Category Archives: Places

Foreign investment in Chicago real estate reaches record high

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Chicago was an appealing city for international real estate investors in 2015:

Chicago’s continuing rise to prominence on the world stage was further boosted by the latest figures indicating that 2015 will not only be a banner year for new construction and hotel occupancy, but a record-breaking period for foreign real estate investment as well. 2015 saw $3.27 billion of new overseas capital flow into the Windy City, according to recently published report by Crain’s Chicago Business, a figure that shatters the previous record of $2.18 billion set in 2013. Citing data from New York-based Real Capital Analytics, Crain’s reports that foreign buyers accounted for roughly 16 percent of Chicago’s total $20.2 billion of real estate sales this year. Chicago now ranks as the fourth largest market in the nation for foreign investment — up from last year’s eighth place — and trails behind only New York, Los Angeles, and Washington D.C.

These positive figures are attributed to several factors. Oversaturation of traditionally stronger coastal markets has driven up prices to the point where commercial investors are often finding more lucrative opportunities in Chicago. Chicago is seen as a somewhat riskier choice for firms taking on commercial properties due to the relative ease at which new buildings can be added and tenants relocated — similar to CNA’s announcement earlier this week — but foreign buyers willing to take on this risk have enjoyed greater returns. In 2015, investment in Chicago saw first-year rates of return (“capitalization rates” for you finance-minded folks) averaging 5.1 percent, outperforming the 4.1 and 4.7 percent yearly yields of Manhattan and San Francisco, respectively.

While this sounds like good news (more capital flowing into the city and the potential for these investments to lead to other deals), I could imagine two downsides:

  1. This recently happened in Chicago, but it wasn’t the first city of choice for international investors. It is suggested here that investors are now turning to Chicago because the more desirable markets – NYC, LA – are oversaturated. So, this may confirm that Chicago is still the third city – or maybe even the fourth city if you include Washington, D.C. This may just feed the anxiety some in Chicago have of their place on the world stage.
  2. Even as investment from outsiders is viewed as good, would investment from foreigners be viewed as positive by all in Chicago? Americans occasionally have periods of fear that people from other countries are taking over and Chicago is a more parochial/less cosmopolitan market than some on the coasts. Foreign investment may be good but do Chicagoans like the idea that others are benefiting greatly off the Midwest?

Quick Review: The Third Coast: When Chicago Built the American Dream

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Thomas Dyja has a provocative argument in The Third Coast: while New York and LA are widely viewed as America’s cultural centers, Chicago of the mid-1900s contributed more than people think to American culture. My quick review of the book:

  1. The fact that the book is built on impressionistic vignettes is book its greatest strength and weakness. Dyja tells a number of interesting stories about cultural figures in Chicago from author Nelson Algren to Bauhaus member László Moholy-Nagy to University of Chicago president Robert Hutchins to puppeteer and TV show creator Burr Tillstrom to magazine creator Hugh Hefner. The characters he profiles have highs and lows but they are all marked by a sort of middle America creativity based on hard work, connecting with audiences, and not being flashy.
  2. Yet, stringing together a set of characters doesn’t help him make his larger argument that Chicago was influential. We get pieces of evidence – an important contribution to television here, the importance of Chess records, a clear contribution to architecture there – but no comparative element. By his lack of attention, Dyja suggests Chicago didn’t contribute much – art is one such area with a lack of a vibrant modern art scene (though what TripAdvisor ratings say is the world’s #1 museum does not get much space). Just how much did these actions in Chicago change the broader American culture? What was going on in New York and LA at those times? The data is anecdotal and difficult to judge.
  3. A few of the more interesting pieces of the book: he suggests Chicago contributed more to the Civil Rights Movement than many people remember (particularly due to the Emmett Till case); Chicago music, particularly through Muddy Waters and Howlin’ Wolf, was particularly influential elsewhere; Mayor Richard J. Daley was on one hand supportive of the arts but only in a functional sense and the arts scene slowly died away into the early 1960s as creative type went elsewhere.

Ultimately, it is hard to know whether these contributions from Chicago really mattered or not. The one that gets the most attention – architecture through former members of the Bauhaus and then the International Style – probably really was a major contribution for both American and global cities. But even there, the focus of this book is on the people and not necessarily on their buildings or how normal Chicagoans experienced those structures or how the changes fit within the large social-political-economic scene in Chicago.

Photographing affordable housing in New York City

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With the expense of Manhattan and a booming luxury market in NYC, one sociologist shows what affordable housing looks like:

Garbage-strewn common areas, ominous graffiti, the twitching fluorescent stairwell lighting — these are the images most often associated with public housing. Even privately owned affordable housing is often seen as something bland and tiny you settle for, not aspire to. But David Schalliol, a photographer and sociology professor in Minnesota, sees a shift toward something that goes beyond the cliché…

In New York, however, he found that there was much more to the story. “Affordable housing means so many different things in New York City,” he said, citing developments, like Co-op City in the Bronx, that helped give the city a reputation for finding innovative ways to provide decent housing to middle- and working-class families.

Mr. Schalliol surveys this landscape in a new anthology, “Affordable Housing in New York: The People, Places and Policies That Transformed a City,” from Princeton University Press…

“One of the aims of this book, this project, is not only to demonstrate the wide variety of these developments, but also the common experience within them,” he said. “But it’s where people make their homes, where they meet their friends. They don’t just come home, they’re actively producing community.”

It would be interesting to see what sort of argument Schalliol makes in this book. The photos provided with the article suggest the people in New York City’s affordable housing are just trying to live a normal life. Yet, collections of photographs can counter stereotypes and help the broader public see what affordable housing really looks like. Perhaps the images could even help people see that having affordable housing nearby will not necessarily ruin their property values and lives.

Calls for a special census as Naperville continues to grow

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There is some evidence that Naperville has grown since the 2010 Census – and a special census would be able to prove it.

This would be the first special census in Naperville since 2008 and would follow other special counts taken in 2003 and four times between 1990 and 2000 during a period of major expansion…

Some subdivisions on Naperville’s southwest side are still filling with residents and the city has approved a few new housing developments in recent years…

“If things in Springfield were normal, which they haven’t been for a long time, each additional body would have been worth $100,” Krieger said. “This year there has been a lot of discussion about reducing that amount.”

Conducting the special census could cost between $80,000 and $140,000, depending on how many census tracts the city decides to count. Officials would want to be certain a tract has seen enough new residents — based on building permits and occupancy certificates — before counting it.

It sounds like this is all about money: proof of more residents = more state dollars. Many communities could use such cash but as this story points out, there has to be enough growth to outweigh the costs of conducting the census. I don’t believe I’ve ever seen the reverse where communities conduct a census to track population loss; that would be a double cost.

Another note: population growth can translate into funding but it can also add to a community’s image. If it hasn’t already, Naperville is very close to being a built-out suburb. Yet, we generally have the idea in the United States that good communities are growing communities. A special census could suggest Naperville is still attractive.

Like many cities, Cincinnati once had a thriving streetcar system

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Cincinnati was one of numerous big American cities that once heavily relied on the streetcar:

They were everywhere. For nearly a century — from the 1850s through the 1940s — streetcars were the most common way for Cincinnatians to get where they were going.

According to a report to common council in 1887, Cincinnati City Clerk Edwin Henderson said council had filed more than 70 ordinances relating to “street railroads” to date, and Henderson’s report detailed 25 routes in service at the time.

At their peak, Cincinnati’s railway companies offered commuters dozens of streetcar routes with nearly 250 miles of track.

Compared to other transportation options of the time, streetcars had numerous advantages: more consistent and producing less visible waste than horses, they were less noisy and followed street patterns compared to trains, and were faster and offered a larger range than walking. Streetcars opened up all sorts of new areas to development as residents could travel further on their daily commutes or regular trips.

Outside of the occasional attempt to revive a streetcar line, often for tourism purposes, most cities today do not contain visible evidence of the popularity of streetcars. Cincinnati is a city that is trying: a plan is in the works for a 3.6 mile loop that connects employment and residential areas. Still, across the broader city and region, cars reign supreme with their ability to go anywhere and offer drivers individual choices.

Chicago keeps a low residential property tax rate to keep residents?

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As the Chicago Tribune highlights the low residential property tax in Chicago compared to nearby communities, could this be a tactic to stem the population decline of the city?

Chicago homeowners pay less in property taxes than the vast majority of their suburban neighbors, even with Mayor Rahm Emanuel’s record property tax increase applied. But business properties are taxed differently in Cook County, resulting in higher tax rates on those parcels in Chicago than nearly all collar county suburbs. Those conclusions emerge from a Tribune analysis of tax rates applied on 2015 bills in 388 city and suburban locations in Cook and the five collar counties.

While housing owners pay less, the business owners of Chicago pay more than their counterparts in the suburbs:

The story is different, however, for those who own city manufacturing plants, offices and shopping centers. They already pay more in property taxes than their counterparts in most suburbs outside Cook County. That gap will only become wider after Emanuel’s tax hike, with Chicago business property owners being taxed at higher rates than those in all but seven collar county towns…

There are plenty of collar county suburbs with room for all types of business development that start to look even more attractive than Chicago, at least in terms of property taxes. In places like Joliet, Downers Grove and Naperville, tax bills on business properties would be half that of equally priced parcels in the city…Deputy Mayor Steve Koch dismissed the business tax differences found in the KPMG study, saying they were not enough to sway business location decisions. He noted recent decisions by Motorola Solutions to move to the city from Schaumburg and ConAgra Foods to move to Chicago from Omaha, Neb., when everyone knew the big property tax hike was coming.

The Tribune suggests one reason for the low residential property tax rates is to not anger voters:

“Because we didn’t have in our leadership the political will to actually tell taxpayers and voters that (more money was needed), frankly folks were sold some snake oil, and they got to believe they could have very low taxes and still have adequate service, and after a while that doesn’t really work,” Martire said. “They should have been (raising property taxes) for a long time, and the pain would have been significantly lower.”

Politicians do need votes. But, to return to the suggestion I made in the opening sentence, I wonder if this is also about keeping residents in Chicago. City leaders argue that businesses are not going to avoid Chicago just because of higher taxes. Chicago has other benefits including other notable businesses, lots of office space, lots of human capital, and numerous attractive cultural and entertainment options. In other words, enough businesses will pay these higher property tax rates in Chicago because there is still money to be made in the city.

Yet, homeowners also consider property tax rates as they look for housing. While Chicago doesn’t suffer from the kind of affordable housing issues as San Francisco or Manhattan, it is still quite expensive in some neighborhoods while suburbs throughout the region provide all sorts of additional housing options as well as jobs and other amenities. Why should many residents stay? Lower property tax rates may just help. And for its international prestige – the seventh-rated global city – Chicago has lost plenty of people in recent decades with a peak of just over 3.6 million in 1950 to just over 2.7 million people today.

Votes and people staying could go together: residents who think the politicians are on their side and then show it by not raising their residential property taxes may be more likely to stay in Chicago.

Thorium contaminated soil out of West Chicago; still groundwater

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Earlier this week, the last thorium contaminated soil was shipped out of West Chicago:

After more than 30 years and $1.2 billion worth of cleanup work, the final rail cars filled with contaminated materials from the former Kerr-McGee factory site in West Chicago have been shipped out of town.

Mayor Ruben Pineda said the occasion is cause for celebration. On Tuesday, he gathered with officials from the Environmental Protection Agency, the Department of Energy, Weston Solutions, DuPage County and other organizations that have helped with removing thousands of pounds of thorium waste produced by the factory. They watched the rail cars head to Utah, where the materials will be buried in the desert.

However, this is not the end of the thorium saga:

Although the soil is gone, city officials said they are waiting for the federal government to provide about $32 million to resolve issues with the contaminated groundwater at the site.

“We still have a lot of work to do out there,” Pineda said. “If we were to get (the $32 million), we could finish the project relatively quickly and (the factory site) would turn into a beautiful park.”

Both parts of this process – removing the soil and finding the funds to completely finish the job (see earlier posts on the long search for funds) – have been lengthy.

With an end in sight, I wonder how long it will take for the idea that thorium is part of West Chicago’s character to dissipate. This has been an ongoing issue for over four decades and this industrial, working-class suburb has often attracted certain attention because of the radioactive material. But, once the thorium is gone for good, those who lived in the community will move away or pass on and newer generations have little or no understanding or experience with this part of the community’s past. Will the community want to remember how it came together to get the thorium out or would it be better to just forget the whole episode and its negative connotations?

Taking a meat axe to Manhattan for a highway

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This retelling of efforts to build a highway across lower Manhattan include this graphic description of what Robert Moses was proposing:

Even Moses acknowledged that his methods were extreme. In fact, he had a term for it: The meat ax. New York, he argued, was already so dense and complex that you had to make cuts somewhere. Sure, other newly-planned metropolises could preserve history and make sure everyone was happy. But according to Moses, New York City needed drastic measures, as he argued in a quote from The Power Broker:

“You can draw any kind of pictures you like on a clean slate and indulge your every whim in the wilderness in laying out a New Delhi, Canberra and Brasilia, but when you operate in an overbuilt metropolis you have to hack your way with a meat ax.”

Imagine a bureaucrat saying that today! It was a time before preservation and urban advocacy existed in organised form. Preserving the grit of the city was a laughable idea — the city needed to be purged of its dirt, not protected…

This strange, antiseptic mindset can be traced alllllll the way back to Europe at the turn of the century, when academics and architects first started thinking about cities as living networks. The sociologist Georg Simmel, writing in 1903, was the first to really describe how cities affected the mental outlook of their inhabitants — city dwellers, Simmel reasoned, were blasé, even neurotic, because of the impersonal, overwhelming, and money-obsessed demands of the city.

But to the architects of 1920s and ’30s Europe, the city wasn’t just neurotic. It was actually sick. The thinking went that a city’s ills — crime, poverty, you name it — could be linked to its poor design its thoughtlessly narrow alleys and dirty streets, its crumbling tenements and poor plumbing. Le Corbusier described “the Cancer of Paris,” as Andrew Lees recounts in his book about the urbanism of the time.

If cities or neighborhoods are diseased, planners and others can justify all sorts of actions. Urban renewal in the mid 1900s operated on a similar premise: slums (often home to non-whites or immigrants) could not be redeemed and instead should be replaced with land use that would be much more valuable (and make a lot more money for developers and politicians). Why should older buildings or poorer residents stand in the way of progress for the city and region? Thus, many American cities moved forward with plans that did what Moses suggested: used a meat axe to chop away land from existing neighborhoods for highways, high-rises, and other land uses. While some of these projects have since been reversed (think the Embarcadero Freeway in San Francisco) or others never got off the ground (see freeway protests as detailed by historian Eric Avila), other projects continue to influence city life. In Chicago alone, think the major expressways in the city including the Eisenhower, the Dan Ryan, and the Kennedy as well as the University of Illinois at Chicago campus.

How Chicago became “the alley capital of the country”

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Chicago has a lot of alleys and here is how they came to be:

According to Michael Martin, alley expert and professor of landscape architecture at Iowa State University, the “why alleys” question is easy to answer. You just have to go back to the late 1700s, decades before Chicago was founded. America was young, and had hardly touched any of its newest territories to the west…

According to cartographer and Chicago history buff Dennis McClendon, alleys had become so commonplace in the American West that the Illinois General Assembly “simply expected it to happen in Chicago.”…

The I&M Canal Commission hired surveyor James Thompson to lay out Chicago at the eastern end of the canal in 1830. To attract prospective land buyers, the General Assembly ordered that the new town of Chicago be “subdivided into town lots, streets, and alleys, as in their best judgment will best promote the interest of the said canal fund.”…

For its boom years in the 1800s, Chicago was an alley monster; it planned new blocks with alleys, annexed towns with alleys, and added territory to its alley-riddled gridiron. But all grid things must come to an end, and soon communities started popping up without alleys.

The first of those communities arrived in 1869. That year, Frederick Law Olmsted — the father of landscape architecture (and who later played a huge role in Chicago’s landscape) — planned the community of Riverside, which was situated on what was considered to be the far western outskirts of the Chicago region. It was the first planned suburb in America, and the earliest sign of divergence from Chicago’s alley trend.

In other words, Chicago has alleys because when it was founded, many communities had alleys. Chicago just happened to boom at this time and the alley was seen as a normal feature – until it slowly petered out in the late 1800s and early 1900s. Then, different expectations took over which emphasized lawns and cars. The vast majority of post-World War II housing does not include alleys as the car is given a prominent spot at the front of the house (with a driveway and garage) and the backyard became a private and important space. Today, New Urbanists promote alleys largely because they are a traditional design feature that removes undesirable activities (like cars) to the back and allows the house to be closer to the street (encouraging sociability). And, I have hard time imagining many municipalities want to pay for alleys – they add an additional layer of cost and infrastructure.

Claim: Broadway brought NYC back from the 1975 brink

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A New York journalist suggests Broadway helped revive the city and improve Times Square:

Much credit typically goes to mayors like Ed Koch and Rudy Giuliani, who cleaned up vice districts, pushed out undesirables and clamped down on nuisance crimes. Once the infrastructure was functioning and crime reduced, the argument usually goes, the natural asset of a great city, the draw of its history, the life-affirming force of its romance, its prestige and its pull, could all be trusted to work their magic. The politicians just had to make it possible for New York to be New York.

But Riedel argues that it was actually the theater and restaurant owners — people sick of plying their struggling trade in an environment that was collapsing all around them — who did the real work on the ground that transformed the fortunes of New York. The offices of Gotham City chugged along; people could head home right after work. But you can’t run an entertainment or dinner business if the police are telling people to get off the streets by 6 p.m.

So, in Riedel’s telling, the late Gerald Schoenfeld of the Shubert Organization went to work, back there in the mid-1970s. He harassed cops on the take to do their jobs and arrest the pimps and prostitutes; he organized all of the businesses in and around Times Square so that they had a collective voice; he found private cash to fill the potholes and empty the garbage cans that the city was leaving full; he waged war against corruption and vice. Retail-style.

With some well-chosen allies, he went about this mission block by block, nasty business by nasty business, sometimes resorting to unsavory, hardball tactics. This was controversial at the time — streetwalkers had rights — but Schoenfeld and his pals also were confronting a massive sex business with documented ties to the mafia — a sex business that dominated the very streets where kids now go to see “Aladdin.” Schoenfeld’s contribution was not least his figuring out that the one had to go before the other could arrive. Ergo, the circle of life.

This may be a popular argument these days about those in the arts and some urbanists: culture industries can help revive moribund cities or neighborhoods. The artists or creative types move in first and then others follow, drawn by the intriguing cultural experiences and economic opportunities.

The story above complicates the narrative a bit though. These theaters had been present for a while – they didn’t move in all the sudden in the mid 1970s. The theater industry also had resources in terms of social connections and money to use – poor artists they were not. The narrative told above may lend itself more to growth machine models of urban development rather than cultural ones. A collection of powerful business owners (probably with the aid of political leaders) were able to make things happen behind the scenes to clean up and revive Times Square.