As we know, Chicago is undergoing a mini-boom. With 18 high-rise office and multifamily projects in the works, 3,000 apartments for 2015 alone, and an assembly line of real estate development, we are in a good place.
Unless you ask the experts who spoke at Bisnow's 3rd Annual Chicago Construction and Development event, who had some serious reservations about the state of the market.
Four issues came up:
1. Illinois' Budget Woes
The General Assembly standstill in passing a budget and solving the state's unfunded pension obligations may lead to higher property taxes for developers and additional construction costs.
2. Global Market Fluctuations
The Greek economic crisis, and China's slowdown may come over to bite us over here. Why? Because we'd lose the prospect of international investment money from those sources. And the attitudes of developers, who would turn bearish in their predilection to obtain capital for new projects.
3. Escalating Costs and Slow Job Growth
Thanks to higher construction costs and fees, developers and subcontractors are scrutinizing their bids and strategies for business growth in the face of cost restrictions. For one thing, where are the new employees going to come from? Apparently, Illinois is second-to-last in population retention, which drains potential hires. And unions are opening up apprenticeship programs to attract new workers, but the numbers aren't quite there yet.
4. Chicago's ARO Changes Get in Gear
Mayor Rahm Emanuel's changes to the Affordable Requirements Ordinance (ARO), are classified as a tax that will result in higher costs to provide affordable housing than to build it, resulting in a dearth of affordable housing in areas that most need it.
What say you? Are these sensible elements to heed, or just unnecessary worries?
·Chicago's Apartment Boom Shows No Signs of Slowing Down [Curbed Chicago]
·New apartments galore [Crain's]
·That giant sucking sound in Chicago comes from these HQs [Crain's]
·Developers to Deliver 3,000 New Downtown Apartments in 2015 [Curbed Chicago]
·Take a Tour of the Building Boom Currently Underway in Downtown Chicago [Curbed Chicago]
·Apartment Boom Town archives [Curbed Chicago]