Cook County Assessor Fritz Kaegi’s commercial property valuation in the Chicago Loop don’t go far enough in addressing building owners’ change in fortunes since the pandemic, according to a landlords’ group.
Kaegi’s office just released property assessments, showing an average decrease of nearly 16 percent in the values of two dozen large office buildings around the Loop, Crain’s reported.
While the data suggests some resilience in the market, particularly for newer, Class A office spaces, the broader picture remains one of uncertainty as remote work and high interest rates continue to challenge commercial landlords.
Kaegi has defended his estimates, claiming that some properties, including high-profile buildings such as Blackstone’s Willis Tower and Wanxiang America Real Estate Group’s Prudential Plaza, are worth as much, if not more, than they were before the pandemic.
However, the assessor’s optimistic stance fails to account for the full impact of the office downturn, said Farzin Parang, executive director of the Building Owners and Managers Association of Chicago.
“The fact that the assessments of office buildings are continuing to increase with no acknowledgment of the impact of the pandemic doesn’t seem objective,” Parang said. “It’s not consistent with what’s happening in other markets or what’s happening in our market.”
Lower-tier office buildings, like PGIM’s 55 East Monroe Street and Brookfield’s 175 West Jackson Boulevard saw valuations drop about 30 percent.
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On the other hand, hotel properties in the Loop are experiencing some of the highest assessment increases, adding complexity to the issue as the county faces increasing pressure to balance the tax load.
Mayor Brandon Johnson proposed a $300 million property tax hike in his 2025 budget, and many property owners are worried about the impact on their tax bills, especially as commercial property assessments have seen a more significant increase than residential properties since 2021.
— Andrew Terrell