Chicago crane operators were kept busy with plenty of big new developments during the 2010s. Now, the city is facing a stark reversal of fortune.
In 2017, there were 60 construction cranes throughout Chicago under former mayor Rahm Emanuel’s leadership. That number has fallen to single digits, shedding light on the impact of high interest rates, the remote-work era and other economic challenges, Bloomberg reported.
Just one office building broke ground in the Windy City last year, and zero are expected to happen this year. Chicago isn’t alone: the commercial real estate crisis has rippled across the nation, as evidenced in cities like New York and San Francisco, where no new office projects kicked off last year.
Chicago has experienced a sharp decline in new construction, with only nine cranes operational as of August, compared to 29 in February 2020, just before the onset of the pandemic. This 69 percent drop is the largest among major U.S. metros.
The situation poses a significant challenge for Mayor Brandon Johnson, who assumed office nine months ago. With falling fiscal revenue and strained relations with the business community, Johnson faces the daunting task of revitalizing a downtown area plagued by record-high office vacancies of around 23 percent.
“With inflation and higher interest rates, the city now faces a different environment,” Jason Lee, a senior adviser for Johnson, told the outlet.
While the Johnson administration works to speed up the city’s arduous development approval process, his proposal to raise property transfer taxes on deals exceeding $1 million has sparked concerns about further depressing an already sluggish commercial sector.
Uncertainty surrounding the remote-work movement has further dampened demand for office space, leading to shorter lease commitments and a reluctance among businesses to invest in new developments.
However, there are pockets of optimism amid the gloom. In the buzzing Fulton Market District, for instance, Alex Najem’s Fulton Market Companies has started construction on a 409,000-square-foot office building — the city’s only to break ground in 2023.
“People deserve to spend a majority of their life in a more exciting, more healthy environment,” Najem told the outlet. “New construction, whether it be in a business district or a neighborhood like Fulton Market, you can afford to do that. You couldn’t pay me to take a building in the Loop. I wouldn’t take it for free.”
Read more
Development
Chicago
Chicago construction costs rise fastest in U.S.
Politics
Chicago
Mayor Brandon Johnson signs executive order to speed up city building approvals
Construction
National
New house construction makes major leap in November