Chicago leading the way to convert offices to residential! Won't work.
Real estate prices in Chicago's suburbs are moving up as people don't want to live downtown. People aren't into the high crime, blah blah blah when they can either work remotely or come in 2-3 days per week. So increasing the supply of urban housing is going to fix this? No, it will further drive down rents and the value of urban real estate. Ergo excess supply.
Chicago will be at the forefront of turning office buildings into apartments in the coming years, a new report shows.
Why it matters: Cities across the nation with fewer commuters and shuttered businesses are scrambling to revitalize downtowns in a post-pandemic world.
Driving the news: Roughly 70% of the units in Chicago's pipeline for conversions will be repurposed office spaces, exceeding the share in Los Angeles or New York City.
That's according to the report by RentCafe, which analyzed data from commercial real estate intelligence service Yardi Matrix.
Zoom in: The push comes as downtown Chicago foot traffic is at 52% of pre-pandemic 2019 levels, Axios' Alex Fitzpatrick and Kavya Beheraj report.
What's happening: Chicago has announced an initiative to revive the financial district along LaSalle Street, which last year logged the highest post-pandemic vacancy rates in the Loop.
The effort includes offering city financial assistance for proposals that will develop more than 1,600 mixed-income housing units.
Be smart: There's still demand for high-quality offices, says Ralph Zucker, CEO of the development firm that's transforming AT&T's former campus in suburban Hoffman Estates into a sprawling hub of work, residential and entertainment space.
What they're saying: Bell Works Chicagoland has proved particularly appealing to commuters (who want to work closer to home), suburban workers (who are reluctant to return to outdated offices) and those who want perks like a bar, cafe and pickleball courts close at hand, Zucker tells Axios.
The revamp has attracted more than 250,000 square feet of commercial leases since its inception in 2018, according to Inspired by Somerset Development, which plans to start building 164 high-end townhouses and about 300 apartments in spring 2024.
What we're watching: The conversion trend is poised to grow as more cities roll out incentive programs, according to Steven Paynter at Gensler, a global design and architecture firm.