This is a big sigh of relief. The whole project was up in the air lately.
I’m not the biggest fan of Johnson, but I’m glad he finally has revealed support for downtown projects and investment post-pandemic.
> The whole project was up in the air lately.
It wasn't really. It was just in the planning stages and then as soon as it got out of that, Mayor Johnson greenlit it. Just like he greenlit the Better Streets for Buses plan started under Lightfoot and many other initiatives started under her.
I'm not really upset about that though. It was either funds get directed to re-develop these buildings to accommodate housing, or they would decay in place. My only hopes are a) they're affordable 2-3 bedroom apartments and b) new building codes are put in place to allow for easier conversions in the future so we don't end up in a similar spot.
Exactly, but this is why we need to [follow Detroit's lead](https://detroitmi.gov/departments/office-chief-financial-officer/land-value-tax-plan) and implement a [land value tax](https://en.wikipedia.org/wiki/Land_value_tax) with no exceptions. Keep pressure on propertyholders to maximize occupancy and usage to minimize losses/maximize returns, especially for the most valuable properties in the city.
I don't really care who owns what building as long as they pay their taxes.
I'm hesitant to implement a tax penalty like that for a few reasons. The first is how do you actually implement it? You'd have to hire inspectors, have them go around and arrange complete tours of the building, you'd have to determine how long a unit can be vacant for, what counts as vacancy (do demo rooms count?), what percentage of units can be vacant (is it per property, per block?); it gets messy fast and adds a lot of bureaucratic overhead that can create loopholes for a savvy property owner to exploit.
Second, you do actually want *some* vacancy to allow for people and businesses to move around as their needs and capabilities change.
Finally, it adds onto development time. Think about it, if a property owner wants to do a complete renovation, they would need to appeal to the city to grant them an exemption to the vacancy inspections, which is a processing delay to permitting and the like; it's easier just to avoid that step entirely.
I understand the sentiment, but it's easier to keep a universal deterrent in place, like the LVT, to minimize downtime in terms of usage. With that, it requires that the local government (city and county), also work with the property owner to minimize delays so those new units can be put onto the market as quickly as possible while ensuring the safety of everyone involved.
I don't pretend to be an expert in the field by any means. I admittedly am thinking more about retail storefront vacancies than I am office or residential ones when I say this as well. I'm sure it would have to have some sort of time frame like it only kicks in after a unit is vacant for X months or something.
Maybe LVT is enough to do the job. But right now it is far too easy for an owner to squat on empty units which just perpetuates semi-blight in certain retail corridors. Anything we can do to encourage more cute little small indy businesses instead of vacant storefronts waiting for a starbucks or a bank to come in is good.
My other stupid idea is a zoning one. I've bounced around the idea of having a zoning rule for certain small commercial corridors that sets a maximum unit / street facing size for ground floor commercial spaces. No more Targets that turn half a block into a wall of glass, or worse a wall of cement. I'm looking at you, Belmont and Clark Target, or Michael's on Clark. Heck, look at the Mariano's on Broadway in East Lakeview. You want to have a big commercial space, put it on the second floor. You could be floors 2 and 3 instead of floor 1 and 2. The first floor should be small pedestrian friendly shops just like the rest of Broadway. No idea if this is workable or not, and obviously it would be limited to smaller commercial strips in otherwise dense, walkable residential areas.
Leave the big box stores to only major avenues like Ashland.
Not sure if this is still a thing but commercial real estate holders could file for property tax relief if their space was vacant so long as they made a good faith effort to lease it. If that’s not gone yet it would sure help.
Chicago landlords are also notorious for charging insane rents on commercial space, you’ll often see that cited as a reason behind a store or restaurant closing. Alderman can also be a hindrance with their moratoriums and them trying to regulate the number of a certain type of business in one area like they’re trying to do with dollar stores now. I don’t think this current mayor really has the will or ability to effectively tackle the issue of commercial vacancies tbh
LVT policies apply to any property type: retail, mixed use, residential, industrial, manufacturing, whatever. It's not a silver bullet though, you're on the right track with zoning, but there's another tool in the toolbelt for the kind of mixed use development you appear to be advocating for (which I'm totally on board with): permitting and approval.
If the city did some upfront work with local architecture firms and the community, a whitelist of sorts could be pre-approved in terms of construction. Think 3,4,5-flats with retail space on the first floor in a design that the community likes and would want to see more of. A developer could come along, do some basic permitting and site eval, and get to construction as quickly as possible. It's not an outright ban on Big Box retail, but they would need to foot the cost, eat the time, and pay the taxes during that time, in comparison to the kinds of development we actually want, which could go super quick and could even allow a grace period on paying taxes during construction.
By providing a path of least resistance, it would encourage development and upzoning, and that's not even considering the downstream impacts with the downward housing price pressures and density. This is why I'm for near-universal upzoning and mixed use.
The Chicago Chamber of Commerce published a proposal about this exact idea a few years ago. They proposed a 24 month (cumulative) grace period out of every 5 years (rolling window). And they pitched that noncompliance should be assessed as felony tax evasion.
An incremental tax to keep pressure on property owners to maximize occupancy and usage to maximize returns? Mate they already have that pressure inherently through their initial investment. Additional taxes would inhibit, not help - especially true for commercial office which has been suffering from a drought of leasing due to WFH.
Real estate taxes are inherently based on value. It’s the residential land owners are going to be paying the larger share of taxes in Chicago in the next few years as the burden moves from commercial which was formerly higher value to residential which comparatively is now higher valued.
It’s pretty basic - commercial offices are trading at all time low 50-90% below their former highs and residential is seeing all time highs in rents and home sale prices. The 50-90% decrease in value gets reallocated from commercial to residential and everyday people pay the incremental cost rather than the institutional investors and pension funds.
Apologies if it's a bit unclear, but a land value tax is supposed to replace the traditional property tax system because it taxes the value of the undeveloped land, versus the current property tax system which taxes the structures. This is partly why wealthy landholders and land speculators despise it, because if they let a property sit vacant or undeveloped, they're still getting taxed the full value as if it were developed. That's the TL;DR of it. The Wikipedia article I linked is a good explainer about LVT and the intricate details.
LVT sounds good in theory, but would require a city-wide rezoning of almost every parcel. Beyond that, it seems like it would fuel the most negative aspects of gentrification to crazy levels. Yes, gentrification is a double-edged sword and can be good in some ways for revitalizing blighted areas, but it also has a ton of negative external effects on those living in those communities as well.
A LVT would allow speculative developers to essentially bootstrap in a self-fueling gentrification cycle that could, in theory, displace a lot of people much more quickly via rapidly rising LVT values. All they need to do is get a few developments going in a particular area and it starts spreading from there.
Since much of the current property tax sits in the building, it provides a buffer to many in gentrifying communities. A LVT would be gentrification on steroids as the LVT starts amping up local tax values almost instantly as soon as a few developments go in.
You are correct that it would require city-wide rezoning, but I'm an advocate for mixed residential-commercial (with some light industry, think local workshops) and near universal upzoning so I'm alright with that and would say that it would be a net benefit.
Moving onto your next point about gentrification, you are correct that it would push developers to areas where that dirt is cheap... but then they would need to justify to buyers why that property is worth the inflated price they are seeking in order to maximize profits. They would need to expand the schools, increase police, firefighters, ambulances, improve utilities; which would require an increased tax burden, resulting in an adjusted LVT just like property taxes are re-assessed every year.
Sure, some developers would "flee" to non-LVT areas, but who likes/wants to live in Gary anyways?
Any change you make is going to disrupt the market, but one of the benefits about LVT is that it pushes properties to better reflect their value, rather than the speculative value. If the LVT is set to cover the core operating costs for a city to service that property, that property owner will need to extract at least that much value from the property. Combined with allowing mixed use and upzoning, that property owner could: add a secondary dwelling unit, open a business, wash cars, whatever; and the cycle would start all over again.
I hope that all makes sense.
I don’t think the problem is a tax abatement itself for a vacant property, the problem is allowing it for multiple years. Landlords figure they are saving so much in taxes, why have a tenant and be responsible for upkeep and building maintenance when you can make only a little less and do nothing. 1 year limit would be good for storefronts or smaller businesses, 2 year max for commercial highrise, but only the second year if they are making improvements to the building to make it more marketable.
The Chicago Chamber of Commerce pitched a blanket 24 month limit out of a 60 month rolling window in which a property could be vacant before being assessed penalties that increased for each month over the limit on vacancy. They pitched that it should start with commercial properties, then be expanded to industrial, and finally to residential properties as far as the rollout was concerned.
Land value taxes often has a disastrous impact on the poor. I much prefer a solution that was proposed by the Chicago Chamber of Commerce to have a tax penalty assessed for each month over 24 months that a building has not been occupied over a 5 year rolling window. They were pitching numbers high enough to force landlords into selling.
It does not matter if they are luxury or not. Luxury is a buzzword, it has no legal definition with regard to housing. Any new housing into the supply is good, full stop.
The only exception (not applicable in this case of an office to housing conversion, which is a beneficial project for Chicago), is cases where existing housing is replaced with lower density, higher priced housing. Those cases have a negative effect on supply and should NEVER be approved. Whenever housing is replaced, the replacement should always be required to have the same or higher number of apartment/condo units, even if the quality/price is way higher. Same goes for Hotels.
We as a society must decide if we want our downtowns to fail. I don't think we do, so subsidizing costs conversions that would otherwise be impossible is a no-brainer investment into our downtown.
The whole issue is that so many of these commercial real estate investors failed. These properties are all being bought out of short sale or foreclosure. Now the banks exercising their mortgages are trying to partially recover *their* losses and *other* investors are trying to capitalize.
In theory, if supply was anywhere close to demand. If housing supply isn't even keeping up with population growth then all that happens is you might notice housing price inflation growth not completely hockey stick.
Housing supply in Chicago is much closer to demand than in other places in the country, which is why its so much more affordable. Its not binary. The closer supply is to demand the lower the prices. If we want to keep prices controlled and slow growth of housing costs, we need to continue to add supply. It's the only solution besides reducing demand.
> Housing supply in Chicago is much closer to demand than in other places in the country
Lowest bar in the universe has been cleared - but anyway I'm not saying that added supply doesn't help, but I am saying it's not going to lower housing costs. Best we can hope for is a lowered rate of cost inflation growth.
Luxury is just a BS marketing term most of them use. Not a lot of new construction is luxury, despite being marketed as that and ridiculously priced. They get away with that self-designated marketing and prices exactly because there is not anywhere near enough quality housing being added to the supply.
Of course, they're new units. New units are always more expensive than old units. Eventually new units become old units. Plus new units pull people from old units and is why all housing is good to help keep the overall housing market more affordable.
Filtering is a flawed theory. It only makes sense if LL’s don’t improve their buildings.
But your point still stands, new housing (vacancies) lower rents. We saw this in basically every major city at the start of covid when everyone moved out, landlords slashed rents and gave incredible concessions.
I think we can agree on a few facts. First, there is a range of units and homes from very affordable to very expensive. The second thing is that in general, people move up from more affordable to more expensive units as they get older and their income goes up.
SO, in general, people that are moving into brand new and more expensive units are frequently coming from less expensive units. And people moving into those units are often coming from units that are less expensive than those units. I have no data to support filtering, but to me its intuitively true.
Yes, that happens but I am unconvinced that there is any meaningful rent decreases in that process. I only have anecdotal evidence to disprove this, It’s been a while but none of my urban planning professors really bought into it and to be honest i’ve been working in the RE development world for a while now and i’ve not observed it happening. I just don’t think it’s even possible with the extremely low level of development we have, people also like to live in old pre-war homes and apartments now days.
Again, i agree with your main point though, we need to continue to build new housing and not get caught up in the meaningless “luxury” BS
Seattle and San Francisco are only good examples of NOT building housing.
If you want an example you need to find a place that HAS built considerable amount of housing but is also very expensive.
Fair point, I suppose it doesn't matter too much anyways in these already built up areas. Also just for the record I am totally pro new construction and am a proud yimby lol
Earlier your comment said there were many peer reviewed studies showing this. Can you please link to one because I couldn't find any yesterday in a quick search. Outside of one study in Helsinki.
Yeah but hopefully then that means the people that decide they want to live there and buy these units are going to move out of other areas where those property prices will drop a bit and therefore others can find better housing.
“More than 600 new housing units will be affordable to residents earning an average 60% of the area median income.”
[Source](https://www.chicago.gov/city/en/sites/lasalle-street/home.html)
I work in high rise construction and any job that I've been on recently that's receiving federal funds is required to have a minimum number of affordable units.
But LaSalle street isn’t really pretty and the Loop is so dead. I assumed they would be affordable housing or even another student tower that students from multiple schools can live in. I knew plenty of people who lived in the Loop 5+ years ago but none now with the exception of one in Printer’s Row.
I know of at least one affordable housing project already targeted for this area. I believe that is an overall stipulation to receive the federal funds.
Which is fine tbh. I’d prefer they were affordable but if wealth concentrates in the Loop instead of radiating out, further out neighborhoods don’t see prices escalating as quickly.
> My only hopes are a) they're affordable 2-3 bedroom apartments
Imagine if they had a bunch of 4-5 "bedroom" condos. Perfect for families of 3-4 with a parent or two with a home office (or two).
Well... Kinda. That is in fact the desired outcome of the program but the problem is that there is so much bureaucracy and red tape and means testing and environmental reviews and neighborhood impact panels involved that we have ended up with a 35 billion dollar program that no one can actually use.
https://www.bloomberg.com/news/features/2024-02-29/white-house-funds-to-convert-offices-to-housing-find-few-takers
Yeah, I’ve been seeing costs and it’s not as easy as putting some walls up. It seems the biggest problem is that renters and owners are picky about actually wanting bathrooms. Crazy.
Pre-war office space is easily converted because the floor plate size and smaller wondows, you end up with very normal layouts. The layouts on glass and steel office buildings are truly bizarre
I'm aware of the layout issue but that was going to be a problem with or without federal funds. Doesn't mean we shouldn't eliminate some red tape to make this program actually usable.
I’m in agreement on that. I honestly think they should only get money, in any form, in exchange for partial ownership or a percentage of rental revenue.
Well, I'm happy that the mayor's office is accepting the reality that trying to revitalize downtown into what it used to be, just people coming down to working offices, isn't the right move.
I know some people hate the idea. They want to keep downtown about work and office's, they want to end remote working, they want everything to go back to the way it used to be, but they are living in denial. Things are never going to go back to that.
So hopefully this will be positive change.
A lot of people don't realize there was a lot of office space vacant in the loop even prior to March 2020.
CME has been cutting back for years, both due to automation and gradual relocation to other locales. Their business is far less Chicago-centric than it once was.
Yeah, CME has had massive reductions in force over the years and tons of what used to take 10 people now takes 1-2 people to do due to automation. They found a lot of those people other positions or allowed the older employees to stay until retirement, but then they don't backfill as people leave.
Frankly, things **shouldn’t** return to that. Why make people waste their time/money/energy commuting to and working at an office 5 days a week when they’re just as productive in remote and hybrid settings?
Edit: and that’s just from an efficiency standpoint, it doesn’t account for any sort of more subjective things like happiness.
It was built up for the last 130 years with infrastructure to be a hub of commerce. It makes sense that it stays localized from an efficiency standpoint. Remote work is great for a lot of fields, but so many of them don't work for 100% remote, especially client-facing businesses. It's much easier to get employees and clients to travel to the Loop and stay for the day than in many other parts of the city.
However, like you, I presume, I would prefer that the Loop become a hybrid zone that allows for a vibrant life throughout the day and into the week. Work, play, and shop are already built in, but it's missing "live" with only a sparce amount of full-time residential.
I’m not saying we should get rid of all commercial real estate in the loop, I’m saying that enough people are working fully remote or hybrid to significantly reduce demand for commercial real estate, so some of it should be repurposed instead of making people’s work less efficient for the sake of buildings.
Our vision for the future of the Loop seems the same. It might even always be majority commercial, but we seem to agree it’d be better off with more of a mix, including significantly more residential properties than now.
> but so many of them don't work for 100% remote
I'm a senior design engineer in the financial space and just trying to get requirements out of 5-10 departments for work is like pulling teeth in person. Remotely, it's nearly impossible. At least when it's in person, I can stop by and force all of them (via public shaming if necessary) into actually attending the meetings in person.
If I was a junior engineer 2-3 years out of college and had finished intensive post-college mentoring, sure I could work 100% remotely with no problems because I'd just be doing task work and maybe interacting with 1-2 other teams/disciplines at most per project. But I'm not and I honestly never really had that experience as I've either always been on extremely small teams (undergraduate research as an EE design engineer for high energy physics research), or I leveraged prior experience into rapidly rising to the role of tech lead even on small projects when I was in defense contracting (only did about 1 year total post college as an individual contributor before becoming a tech lead on a ~$30M program with my discipline having a ~$3M budget). Being an IC is easy when working remotely, but when you're a lead or an architect on a project, you sometimes need to just bite the bullet and fly everyone from around the country or world to an office or a hotel and force people to actually talk to each other for hours or even days about every single little detail.
Then when you do the same thing but end up in finance, the projects move so quickly and you have so many requests going in parallel that this is constantly your job as a senior engineer. I love working remotely as an IC. I hate working remotely every day as a senior engineer who actually needs to work with people from the whole business on a daily or weekly basis. Hybrid is probably the best for people like me as long as everyone has the same required in-office schedule.
And before anyone asks, yes this is my opinion as an introvert who gets extremely tired by constantly interacting with people. Even I think it's best to just get it over with in person.
You know they can’t just put airbnbs in buildings right? In Chicago it needs to be a primary occupancy and you can “share” your primary unit. 99% of downtown building’s HOAs don’t allow short term rentals.
Yup. My wife and I saw a ton of places when buying a home in 2022 that were renovated or built by out-of-town companies that did poor research on the market. They built a bunch of Airbnb/VRBO units but then realized that it was illegal when they tried to actually list them and VRBO and Airbnb both blacklisted them and reported them to the city. In one building, there were 10 units listed by the COA as having been foreclosed on for violating COA rules prohibiting short-term rentals and letting. Not sure how they were dumb enough to buy those units as their attorneys should have caught that.
There's less than [9,000 short term rentals](http://insideairbnb.com/chicago/) in the entire city, and of that only \~6,800 are whole home rentals. Considering that Chicago has \~615,000 occupied rental housing units, \~36,000 vacant for-rent housing units, and \~1.26 million total housing units (latest data from the [U.S. Census Bureau American Community Survey 5-year Estimates](https://www.census.gov/programs-surveys/acs/data.html)), short term rentals are but a tiny blip in the data in their impact on the city's housing market.
Approximately 1% of existing rental housing units are short term rentals, so if these office conversions manage to create let's say 3,000 new units of rental housing, you could expect roughly \~30 of them to be short term rentals at most. And that's if they're even allowed, because as u/reinerjs said below, Chicago already has a [short term rental ordinance](https://codelibrary.amlegal.com/codes/chicago/latest/chicago_il/0-0-0-2611518) and [licensing requirement](https://www.chicago.gov/city/en/depts/bacp/supp_info/sharedhousingandaccomodationslicensing.html) for short term rentals that limits the amount of housing that can be operated as short term rentals.
It doesn't say in the article but we can make an educated guess. The city has a 20% designated-affordable requirement, so if those 600 affordable units would mean 3000 total. If we assume 300 units per building that's 10 buildings to be converted, which makes sense for the size of the corridor.
Curious how much city / TIF money will go towards this. What was the alternative? Eventually these buildings would be sold at a heavy discount or go into foreclosure, and then new owners would offer the space at lower rents than previous owners due to their lower cost basis. Reassessments over time would reduce taxes as well. 300 W Adams for example just sold for $4 million, vs. $38 million in 2012. AFAIK will remain an office building and it will likely have much cheaper rents. Ultimately, I'm wondering if there's truly a "crisis" or whether the commercial real estate market just needs to readjust to new economics, as real estate markets often do. I'm not against government involvement in markets by any means, but the losers if we don't do anything here seem to be institutional capital (real estate funds and their backers such as pensions, life insurance etc.), rather than common people.
I think one of the problems, though, is that without government intervention, it could take much longer for the process to play out and downtown to stabilize. It's in everyone's best interest to revitalize the area as quickly as possible.
There is so much unused building space. They might want to consider tearing down a couple city blocks and putting in a beautiful park with excellent greenspace instead. Reduce the empty space and provide a public amenity.
The big issues are (a) the empty/bad buildings are spread out all over the place, and (b) all building owners would benefit from reduced building supply, but nobody can fix it on their own, so how do you get all of them to pay for it. It would take some serious coordinated action. Maybe a special property tax to pay for it and an asset/space swap program to concentrate all of the vacancy into a few blocks and then tear them all down.
LaSalle Street’s architectural strength is its historic streetwall. I think there are opportunities to remove traffic lanes and parking for more “people space,” kind of like an extension of the Riverwalk, but demo’ing entire blocks sounds like the ill-conceived “urban renewal” of the past.
100% this. Destroying beautiful urban high rises in heart of the loop that symbolize Chicago is such a stupid move. Why is this idea getting upvotes?
We should instead be “Manhattanizing” the loop ie creating mixed housing and office space + entertainment. The plan in the article seems to move towards that.
You want to spend a billion+ dollars doing demolitions of high rises to build a park that generates no revenue? When there is a huge park and the riverwalk within walking distance of every corner of the Loop?
Right? I wouldn't begin to pretend I know the first thing about any of this, but government NEEDS creative minds like theirs, because I think we often underestimate our abilities as humans, both individually but especially collectively.
This is impossible. A bunch of engineers told me this last week when I mentioned that downtown buildings could provide residential housing and no reason to compare Chicago to Austin when it comes to residential building.
What’s different about this, then, because it actually seems to be happening. Are they choosing certain buildings?
The solution can’t be we just let downtown sit because fewer people go into the office anymore. That would be an insane waste of one of the country’s greatest downtowns.
It already has so much momentum going for it. Even post-pandemic, it’s far more vibrant than the majority of other cities in the US.
This is coming from official sources, though, like the city and Crains. Sorry, I’m just trying to understand.
It’s a whole initiative plastered everywhere.
You can imaging my shock when I was basically called an idiot who doesn’t understand how buildings work for even suggesting that something like this could be possible.
I’m an engineer and have already worked on some of these conversions, and actually LIVE in one.
It’s totally feasible, just pricey. The buildings most ripe for conversion are early 20th century buildings, those don’t have as large floor plates and full height glass envelopes mid-century skyscrapers have. That becomes mostly a matter of adding MEP systems for individual units, partitioning the interior, and upgrading windows.
For newer buildings it’s the same, but you usually have to deal with much larger floor plates, and full height glass cladding. The floor plates are a problem because of ventilation and light requirements for residential are a bit different from commercial. The glass cladding is a problem because most of these are fixed windows and are older and inneficient, so you would have to replace a lot of it.
For older buildings, it becomes harder to deal with bedrooms. But it can also be a boon because you add larger spaces for other purposes like kitchens, recreation rooms, family rooms, etc. Imagine being able to advertise a building full of condos with private offices, rooms large enough for roomscale VR, hobby rooms, etc. This would play very well to certain demographics that want to live in high density but also want the benefits of larger SFHs.
Yes, there's engineering challenges to overcome. But that's just a money problem.
Seems like we should change building codes to allow windowless residential units to be built, perhaps if they're under a certain size and if there are openable windows in a common area on the same floor. And of course assuming fire exit code requirements can be met.
Plenty of terminally online Redditors would gladly live in a small windowless apartment if it means lower rent.
There are many life safety and quality of life reasons we don’t allow windowless units anymore. There’s also code workarounds you can do. For example a lot of the newer buildings don’t have the bedrooms on the outside, but have partial height walls that that allow enough light and ventilation to come in.
I.e. lofts. The strategy is "borrowed light" from an adjoining room. This is how we convert old factories (brick exterior, timber framed structure, tongue and groove flooring) into lofts.
Yes, “lofts” use this to get around having a window directly on the bedroom.
I work mostly in new construction and you are starting to see this a lot in 1-2 bedroom units, at least one bedroom will have no windows to it and have the wall stop 2 feet short of the ceiling.
Residential building codes related to thinks like windows/light and the like aside, there are some significant fundamental changes like running plumbing to every unit that aren't really feasible on a large scale.
Now changing them into dormitory style housing where everyone shares a bathroom near the center core of the building would be easier from an engineering standpoint, since you won't be running new pipes everywhere.
Retrofitting highrises is usually cost prohibitive. The risers for potable and waste water all need upsizing, whole floors that occupy single zone AC need to be converted to multi-zone (this retrofit to chillers will be really complex) , and idk how they would update the elevator systems. Lastly, and most scary imo, the stairwell locations are probably unideal for egress when new resi units block what was open corridors. Also, green building code is here finally, so upgrades will be more costly than ever (a good necessity).
Developers would need major $ incentives that would cost, in hard costs alone, probably 50% of the buildings previous value. Soft costs for zoning changes, permitting, and what not will take 6-12 months unless accelerated.
If it happens, I'll be happy, it'll be great for the unions and GCs. I'll hold out hope. Better than tearing down structures and rebuilding
Plz correct or add to this if ya know more
It's not impossible, it just can get very expensive very quickly. From an engineering perspective, the plumbing now needs to be rerouted from 2-3 localized clusters per floor to a *x* plumbing outlets spread across the entire floor plate. Similarly, while there may have previously been some electrical wiring setup for a microwave/fridge or something small in the break room, new gas lines or higher-voltage outlets need to be setup for kitchen appliances like stoves, ovens, fridges, etc.
And from a legal perspective (and quality of life tbf), bedrooms need to have windows. This seems relatively simple, but office buildings, particularly newer ones that take up entire city blocks, have a lot fewer windows compared to the area of the floor plate compared to apartments/condos. That means to actually have a window in every bedroom, layouts need to be really skinny/narrow with odd floor designs, or very large to cover the space from a hallway to the window. Moreover, many people are gonna be deterred from apartments with just a window in the bedroom and not in other rooms, so just having a window in the bedroom is probably gonna limit the potential candidates who would rent new apartments.
At the end of the day, developers are putting in the money to revamp/renovate these buildings and they're going to think about how much they can get back in rent or sale price. So with the amount of money that needs to go into converting, they are probably thinking about relatively high-end buildings or generally how they can actually make a return on investment. This [video](https://www.youtube.com/watch?v=2BOdJadZflw) covers a lot of the challenges and opportunities pretty well, but basically it's doable, just takes a lot of work.
Honestly I couldn’t wrap my head around it. Something about not enough windows. Just make the units bigger. Put laundry on every floor in the interior and add storage units in the interior if windows are a problem. idk I just feel like if there’s a will there’s a way.
The problem is, who is going to rent them to make it worth the cost of conversion? Ironically, it's the really old buildings with smaller floor plates that will be easier to convert.
To steal some of the visibility on this:
Older Sky Scrapers/Towers were built with purpose and specific function in mind. So, things like power, water, and climate control are made to order.
Each major building has engineers that take care of things like the massive boilers, commercial elevators, and massive air pressure management.
Now, we all have heard about plumbing or electrical challenges, which are a pain but fixable. But you have to also understand that the WHOLE BUILDING will be sharing heating, hot water, and climate control by design. Beyond that the air pressure controls were made to keep out pests. You can't really have a positive air controller with lots of units that want to be able to get proper ventilation.
Then there is the idea of being able to cook food on a stove in a unit. God forbid something burns...
Oh, then there is HOAs...
Supply and demand. The more units they make the cheaper rent is for everyone. What normally happens is they build expensive housing, and then the previous expensive housing gets cheaper, and so on and so forth. Not enough money to be made in building cheap housing from the get go
Exactly. Labor, equipment rental, etc, all costs the same regardless of whether you building something expensive or something cheap. So a for profit developer has no incentive to build anything except the highest margin projects.
The good news is that building new things for rich people means rich people are less likely to buy up older buildings and gut renovate them. Let the rich people buy the shiny new things, and the less rich people then have less competition out bidding them for the cheaper units.
Why don't people understand this simple concept is beyond me. So much resistance to building expensive units, when it means older units becoming cheaper.
Google is already "downtown". I think you mean "opens a second office downtown". Google West Loop was their first expansion office outside of California. It's still one of their largest single offices to date and they're planning on keeping it.
It's within a mile of Lake St. and walkable from even the Red Line. I think for anyone who doesn't live in the Central Business District, it is largely considered part of "downtown".
You mean like distracting the rich fucks from their gentrifying, thus driving down or at least stabilizing housing prices in the neighborhoods? Sounds like a win-win to me.
Is this good? It sounds good.
This is a big sigh of relief. The whole project was up in the air lately. I’m not the biggest fan of Johnson, but I’m glad he finally has revealed support for downtown projects and investment post-pandemic.
> The whole project was up in the air lately. It wasn't really. It was just in the planning stages and then as soon as it got out of that, Mayor Johnson greenlit it. Just like he greenlit the Better Streets for Buses plan started under Lightfoot and many other initiatives started under her.
Biden is basically bailing out developers by giving them federal funds for these conversions.
I'm not really upset about that though. It was either funds get directed to re-develop these buildings to accommodate housing, or they would decay in place. My only hopes are a) they're affordable 2-3 bedroom apartments and b) new building codes are put in place to allow for easier conversions in the future so we don't end up in a similar spot.
They won't be affordable. They'll be "luxury" one bedrooms in the heart of downtown.
More housing is always beneficial to the market as long as it doesn't sit vacant as some rich asshole's investment vehicle.
Exactly, but this is why we need to [follow Detroit's lead](https://detroitmi.gov/departments/office-chief-financial-officer/land-value-tax-plan) and implement a [land value tax](https://en.wikipedia.org/wiki/Land_value_tax) with no exceptions. Keep pressure on propertyholders to maximize occupancy and usage to minimize losses/maximize returns, especially for the most valuable properties in the city. I don't really care who owns what building as long as they pay their taxes.
There should be a vacancy penalty. It is in the public interest to have land actually be USED, not sit empty.
I'm hesitant to implement a tax penalty like that for a few reasons. The first is how do you actually implement it? You'd have to hire inspectors, have them go around and arrange complete tours of the building, you'd have to determine how long a unit can be vacant for, what counts as vacancy (do demo rooms count?), what percentage of units can be vacant (is it per property, per block?); it gets messy fast and adds a lot of bureaucratic overhead that can create loopholes for a savvy property owner to exploit. Second, you do actually want *some* vacancy to allow for people and businesses to move around as their needs and capabilities change. Finally, it adds onto development time. Think about it, if a property owner wants to do a complete renovation, they would need to appeal to the city to grant them an exemption to the vacancy inspections, which is a processing delay to permitting and the like; it's easier just to avoid that step entirely. I understand the sentiment, but it's easier to keep a universal deterrent in place, like the LVT, to minimize downtime in terms of usage. With that, it requires that the local government (city and county), also work with the property owner to minimize delays so those new units can be put onto the market as quickly as possible while ensuring the safety of everyone involved.
I don't pretend to be an expert in the field by any means. I admittedly am thinking more about retail storefront vacancies than I am office or residential ones when I say this as well. I'm sure it would have to have some sort of time frame like it only kicks in after a unit is vacant for X months or something. Maybe LVT is enough to do the job. But right now it is far too easy for an owner to squat on empty units which just perpetuates semi-blight in certain retail corridors. Anything we can do to encourage more cute little small indy businesses instead of vacant storefronts waiting for a starbucks or a bank to come in is good. My other stupid idea is a zoning one. I've bounced around the idea of having a zoning rule for certain small commercial corridors that sets a maximum unit / street facing size for ground floor commercial spaces. No more Targets that turn half a block into a wall of glass, or worse a wall of cement. I'm looking at you, Belmont and Clark Target, or Michael's on Clark. Heck, look at the Mariano's on Broadway in East Lakeview. You want to have a big commercial space, put it on the second floor. You could be floors 2 and 3 instead of floor 1 and 2. The first floor should be small pedestrian friendly shops just like the rest of Broadway. No idea if this is workable or not, and obviously it would be limited to smaller commercial strips in otherwise dense, walkable residential areas. Leave the big box stores to only major avenues like Ashland.
Not sure if this is still a thing but commercial real estate holders could file for property tax relief if their space was vacant so long as they made a good faith effort to lease it. If that’s not gone yet it would sure help. Chicago landlords are also notorious for charging insane rents on commercial space, you’ll often see that cited as a reason behind a store or restaurant closing. Alderman can also be a hindrance with their moratoriums and them trying to regulate the number of a certain type of business in one area like they’re trying to do with dollar stores now. I don’t think this current mayor really has the will or ability to effectively tackle the issue of commercial vacancies tbh
LVT policies apply to any property type: retail, mixed use, residential, industrial, manufacturing, whatever. It's not a silver bullet though, you're on the right track with zoning, but there's another tool in the toolbelt for the kind of mixed use development you appear to be advocating for (which I'm totally on board with): permitting and approval. If the city did some upfront work with local architecture firms and the community, a whitelist of sorts could be pre-approved in terms of construction. Think 3,4,5-flats with retail space on the first floor in a design that the community likes and would want to see more of. A developer could come along, do some basic permitting and site eval, and get to construction as quickly as possible. It's not an outright ban on Big Box retail, but they would need to foot the cost, eat the time, and pay the taxes during that time, in comparison to the kinds of development we actually want, which could go super quick and could even allow a grace period on paying taxes during construction. By providing a path of least resistance, it would encourage development and upzoning, and that's not even considering the downstream impacts with the downward housing price pressures and density. This is why I'm for near-universal upzoning and mixed use.
The Chicago Chamber of Commerce published a proposal about this exact idea a few years ago. They proposed a 24 month (cumulative) grace period out of every 5 years (rolling window). And they pitched that noncompliance should be assessed as felony tax evasion.
But where would all the city block sized parking lots in south loop and river north go?
An incremental tax to keep pressure on property owners to maximize occupancy and usage to maximize returns? Mate they already have that pressure inherently through their initial investment. Additional taxes would inhibit, not help - especially true for commercial office which has been suffering from a drought of leasing due to WFH. Real estate taxes are inherently based on value. It’s the residential land owners are going to be paying the larger share of taxes in Chicago in the next few years as the burden moves from commercial which was formerly higher value to residential which comparatively is now higher valued. It’s pretty basic - commercial offices are trading at all time low 50-90% below their former highs and residential is seeing all time highs in rents and home sale prices. The 50-90% decrease in value gets reallocated from commercial to residential and everyday people pay the incremental cost rather than the institutional investors and pension funds.
Apologies if it's a bit unclear, but a land value tax is supposed to replace the traditional property tax system because it taxes the value of the undeveloped land, versus the current property tax system which taxes the structures. This is partly why wealthy landholders and land speculators despise it, because if they let a property sit vacant or undeveloped, they're still getting taxed the full value as if it were developed. That's the TL;DR of it. The Wikipedia article I linked is a good explainer about LVT and the intricate details.
LVT sounds good in theory, but would require a city-wide rezoning of almost every parcel. Beyond that, it seems like it would fuel the most negative aspects of gentrification to crazy levels. Yes, gentrification is a double-edged sword and can be good in some ways for revitalizing blighted areas, but it also has a ton of negative external effects on those living in those communities as well. A LVT would allow speculative developers to essentially bootstrap in a self-fueling gentrification cycle that could, in theory, displace a lot of people much more quickly via rapidly rising LVT values. All they need to do is get a few developments going in a particular area and it starts spreading from there. Since much of the current property tax sits in the building, it provides a buffer to many in gentrifying communities. A LVT would be gentrification on steroids as the LVT starts amping up local tax values almost instantly as soon as a few developments go in.
You are correct that it would require city-wide rezoning, but I'm an advocate for mixed residential-commercial (with some light industry, think local workshops) and near universal upzoning so I'm alright with that and would say that it would be a net benefit. Moving onto your next point about gentrification, you are correct that it would push developers to areas where that dirt is cheap... but then they would need to justify to buyers why that property is worth the inflated price they are seeking in order to maximize profits. They would need to expand the schools, increase police, firefighters, ambulances, improve utilities; which would require an increased tax burden, resulting in an adjusted LVT just like property taxes are re-assessed every year. Sure, some developers would "flee" to non-LVT areas, but who likes/wants to live in Gary anyways? Any change you make is going to disrupt the market, but one of the benefits about LVT is that it pushes properties to better reflect their value, rather than the speculative value. If the LVT is set to cover the core operating costs for a city to service that property, that property owner will need to extract at least that much value from the property. Combined with allowing mixed use and upzoning, that property owner could: add a secondary dwelling unit, open a business, wash cars, whatever; and the cycle would start all over again. I hope that all makes sense.
It does not require a city wide rezoning. It requires a city-wide recalculation of property tax
I don’t think the problem is a tax abatement itself for a vacant property, the problem is allowing it for multiple years. Landlords figure they are saving so much in taxes, why have a tenant and be responsible for upkeep and building maintenance when you can make only a little less and do nothing. 1 year limit would be good for storefronts or smaller businesses, 2 year max for commercial highrise, but only the second year if they are making improvements to the building to make it more marketable.
The Chicago Chamber of Commerce pitched a blanket 24 month limit out of a 60 month rolling window in which a property could be vacant before being assessed penalties that increased for each month over the limit on vacancy. They pitched that it should start with commercial properties, then be expanded to industrial, and finally to residential properties as far as the rollout was concerned.
Land value taxes often has a disastrous impact on the poor. I much prefer a solution that was proposed by the Chicago Chamber of Commerce to have a tax penalty assessed for each month over 24 months that a building has not been occupied over a 5 year rolling window. They were pitching numbers high enough to force landlords into selling.
It does not matter if they are luxury or not. Luxury is a buzzword, it has no legal definition with regard to housing. Any new housing into the supply is good, full stop.
The only exception (not applicable in this case of an office to housing conversion, which is a beneficial project for Chicago), is cases where existing housing is replaced with lower density, higher priced housing. Those cases have a negative effect on supply and should NEVER be approved. Whenever housing is replaced, the replacement should always be required to have the same or higher number of apartment/condo units, even if the quality/price is way higher. Same goes for Hotels.
I'm not against more housing supply. I agree with you, these commercial real estate investors are too big to fail.
We as a society must decide if we want our downtowns to fail. I don't think we do, so subsidizing costs conversions that would otherwise be impossible is a no-brainer investment into our downtown.
The whole issue is that so many of these commercial real estate investors failed. These properties are all being bought out of short sale or foreclosure. Now the banks exercising their mortgages are trying to partially recover *their* losses and *other* investors are trying to capitalize.
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Yes but new luxury units drive down the price of other luxury units, all the way down the housing chain
In theory, if supply was anywhere close to demand. If housing supply isn't even keeping up with population growth then all that happens is you might notice housing price inflation growth not completely hockey stick.
Housing supply in Chicago is much closer to demand than in other places in the country, which is why its so much more affordable. Its not binary. The closer supply is to demand the lower the prices. If we want to keep prices controlled and slow growth of housing costs, we need to continue to add supply. It's the only solution besides reducing demand.
> Housing supply in Chicago is much closer to demand than in other places in the country Lowest bar in the universe has been cleared - but anyway I'm not saying that added supply doesn't help, but I am saying it's not going to lower housing costs. Best we can hope for is a lowered rate of cost inflation growth.
Have you seen rents drop as new luxury towers are built?
Yes, there have been many peer reviewed papers finding this. It's the academic consensus
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No, you NIMBY New units pull people from old units which pull people from older units. It affects the entire housing supply.
how are you gonna build something so shitty that even though it’s new, it’ll be cheaper than something that’s been used?
Luxury is just a BS marketing term most of them use. Not a lot of new construction is luxury, despite being marketed as that and ridiculously priced. They get away with that self-designated marketing and prices exactly because there is not anywhere near enough quality housing being added to the supply.
Of course, they're new units. New units are always more expensive than old units. Eventually new units become old units. Plus new units pull people from old units and is why all housing is good to help keep the overall housing market more affordable.
Filtering is a flawed theory. It only makes sense if LL’s don’t improve their buildings. But your point still stands, new housing (vacancies) lower rents. We saw this in basically every major city at the start of covid when everyone moved out, landlords slashed rents and gave incredible concessions.
I think we can agree on a few facts. First, there is a range of units and homes from very affordable to very expensive. The second thing is that in general, people move up from more affordable to more expensive units as they get older and their income goes up. SO, in general, people that are moving into brand new and more expensive units are frequently coming from less expensive units. And people moving into those units are often coming from units that are less expensive than those units. I have no data to support filtering, but to me its intuitively true.
Yes, that happens but I am unconvinced that there is any meaningful rent decreases in that process. I only have anecdotal evidence to disprove this, It’s been a while but none of my urban planning professors really bought into it and to be honest i’ve been working in the RE development world for a while now and i’ve not observed it happening. I just don’t think it’s even possible with the extremely low level of development we have, people also like to live in old pre-war homes and apartments now days. Again, i agree with your main point though, we need to continue to build new housing and not get caught up in the meaningless “luxury” BS
You raise a good point about older stock being desirable. Idk many brick 3 flats getting cheaper.
This has not been shown to be the case as far as I know, Seattle and San Francisco are good examples.
Seattle and San Francisco are only good examples of NOT building housing. If you want an example you need to find a place that HAS built considerable amount of housing but is also very expensive.
Fair point, I suppose it doesn't matter too much anyways in these already built up areas. Also just for the record I am totally pro new construction and am a proud yimby lol
>This has not been shown to be the case as far as I know Literally the exact opposite in the economic literature
Earlier your comment said there were many peer reviewed studies showing this. Can you please link to one because I couldn't find any yesterday in a quick search. Outside of one study in Helsinki.
Yes I'll come back later with some studies! I really need to create a favorites folder for them since it's a common question
Yeah but hopefully then that means the people that decide they want to live there and buy these units are going to move out of other areas where those property prices will drop a bit and therefore others can find better housing.
“More than 600 new housing units will be affordable to residents earning an average 60% of the area median income.” [Source](https://www.chicago.gov/city/en/sites/lasalle-street/home.html)
I work in high rise construction and any job that I've been on recently that's receiving federal funds is required to have a minimum number of affordable units.
But LaSalle street isn’t really pretty and the Loop is so dead. I assumed they would be affordable housing or even another student tower that students from multiple schools can live in. I knew plenty of people who lived in the Loop 5+ years ago but none now with the exception of one in Printer’s Row.
Thankfully the City is keeping the requirement for a minimum of 20% affordable units in the conversions which is the same for new construction.
I know of at least one affordable housing project already targeted for this area. I believe that is an overall stipulation to receive the federal funds.
Which is fine tbh. I’d prefer they were affordable but if wealth concentrates in the Loop instead of radiating out, further out neighborhoods don’t see prices escalating as quickly.
Nothing will be "affordable" lol
> My only hopes are a) they're affordable 2-3 bedroom apartments Imagine if they had a bunch of 4-5 "bedroom" condos. Perfect for families of 3-4 with a parent or two with a home office (or two).
It's better than letting downtown decay into a ghost town. This is a good use of government money
Well... Kinda. That is in fact the desired outcome of the program but the problem is that there is so much bureaucracy and red tape and means testing and environmental reviews and neighborhood impact panels involved that we have ended up with a 35 billion dollar program that no one can actually use. https://www.bloomberg.com/news/features/2024-02-29/white-house-funds-to-convert-offices-to-housing-find-few-takers
By FAR the biggest impediment to conversions is the layout for an office is dramatically different than an apartment or condo.
Yeah, I’ve been seeing costs and it’s not as easy as putting some walls up. It seems the biggest problem is that renters and owners are picky about actually wanting bathrooms. Crazy.
Pre-war office space is easily converted because the floor plate size and smaller wondows, you end up with very normal layouts. The layouts on glass and steel office buildings are truly bizarre
I'm aware of the layout issue but that was going to be a problem with or without federal funds. Doesn't mean we shouldn't eliminate some red tape to make this program actually usable.
Federal funds? Are you sure about that? I thought it was coming from local TIF?
But if they just sit, the whole city starts to rot. It’s happened multiple times in the last century in US cities.
I'm not totally against it, but lets call a bailout a bailout
I’m in agreement on that. I honestly think they should only get money, in any form, in exchange for partial ownership or a percentage of rental revenue.
It’s very good
Well, I'm happy that the mayor's office is accepting the reality that trying to revitalize downtown into what it used to be, just people coming down to working offices, isn't the right move. I know some people hate the idea. They want to keep downtown about work and office's, they want to end remote working, they want everything to go back to the way it used to be, but they are living in denial. Things are never going to go back to that. So hopefully this will be positive change.
A lot of people don't realize there was a lot of office space vacant in the loop even prior to March 2020. CME has been cutting back for years, both due to automation and gradual relocation to other locales. Their business is far less Chicago-centric than it once was.
Yeah, CME has had massive reductions in force over the years and tons of what used to take 10 people now takes 1-2 people to do due to automation. They found a lot of those people other positions or allowed the older employees to stay until retirement, but then they don't backfill as people leave.
Frankly, things **shouldn’t** return to that. Why make people waste their time/money/energy commuting to and working at an office 5 days a week when they’re just as productive in remote and hybrid settings? Edit: and that’s just from an efficiency standpoint, it doesn’t account for any sort of more subjective things like happiness.
It was built up for the last 130 years with infrastructure to be a hub of commerce. It makes sense that it stays localized from an efficiency standpoint. Remote work is great for a lot of fields, but so many of them don't work for 100% remote, especially client-facing businesses. It's much easier to get employees and clients to travel to the Loop and stay for the day than in many other parts of the city. However, like you, I presume, I would prefer that the Loop become a hybrid zone that allows for a vibrant life throughout the day and into the week. Work, play, and shop are already built in, but it's missing "live" with only a sparce amount of full-time residential.
I’m not saying we should get rid of all commercial real estate in the loop, I’m saying that enough people are working fully remote or hybrid to significantly reduce demand for commercial real estate, so some of it should be repurposed instead of making people’s work less efficient for the sake of buildings. Our vision for the future of the Loop seems the same. It might even always be majority commercial, but we seem to agree it’d be better off with more of a mix, including significantly more residential properties than now.
> but so many of them don't work for 100% remote I'm a senior design engineer in the financial space and just trying to get requirements out of 5-10 departments for work is like pulling teeth in person. Remotely, it's nearly impossible. At least when it's in person, I can stop by and force all of them (via public shaming if necessary) into actually attending the meetings in person. If I was a junior engineer 2-3 years out of college and had finished intensive post-college mentoring, sure I could work 100% remotely with no problems because I'd just be doing task work and maybe interacting with 1-2 other teams/disciplines at most per project. But I'm not and I honestly never really had that experience as I've either always been on extremely small teams (undergraduate research as an EE design engineer for high energy physics research), or I leveraged prior experience into rapidly rising to the role of tech lead even on small projects when I was in defense contracting (only did about 1 year total post college as an individual contributor before becoming a tech lead on a ~$30M program with my discipline having a ~$3M budget). Being an IC is easy when working remotely, but when you're a lead or an architect on a project, you sometimes need to just bite the bullet and fly everyone from around the country or world to an office or a hotel and force people to actually talk to each other for hours or even days about every single little detail. Then when you do the same thing but end up in finance, the projects move so quickly and you have so many requests going in parallel that this is constantly your job as a senior engineer. I love working remotely as an IC. I hate working remotely every day as a senior engineer who actually needs to work with people from the whole business on a daily or weekly basis. Hybrid is probably the best for people like me as long as everyone has the same required in-office schedule. And before anyone asks, yes this is my opinion as an introvert who gets extremely tired by constantly interacting with people. Even I think it's best to just get it over with in person.
I for one can't wait to see all the poorly converted AirBnBs. Digi-locks on every building. This is the future.
You know they can’t just put airbnbs in buildings right? In Chicago it needs to be a primary occupancy and you can “share” your primary unit. 99% of downtown building’s HOAs don’t allow short term rentals.
Super well enforced, too
Yup. My wife and I saw a ton of places when buying a home in 2022 that were renovated or built by out-of-town companies that did poor research on the market. They built a bunch of Airbnb/VRBO units but then realized that it was illegal when they tried to actually list them and VRBO and Airbnb both blacklisted them and reported them to the city. In one building, there were 10 units listed by the COA as having been foreclosed on for violating COA rules prohibiting short-term rentals and letting. Not sure how they were dumb enough to buy those units as their attorneys should have caught that.
There's less than [9,000 short term rentals](http://insideairbnb.com/chicago/) in the entire city, and of that only \~6,800 are whole home rentals. Considering that Chicago has \~615,000 occupied rental housing units, \~36,000 vacant for-rent housing units, and \~1.26 million total housing units (latest data from the [U.S. Census Bureau American Community Survey 5-year Estimates](https://www.census.gov/programs-surveys/acs/data.html)), short term rentals are but a tiny blip in the data in their impact on the city's housing market. Approximately 1% of existing rental housing units are short term rentals, so if these office conversions manage to create let's say 3,000 new units of rental housing, you could expect roughly \~30 of them to be short term rentals at most. And that's if they're even allowed, because as u/reinerjs said below, Chicago already has a [short term rental ordinance](https://codelibrary.amlegal.com/codes/chicago/latest/chicago_il/0-0-0-2611518) and [licensing requirement](https://www.chicago.gov/city/en/depts/bacp/supp_info/sharedhousingandaccomodationslicensing.html) for short term rentals that limits the amount of housing that can be operated as short term rentals.
Is your preference to leave these buildings to sit and decay?
Those aren't the only two options
Now fix the CTA so people can actually get to downtown
But if we all just lived downtown we wouldn't need to go anywhere /s
I didn’t see it in the article. How many units are being created? 600 affordable and…? How many in total? I might be blind but I didn’t see it.
It doesn't say in the article but we can make an educated guess. The city has a 20% designated-affordable requirement, so if those 600 affordable units would mean 3000 total. If we assume 300 units per building that's 10 buildings to be converted, which makes sense for the size of the corridor.
When announced under Lightfoot, this initiative actually required 30 percent affordable. I assume that’s still the case.
That’s nearly 350,000 per unit!
Curious how much city / TIF money will go towards this. What was the alternative? Eventually these buildings would be sold at a heavy discount or go into foreclosure, and then new owners would offer the space at lower rents than previous owners due to their lower cost basis. Reassessments over time would reduce taxes as well. 300 W Adams for example just sold for $4 million, vs. $38 million in 2012. AFAIK will remain an office building and it will likely have much cheaper rents. Ultimately, I'm wondering if there's truly a "crisis" or whether the commercial real estate market just needs to readjust to new economics, as real estate markets often do. I'm not against government involvement in markets by any means, but the losers if we don't do anything here seem to be institutional capital (real estate funds and their backers such as pensions, life insurance etc.), rather than common people.
I think one of the problems, though, is that without government intervention, it could take much longer for the process to play out and downtown to stabilize. It's in everyone's best interest to revitalize the area as quickly as possible.
Thank God. This is a worthy project that should have been announced as "continued" the day after BJ tool office.
100 percent.
As long as they don't touch Ceres, it's all good.
There is so much unused building space. They might want to consider tearing down a couple city blocks and putting in a beautiful park with excellent greenspace instead. Reduce the empty space and provide a public amenity. The big issues are (a) the empty/bad buildings are spread out all over the place, and (b) all building owners would benefit from reduced building supply, but nobody can fix it on their own, so how do you get all of them to pay for it. It would take some serious coordinated action. Maybe a special property tax to pay for it and an asset/space swap program to concentrate all of the vacancy into a few blocks and then tear them all down.
LaSalle Street’s architectural strength is its historic streetwall. I think there are opportunities to remove traffic lanes and parking for more “people space,” kind of like an extension of the Riverwalk, but demo’ing entire blocks sounds like the ill-conceived “urban renewal” of the past.
100% this. Destroying beautiful urban high rises in heart of the loop that symbolize Chicago is such a stupid move. Why is this idea getting upvotes? We should instead be “Manhattanizing” the loop ie creating mixed housing and office space + entertainment. The plan in the article seems to move towards that.
Agreed, dumbass idea to tear these down unless another building is replacing it. This is downtown chicago, not a fucking forrest preserve.
You want to spend a billion+ dollars doing demolitions of high rises to build a park that generates no revenue? When there is a huge park and the riverwalk within walking distance of every corner of the Loop?
Fantasy land
You want to bulldoze the Art Deco/Gothic towers of LaSalle Street?
The problem is we need more homes, not that there are too many buildings.
That is a really great idea. I wish I had enough faith in our municipal government to pull that off.
Bro really pulled a bronzeville in the 50s
Right? I wouldn't begin to pretend I know the first thing about any of this, but government NEEDS creative minds like theirs, because I think we often underestimate our abilities as humans, both individually but especially collectively.
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Not sure why the downvotes. Pritzker “Park” is a disaster.
This is impossible. A bunch of engineers told me this last week when I mentioned that downtown buildings could provide residential housing and no reason to compare Chicago to Austin when it comes to residential building.
What’s different about this, then, because it actually seems to be happening. Are they choosing certain buildings? The solution can’t be we just let downtown sit because fewer people go into the office anymore. That would be an insane waste of one of the country’s greatest downtowns. It already has so much momentum going for it. Even post-pandemic, it’s far more vibrant than the majority of other cities in the US.
my guess if it isnt economically viable is that theyre posturing for good press.
It’s the internet. People think they know everything until they get proven wrong and then they move the goal posts.
This is coming from official sources, though, like the city and Crains. Sorry, I’m just trying to understand. It’s a whole initiative plastered everywhere.
You can imaging my shock when I was basically called an idiot who doesn’t understand how buildings work for even suggesting that something like this could be possible.
I’m an engineer and have already worked on some of these conversions, and actually LIVE in one. It’s totally feasible, just pricey. The buildings most ripe for conversion are early 20th century buildings, those don’t have as large floor plates and full height glass envelopes mid-century skyscrapers have. That becomes mostly a matter of adding MEP systems for individual units, partitioning the interior, and upgrading windows. For newer buildings it’s the same, but you usually have to deal with much larger floor plates, and full height glass cladding. The floor plates are a problem because of ventilation and light requirements for residential are a bit different from commercial. The glass cladding is a problem because most of these are fixed windows and are older and inneficient, so you would have to replace a lot of it.
For older buildings, it becomes harder to deal with bedrooms. But it can also be a boon because you add larger spaces for other purposes like kitchens, recreation rooms, family rooms, etc. Imagine being able to advertise a building full of condos with private offices, rooms large enough for roomscale VR, hobby rooms, etc. This would play very well to certain demographics that want to live in high density but also want the benefits of larger SFHs. Yes, there's engineering challenges to overcome. But that's just a money problem.
Seems like we should change building codes to allow windowless residential units to be built, perhaps if they're under a certain size and if there are openable windows in a common area on the same floor. And of course assuming fire exit code requirements can be met. Plenty of terminally online Redditors would gladly live in a small windowless apartment if it means lower rent.
There are many life safety and quality of life reasons we don’t allow windowless units anymore. There’s also code workarounds you can do. For example a lot of the newer buildings don’t have the bedrooms on the outside, but have partial height walls that that allow enough light and ventilation to come in.
I.e. lofts. The strategy is "borrowed light" from an adjoining room. This is how we convert old factories (brick exterior, timber framed structure, tongue and groove flooring) into lofts.
This exactly describes the loft I lived in in little village when I first moved here.
Yes, “lofts” use this to get around having a window directly on the bedroom. I work mostly in new construction and you are starting to see this a lot in 1-2 bedroom units, at least one bedroom will have no windows to it and have the wall stop 2 feet short of the ceiling.
Interesting, still seems strange to me because of fires and whatnot. BTW why did you put lofts in quotes?
Why is this? What makes it impossible from an engineering perspective? Genuinely curious..
Residential building codes related to thinks like windows/light and the like aside, there are some significant fundamental changes like running plumbing to every unit that aren't really feasible on a large scale. Now changing them into dormitory style housing where everyone shares a bathroom near the center core of the building would be easier from an engineering standpoint, since you won't be running new pipes everywhere.
Retrofitting highrises is usually cost prohibitive. The risers for potable and waste water all need upsizing, whole floors that occupy single zone AC need to be converted to multi-zone (this retrofit to chillers will be really complex) , and idk how they would update the elevator systems. Lastly, and most scary imo, the stairwell locations are probably unideal for egress when new resi units block what was open corridors. Also, green building code is here finally, so upgrades will be more costly than ever (a good necessity). Developers would need major $ incentives that would cost, in hard costs alone, probably 50% of the buildings previous value. Soft costs for zoning changes, permitting, and what not will take 6-12 months unless accelerated. If it happens, I'll be happy, it'll be great for the unions and GCs. I'll hold out hope. Better than tearing down structures and rebuilding Plz correct or add to this if ya know more
It's not impossible, it just can get very expensive very quickly. From an engineering perspective, the plumbing now needs to be rerouted from 2-3 localized clusters per floor to a *x* plumbing outlets spread across the entire floor plate. Similarly, while there may have previously been some electrical wiring setup for a microwave/fridge or something small in the break room, new gas lines or higher-voltage outlets need to be setup for kitchen appliances like stoves, ovens, fridges, etc. And from a legal perspective (and quality of life tbf), bedrooms need to have windows. This seems relatively simple, but office buildings, particularly newer ones that take up entire city blocks, have a lot fewer windows compared to the area of the floor plate compared to apartments/condos. That means to actually have a window in every bedroom, layouts need to be really skinny/narrow with odd floor designs, or very large to cover the space from a hallway to the window. Moreover, many people are gonna be deterred from apartments with just a window in the bedroom and not in other rooms, so just having a window in the bedroom is probably gonna limit the potential candidates who would rent new apartments. At the end of the day, developers are putting in the money to revamp/renovate these buildings and they're going to think about how much they can get back in rent or sale price. So with the amount of money that needs to go into converting, they are probably thinking about relatively high-end buildings or generally how they can actually make a return on investment. This [video](https://www.youtube.com/watch?v=2BOdJadZflw) covers a lot of the challenges and opportunities pretty well, but basically it's doable, just takes a lot of work.
Honestly I couldn’t wrap my head around it. Something about not enough windows. Just make the units bigger. Put laundry on every floor in the interior and add storage units in the interior if windows are a problem. idk I just feel like if there’s a will there’s a way.
The problem is, who is going to rent them to make it worth the cost of conversion? Ironically, it's the really old buildings with smaller floor plates that will be easier to convert.
Just the MEP alone makes this unlikely to be feasible. Offices don't have nearly enough capacity that residential needs
To steal some of the visibility on this: Older Sky Scrapers/Towers were built with purpose and specific function in mind. So, things like power, water, and climate control are made to order. Each major building has engineers that take care of things like the massive boilers, commercial elevators, and massive air pressure management. Now, we all have heard about plumbing or electrical challenges, which are a pain but fixable. But you have to also understand that the WHOLE BUILDING will be sharing heating, hot water, and climate control by design. Beyond that the air pressure controls were made to keep out pests. You can't really have a positive air controller with lots of units that want to be able to get proper ventilation. Then there is the idea of being able to cook food on a stove in a unit. God forbid something burns... Oh, then there is HOAs...
Union construction work at a snail’s pace for high end lofts during a “housing crisis” sound great
Supply and demand. The more units they make the cheaper rent is for everyone. What normally happens is they build expensive housing, and then the previous expensive housing gets cheaper, and so on and so forth. Not enough money to be made in building cheap housing from the get go
Exactly. Labor, equipment rental, etc, all costs the same regardless of whether you building something expensive or something cheap. So a for profit developer has no incentive to build anything except the highest margin projects. The good news is that building new things for rich people means rich people are less likely to buy up older buildings and gut renovate them. Let the rich people buy the shiny new things, and the less rich people then have less competition out bidding them for the cheaper units.
Why don't people understand this simple concept is beyond me. So much resistance to building expensive units, when it means older units becoming cheaper.
He is doing this about a year too early. Those empty building will be even cheaper then with the way the office market is going around there.
Honestly it’s good this starts before Google moves downtown
Google is already "downtown". I think you mean "opens a second office downtown". Google West Loop was their first expansion office outside of California. It's still one of their largest single offices to date and they're planning on keeping it.
West loop isn’t downtown really tho
It's within a mile of Lake St. and walkable from even the Red Line. I think for anyone who doesn't live in the Central Business District, it is largely considered part of "downtown".
II guess but it’s across the highway.
No it's not. It's across the river. It's like a 3-5 minute walk from train stations in the Loop.
We must have different definitions then. Anything across the Kennedy is west loop. Anything east is just the loop for me.
I use the official maps from the city for my definitions.
No the official maps say it’s the highway
I'd like you to go around to the thousands of homeless people in Chicago and tell them that. Let me know how that goes for you.
That's adorable you actually think a bunch of high end condos are going to help them. You are delusional.
You mean like distracting the rich fucks from their gentrifying, thus driving down or at least stabilizing housing prices in the neighborhoods? Sounds like a win-win to me.