Chicago Governor Shifts to Pro-Business Steps to Save its Downtown District

Although economic trends such as weakening demand for office space, higher interest rates, and difficulty securing refinancing have afflicted the central business districts in many major U.S. cities, “by one measure, Chicago’s is the hardest hit.” According to reported KBRA Analytics’ statistics, “three-quarters of the mortgages backing its [Chicago’s] office space that were converted into securities are either in default or are at risk of default — the highest of any major metropolitan area in the nation;” office vacancy increased nearly 37% from early 2020, reaching 16.3% — higher than the 13.8% U.S. average per reported Costar Group data; and “some downtown office buildings have sold for less than one-quarter of what they were valued at a few years ago.” A plan for office-to-residential conversions originally proposed by the current governor’s predecessor will now move forward under the current administration. As part of the plan, the “city will provide $150 million to property developers to convert four buildings in the heart of the business district to more than 1,000 apartments, as long as about one-third are set aside as affordable units.” While pro-business initiatives such as this have become more widespread in other major U.S. cities, “most analysts agree that conversions can fill only a fraction of the 1.17 billion square feet of vacant U.S. office space.”