percent of housing units in most new developments be reserved for residents making certain fractions of the area median income, up from 10 percent previously.
Developers contend it limits the amount of growth that could be happening in the city, Wong said, so the ordinance could be looked at so it doesn’t “add so much to the cost of development that it slows down progress and growth.”
Instead of increasing taxes, Chicago should focus on revitalizing the city’s downtown, incentivizing workers to return to offices and growing its tax base, Masters said.
The association supports Lightfoot’s “LaSalle Street Reimagined” initiative, which will offer incentives to turn the historic financial corridor’s almost 5 million square feet of vacant commercial space into new businesses and convert some office buildings into more than 1,000 new residential units.
“Downtown revitalization efforts are good investments for the public to make,” Masters said.
She added that the city should pursue additional strategies to create a more dynamic “live-work-play community for workers, residents and tourists,” and that her group encourages dedicating resources to expanding retail leases, increasing pedestrian activity, and incorporating art and culture to create a vibrant Central Loop atmosphere.
“These efforts will not only help the LaSalle Street corridor become the economic driver it once was, they will also benefit taxpayers across the city,” she said.
Yet some ideas discussed as ways to bring about a Central Loop rebound — in particular a pitch by an Urban Land Institute panel to shut down a section of LaSalle to vehicle traffic to enhance the retail scene — have proven controversial.
“We have hotels on LaSalle that we’d like people to be able to pull up to,” said Mike Reschke Jr., whose father’s company The Prime Group owns the Residence Inn at 11 South LaSalle as well as the newly completed The LaSalle at 208 South LaSalle.
When it comes to property values and bringing income into the city, crime and the perception of Chicago with regard to public safety is the top issue, especially for residential brokers.
“I just feel like Chicago’s become synonymous with violent crime and that’s just horrible for real estate,” Compass Chicago founding broker Jeff Lowe said.
Lowe said violent crime or anything that affects people on the street such as armed robberies and carjackings are the biggest issues, and Chicago’s mayor needs to make sure those criminals are caught and prosecuted.
Chicago’s mayor needs to not just get more police officers on the streets, but also get those officers to make a better effort to establish trustworthy connections so that neighborhoods welcome them, the Berkshire broker Greco said.
“The new mayor needs to instill confidence that he or she will begin to seriously address the issue with crime, not only in the wealthier neighborhoods, but also the traditionally more disinvested neighborhoods in the city,” Greco said.
Listen to business
Overall, industry professionals want to see a mayor having conversations with real estate players and businesses.
“Sometimes you see legislation where you don’t bring both sides of the table in and we want to be part of that discussion,” Levin said.
Wong and Lowe credited former Mayor Rahm Emanuel with skillfully recruiting businesses to Chicago and said they want to see a mayor that supports businesses and listens to their concerns.
Wong said there have been some missteps when it comes to working relationships with the business community, such as when Lightfoot chastised McDonald’s CEO for his comments about crime hurting downtown business.
“There needs to be a leader that’s bringing a positive message to all constituencies and integrating them all together in a positive light and working together to improve Chicago,” Wong said.