Monthly Archives: March 2015

Chicago named top metro area for business location

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For the second straight year, Site Selection picked the Chicago metropolitan area as its top metro of the year:

In fact, 385 companies either expanded or located in Chicago in 2014, resulting in the city being named Site Selection’s Top Metro in the US for the second straight year. The consecutive wins are a pleasant endorsement, says Jeff Malehorn, president and CEO of World Business Chicago…

Chicago’s appeal is hardly surprising. The city’s boasts outstanding transportation and logistical assets, including two international airports, a rail hub and seaport, and stands at the crossroads of major Interstates. Chicago and the region are home to a wealth of talent educated at some of the nation’s premier colleges and universities. Foreign companies looking for a US home are drawn to the city’s diverse ethnic population. “Any company outside the US can look to Chicago and see a home,” says Malehorn.

Project highlights for Chicago in 2014 include:

  • Valence Health — a health services company based in Chicago adding 500 jobs over the next five years;
  • Yelp — the online review and advertising site based in San Francisco, Calif., is opening an office in Chicago and plans to hire 300 employees;
  • Braintree — the global payments platform expanded into a 65,000-sq.-ft. (6,000-sq.-m.) headquarters on the eighth floor of the Merchandise Mart. The company is adding 360 new jobs by 2017.
  • ADM — the food services company opened its new global headquarters in downtown Chicago in August 2014…

In figures released in January, Chicago posted its lowest unemployment rate since April 2008, 6.2 percent. The number of city residents employed in December 2014 increased by more than 38,000. The jobs were mostly attributed to professional and business services, education and health service and transportation and warehousing. Malehorn says diversity is a theme in Chicago’s growth, but so is innovation and disruption.

I wonder how the city’s critics would respond. Even with a perilous budget, state issues, Chicago corruption, and cold weather, Chicago continues to be a desirable site for business. They might say that this all happens in spite of the problems..but how would we know? Regardless, this is another piece of evidence that Chicago deserves its lofty ranking among the top global cities in the world.

Americans spend more at restaurants than at grocery stores; use restaurants in new ways

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Spending data from the Census shows that for the first time Americans spent more at restaurants than on buying food at grocery stores:

More than two decades ago, Americans spent $162 in groceries for every $100 they spent in restaurants. But this past January, they spent nearly equal amounts of money in both places: $50.475 billion in restaurants and bars, and $50.466 billion in grocery stores.

There are several social changes behind this:

Perry attributes the numbers to dropping gas prices, which have left many people with more disposable income. But it’s unlikely that a single factor is to thank for the trend. “I think it’s a combination of a recovering economy and changing eating habits,” he said, extrapolating that “the millennial generation [may be] more likely to eat out than cook at home.” Perry also noted that dining in restaurants simply isn’t the once-in-a-blue-moon event it used to be…

Martha Hoover, the founder of sprawling Indianapolis restaurant empire Patachou, goes one step further: Restaurants have earned a role in society that is equal to “work” or “home.”…

“We’ve seen a huge shift in San Francisco,” she told Yahoo Food. “I’ve seen people who treat restaurants like they do in New York City: as their kitchens.” Weinberg attributes the change to people working longer hours, leaving them with little time to prepare their own meals. Grocery shopping, too, can be a pricey proposition if one develops a predilection for organic and local fare.

In other words, home and family life has changed alongside different economic options. We might also see restaurants more as “third places” between work and home where people can socialize and pay for their meals in a comfortable in between space.

97% response rate for American Community Survey

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The Census Bureau regularly collects data through the American Community Survey and it has a high response rate:

“Since 2005, the American Community Survey has produced an annual overall survey response rate of around 97 percent,” says James Treat, chief of the American Community Survey Office. He compares filling out a survey to serving on a jury, paying taxes or getting a valid driver’s license.

The Census Bureau can do more than push patriotic buttons to persuade people. Under Title 13 of the U.S. Code, a person who willfully ignores the survey can be fined as much as $100. That fine could be as high as $500 if you lie — maybe claim to access the Internet through a “mobile broadband plan” because you don’t want to admit to having a “dial-up service.”

Treat says the Census Bureau has a thorough procedure to check for inconsistencies and inaccuracies and that people don’t need to worry about their private information being shared with immigration officials, cops, the IRS, employers or cable-service providers.

Given concerns today about survey fatigue, this response rate is astounding. It is a good thing since the data is used by all sorts of government agencies as well as researchers. Even though the ACS draws occasional attention from lawmakers who want to cut budgets, it also doesn’t rise the same kind of ire compared to the dicennial census and its massive undertaking.

American cities to have driverless cars by next year

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It won’t be long before some major American cities feature self-driving cars:

Automated vehicle pilot projects will roll out in the U.K. and in six to 10 U.S. cities this year, with the first unveiling projected to be in Tampa Bay, Florida as soon as late spring. The following year, trial programs will launch in 12 to 20 more U.S. locations, which means driverless cars will be on roads in up to 30 U.S. cities by the end of 2016. The trials will be run by Comet LLC, a consulting firm focused on automated vehicle commercialization…

He explained that they’re focusing on semi-controlled areas and that the driverless vehicles will serve a number of different purposes—both public and private. The vehicles themselves—which are all developed by Veeo Systems—will even vary from two-seaters to full-size buses that can transport 70 people. At some locations, the vehicles will drive on their own paths, occasionally crossing vehicle and pedestrian traffic, while at others, the vehicles will be completely integrated with existing cars…

In addition to the first test site set for Tampa Bay, they’re looking to implement two more projects in Florida. The Comet team is also planning trials in Greenville, South Carolina and Seattle, Washington, where the 70-person buses will be used in public transit.

At 25 to 40 percent cheaper, the cost to ride the driverless public transit vehicles will be significantly less expensive than traditional buses and trains, according to Mr. Clothier. They’ll also be far less expensive to operate. The vehicles are electric, rechargeable and could cost as low as $1 to $3 to run per day.

I used to think people would find such vehicles disturbing at first but I wonder if people will even take a second long by the time these come along. And, even if they are bothered or it takes some time to get used to, people would definitely like the cost savings, safety, and dependability. Now, whether the cost savings would be passed on to mass transit riders is another matter…

Just how much is the Willis Tower worth?

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News is that the Willis Tower in Chicago is up for sale and one insider suggests it could go for $1.5 billion:

The owners of the Willis Tower have hired Eastdil Secured to seek a sale, according to an offering book already given to potential buyers. The property’s owners are being advised in the deal by Chicago-based Stephen Livaditis and New York-based Douglas Harmon, senior managing directors at Eastdil, according to the materials…

Chicago is coming off the strongest year of office building sales downtown in seven years. Boosted by low interest rates, a strong real estate appetite for U.S. real estate by domestic and international investors and comparatively higher pricing in coastal cities such as New York and San Francisco, Chicago in 2014 experienced some of its biggest office deals…

Industry newsletter Real Estate Alert, which first reported Willis Tower was being shopped, estimated it could sell for about $1.5 billion. That would be almost $400 for each of the tower’s nearly 3.8 million square feet of office space.

But because of its huge size and unusually broad sources of revenue, experts say Willis Tower’s value is more difficult to pinpoint than a traditional office property.

Sounds like a thriving market right now. Building occupancy is up in recent years and several other large office buildings have sold for high prices in the last year or so.

It would be fascinating to see what happens if the name changes again. How would Chicagoans react? The Willis Tower switchover never completely happened – hard to believe that was over 10 years ago now – so would a new name work? We are not there yet but could be headed toward a world where major buildings consistently change names as they change owners or even develop sponsorship deals to have particular names?

Trying to revive wood skyscrapers

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The idea of constructing high-rises out of wood and other sustainable materials may just be gathering steam:

This week, an ambitious proposal for the world’s tallest wooden skyscraper was unveiled in Vienna, Austria. The 275-foot, €60M timber building will be built next year, and follows in the low-carbon footsteps of recent timber structures in Canada, Australia, and England. The idea of fashioning tall towers from the earth’s natural materials, and not concrete or steel, first began gaining traction in 2013, when the Canadian architect Michael Green introduced the concept to the wider world via a TED talk that has now been viewed more than a million times. “I believe that wood is the most technologically advanced material I can build with,” Green said in his talk. “It just happens to be that Mother Nature holds the patent.”…

Unlike concrete and steel, synthetic materials that together represent eight percent of man’s greenhouse gas emissions, wood has the opposite effect: it takes in massive amounts of carbon dioxide, an obvious upside when cities are growing ever denser. “One cubic meter of wood will store one tonne of carbon dioxide,” Green explained in his TED talk…

At the time when Green gave his talk, the world was home to at least two existing timber structures that could have been considered towers: the Stadthaus residential building by Waugh Thistleton Architects in London, which has nine stories, and the Forté apartment complex in Melbourne, Australia, designed by Lend Lease developers with ten floors. Both buildings were made from panels of cross-laminated timber, which is a form of engineered wood that was originally developed as an alternative to stone and masonry. Unlike typical 2-by-4s, these panels made from many pieces of wood glued together are enormous, around eight feet wide and 64 feet long…It’s also fairly difficult to get cross-laminated timber to catch fire, which appears to be the main concern of supervisory bodies in cities where architects are attempting to use the material in their buildings. Vienna, which will soon have the tallest structure of this sort, has instructed its fire service to conduct special tests on the new building, which will already be required to install more sensitive sprinkler system than those required for other towers.

As the article notes, the main feature appears to be the reduction of carbon use compared to construction with cement and concrete. But, this might also draw the attention of architects less interested in the sustainability but intrigued by another medium with which to innovate. It could be fascinating to see the mix of mediums within a single skyline – imagine the glass skyscrapers of today next to wooden structures that have a entirely different feel.

For Americans, someone else is always a rich person

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Perhaps this is not surprising in a country where almost all claim to be middle class: Americans suggest someone else is the one who is truly rich.

Richard Reeves of the Brookings Institution, who has made this quirk of our class identities into a hobby horse of sorts, recently put together a nice illustration of what he calls our national, “Me? I’m not rich!” problem. In 2011, Gallup asked Americans how much income they needed to be “rich.” In general, they answered some amount that was higher than whatever they made. Most people who earned $30,000 a year or less thought you could be rich making under six figures. A majority of those who earned between $30,000 and $99,000 thought you needed to cross the $100,000 threshold. You get the idea.

reeves_rich

Brookings

None of this is especially surprising. People don’t generally think about living standards in absolute terms. They think about them relatively, and tend to compare themselves with their peer group. And because most of us know at least a few jerks with a bigger house, nicer car, and more interesting-looking vacation photos, it’s easy to conclude that, no, we ourselves are not truly rich. I’m making fun of Americans for it, but my guess is it’s near universal. It just happens to be a problem in the U.S. because, as Reeves writes, those of us who think we should be paying taxes at all tend to believe the rich should be the ones shelling out. That’s a political problem when there are apparently no rich people to be found.

I’ve seen this at work in numerous settings where Americans fall over themselves to claim that they don’t have as many resources as it appears they might. This could involve a discussion of McMansions and how everyone knows someone else who lives in such a garish house while they would never consider such a thing. Or it could be in a discussion of students or staff at a private college where everyone acts like they don’t have any spending money. There are powerful social incentives to not declare oneself rich even when objective measures put people at the higher ends of the social class ladder.

I wonder how much particular actions of the wealthy could mitigate their own admittance at being rich. Take Bill Gates. Fabulously wealthy and well known for this but he has also spent a lot of money on philanthropic ends. Does this take away the negatives of being rich? Warren Buffett is cited in this article as someone who claims to be rich. Does he do anything to offset that image or is it okay if you became rich through building your own financial empire (just American hard work)?

Chicago area apartment market continues price increases

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With homeownership still moving downward in the United States, the apartment market in the Chicago suburbs keeps going up in price:

The median net rent in the Chicago suburbs rose to $1.29 a square foot in the fourth quarter, another record, up 4.7 percent from a year earlier, according to a report from Appraisal Research Counselors, a Chicago-based consulting firm. The occupancy rate was 95.3 percent, versus 95.1 percent a year earlier.

Suburban rents have increased five years in a row—they rose 21 percent over that period—as more people have held off on buying a home, either because they can’t get a mortgage or are wary of owning after the housing crash. More recently, the improving job market has boosted demand for all housing, and apartment landlords are getting their share.

On the supply side, new developments are sprouting up from Naperville to Northbrook. Developers completed more than 3,300 apartments in the suburbs over the past year, the most in a decade, and another 2,700 are under construction, according to Appraisal Research…

Yet the revenue side of the equation is about as good as it gets for suburban landlords. Market revenue performance, a metric that combines the occupancy rate and median net rent, hit $1.23 in the fourth quarter, the highest it’s ever been, according to Appraisal Research.

An interesting housing market these days. Starter homes are not being built. New McMansions are back even as older McMansions sell briskly. People are considering disaster chic. The luxury market is booming in big cities like New York.

If apartments are indeed popular because they offer more short-term flexibility, how many suburbs will allow the construction of many apartments? Historically, wealthier suburbs in the Chicago area tend to avoid apartments and their more transient residents. So, I would guess most of these new suburban apartments are actually higher end, the kinds of places appealing to young professionals or the just retired and often located near cultural or transportation amenities like denser downtowns and train stations. If so, more expensive apartments don’t help many in the housing market who still need reasonably priced and conveniently located housing in the Chicago region.

Did we already pass “peak urban millennial”?

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Joel Kotkin discusses the demographic data that shows the bulk of millenials are near their 30s – and possible lives in the suburbs.

Some of this simply reflects the aging of millennials. As Jed Kolko at the real estate website Trulia has pointed out, the proclivity for urban living peaks in the mid-to-late 20s and drops notably later. Over 25 percent of people in their midtwenties, he found, live in urban neighborhoods; but by the time they move into their midthirties, it drops to no more than18 percent.

The impact of the aging process – the maturation, however delayed, upon millennials – will soon become acutely obvious to all but the most emotional retro-urbanist. In 2018, according to Census Bureau estimates, the number of millennials entering their 30s will be larger than those in their 20s, and the trend will only get stronger, with the numbers tilting ever more in favor of the thirtysomethings. Kolko suggests that we may already have passed “peak urban millennial.”

And then Kotkin goes on to try to bust other stereotypes about millennials. Both he and the other side – such as those who tend to argue that smart growth will inevitable win out behind the tastes of younger Americans – can cite some data and make some predictions. Perhaps Kotkin has the easier selection: he suggests millennials will follow the geographic inertia of their ancestors (even if they do have some other social differences) while his opponents are looking for a big break from the past.

But, it is interesting to note that we may only be a few years away from settling this debate if the bulk of millennials are then in their thirties. Unless emerging adulthood keeps getting extended for this group, they will be expected to have made their “adult” decisions soon. Will they choose cities and denser suburbs or will they continue to prefer more space relatively far from dense population concentrations?