Chicago is a global leader in data centers

The Chicago region is a world leader in data centers:

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The Chicago area is tied with Atlanta as the fourth-largest data center market in the world, behind Northern Virginia, Silicon Valley and Singapore, according to a new study by Cushman & Wakefield. The study cites low cost of land, a robust development pipeline and lower power costs than most large data centers as advantages for Chicago.

The study also notes that Chicago-area sites come with “sizable incentives,” a factor that helped bring Facebook/Meta to DeKalb.

In 2019, Illinois created the Data Center Investment Program, offering an exemption from state and local sales and use taxes for companies that invest at least $250 million and create 20 new operational jobs in a data center. The program also requires the data center to be carbon-neutral.

In other words, there is money to be made by putting data centers in the Chicago region.

But, what do data centers offer back to the community? They might sit in buildings that the public does not know are data centers. They may not offer that many jobs; the data center under discussion in DeKalb in the article cited above is a more than 2.3 million square foot facility on 505 acres that will employ 200 people. They are getting tax incentives.

Of course, this is the way the development game is played in the United States. If these deals are not cut, companies will claim they will go elsewhere and they can find more favorable conditions elsewhere. The new data center will end up in Iowa or a “business-friendly climate.” The tech companies are desired by many communities so they will get good offers.

More positively, part of Chicago’s strength over the decades is its position in key infrastructure. The center of important railroad routes. Busy airports. The convergence of commodities from the whole Midwest. The creation of financial instruments. And now data centers.

How many people want to buy the split-levels and Colonial Revivals that need rehabbing in higher-end Chicago suburbs?

A look at women seeking homeownership suggests they might not be interested in many of the homes in more expensive Chicago suburbs:

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“They are not going to sacrifice,” Spaniak said. “They don’t have the time to rehab. And they want something newer, with quality, that expresses who they are.”

That’s a tall order that often isn’t in line with the split-levels and Colonial Revival houses common in higher-end Chicago suburbs. The scarcity of polished, modern houses in established suburbs further drives up the prices of the few houses that do meet that narrow criteria, Spaniak said.

This is an issue facing many suburban communities and potential homebuyers:

  1. Many existing homes do not have the features, finishes, or architecture preferred by homebuyers now.
  2. More mature suburbs have a limited number of newer homes as new construction is limited to small developments or teardowns.
  3. The housing prices in more expensive and mature suburbs are not that low that it will attract people drawn by fixer-uppers. The people who can buy and rehab homes in the wealthier suburbs have enough capital to buy in and fix or teardown the homes for a tidy profit.

Roughly five years ago, we were in a similar position looking for a larger home. Homes within our price range often needed updating or had disagreeable and unchangeable traits. The style of homes available fit into what is described above: split-levels, raised ranches, ranches, Colonials, and a few older structures. We had time and flexibility so it all worked out but I could see how the available options and at the particular prices available would frustrate some homebuyers.

The Chicago region has a lot of human capital…and the workers have a stronger work ethic?

A recent article discusses the potential workers in the Chicago region and how hard they work:

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“Probably the strongest work ethic of laborers is the folks in the Midwest,” the Houston-based founder of SparrowHawk Real Estate Strategists said, definitely not rhyming. “They’re just, I don’t know what they put in the water there, but they’re hard workers. And so you’ve got a good labor force.”…

Illinois Manufacturing Association president and CEO Mark Denzler recalls a businesswoman who recently moved her small manufacturing operations of about 50-70 workers to Mississippi with the goal of saving on costs. She regrets the decision, he said…

“When I’m around the warehouse workers in the Midwest — Chicago and all these other Midwestern cities — they’re different than the folks in the southeast and the folks in the West Coast. They just have a different work ethic,” he said…

“It would be really hard. I’d be suspicious of anybody who said they can do it,” Bruno said. “But there is this strong experience with work in the Midwest that it’s part of your development. It’s connected to your health and well-being.”

Contrary to the final paragraph above, I bet this could be measured. But, what would it show? And how would workers in Boston or New York City or Atlanta or San Francisco respond to the argument that Chicago workers have a stronger work ethic? Or, within the Midwest and Rust Belt, how about workers in Milwaukee, Cleveland, or Pittsburgh?

This is part of a bigger narrative about Chicago. it is part of its character. Even as it is a global city with an important finance sector and many professional and white-collar workers, it imagines itself as a blue-collar city relying on manufacturing. The loss of manufacturing jobs in the last sixty years hit Chicago hard, as it did many cities, yet the narrative continues.

I would be interested in a more recent study that looks at how residents of the Chicago area think about the purported work ethic. Does the narrative hold across locations, groups, and occupations? Does the idea of “the city that works” extend throughout the region and different kinds of workers?

Chicago suburbs continue the fight against railroad mergers they say will negatively impact their communities

This started years ago in response to the purchase of the Elgin, Joliet & Eastern Railway and continues now as eight Chicago suburbs challenge the potential merger of the Canadian Pacific and the Kansas City Southern railroads:

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Bartlett, Bensenville, Elgin, Itasca, Hanover Park, Roselle, Wood Dale and Schaumburg formed the Coalition to Stop CPKC last week in a bid to convince the board that the merger would bring so many additional trains to the Milwaukee West Line that it would dramatically alter life in their communities…

The merger would create the first single-line rail network linking the U.S., Canada and Mexico. The railroads filed the merger application in October.

Each of the eight suburbs conducted evaluations and determined what mitigations would be needed to protect their residents and businesses from the increase in freight traffic. Pileski said Roselle alone would need at least $30 million to create pathways and modify roads to get around the freight trains.

The coalition filing says the potential price tag for mitigations in all eight suburbs could reach $9.5 billion, and negate any benefit to the railroads.

Railroad traffic in many suburbs is viewed negatively due to an increase in blocked crossings or waiting for trains, more noise and pollution, and a disruption to a quiet suburban life. On the other hand, rail traffic helps deliver a lot of goods, can be more efficient than other shipping options, and might limit traffic – train or on roads – elsewhere.

In the larger picture of the Surface Transportation Board, where do the concerns of these 8 suburbs fit with other concerns or advantages regarding this potential merger?

In a region built in part on railroad transportation and that continues to see tremendous amounts of railroad freight traffic, it will be worth watching this outcome.

The presence of mobile homes in the Chicago area

Remembering a small mobile home community not too far from the suburban home in which I grew up, I was interested to see numbers on how many mobile homes are in the Chicago region and read about the experiences of people living in mobile homes:

Yes, we do! It turns out hundreds of families live in Chicago’s only trailer park, Harbor Point Estates, which is in the far southeast corner of the city. It sits along the shores of Wolf Lake in the Hegewisch neighborhood, just off 134th Street. The community is so close to Indiana you can fly a kite there, a property manager says.

And beyond the city’s borders, there’s another 18,000 mobile homes in the seven-county metro area, according to estimates by regional planners. Mobile home communities are squeezed between expressways and plopped down in exurban cornfields, from the North Shore to Peotone…

Curious City got a question about trailer parks from a listener interested in affordable homeownership. “What is life like in Chicagoland trailer parks?” the listener wanted to know.

So we visited manufactured housing communities in Chicago, Blue Island and Des Plaines to ask residents that question. And we met people with a whole range of experiences. We found some who had moved to the trailer park as a way to make ends meet. We found families looking for peace and safety and a quiet place to raise their kids. We found residents who liked the trailer park because they could live near extended family — adult siblings, cousins — and others who’d adopted neighbors as extended family. We found people living in their familiar mobile home deep into old age. We found folks looking for a foothold to the American Dream.

Many suburban communities and urban neighborhoods would not want or approve mobile homes. As communities tend to prefer development (if they prefer any new development) that matches or exceeds the prices and styles of existing residences, mobile homes can be hard to find in metropolitan regions.

This also reminds me of sociologist Matthew Desmond’s findings about urban mobile home communities in Evicted. Such communities do exist, their landlords can and do make money, and residents in mobile home communities can face a number of issues.

Yet, because of their cost, they can be a housing option for many. Looking to address affordable housing in the Chicago region? Mobile homes could be part of a comprehensive answer.

(Bonus: the title of my published study on religious zoning in Chicago suburban contexts refers to someone saying that would prefer mobile homes nearby rather than a possible Islamic Center.)

Pop-up COVID-19 testing sites likely benefit from more vacant commercial properties

Amid concerns in the Chicago area about a pop-up COVID-19 testing site operator, I thought: a business that can quickly emerge and offer testing services needs to be able to quickly find properties for their new locations. Brick and mortar businesses have faced issues for years and this has led to plenty of vacant commercial locations.

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Thus, when COVID-19 arrived and swept through the United States in multiple waves, there were numerous potential locations available for testing sites. Throughout the Chicago region and the United States, there are larger vacant properties – from office parks to grocery stores to shopping malls – as well as smaller locations in strip malls and other smaller structures. I got my first two vaccination shots at a former big box store in the far-flung Chicago suburbs. Commercial properties are often located along busy roads and they may have central locations that people can access relatively easily.

If commercial properties were not as available, testing could take place elsewhere including on government properties like fairgrounds or civic centers. For example, the State of Illinois Community-Based Testing Sites appear to be a range of property types.

Additionally, I wonder at the rates a new testing business or a government group would pay for rent and utilities at a vacant commercial property. Has more vacancies also helped make prices more affordable for testing facilities to arise?

And if COVID-19 passes plus there is more interest in commercial properties, testing sites might also fade away. Just like other businesses or organizations who might take up residence in a strip mall or commercial property for a while, COVID-19 testing sites would arise and then disappear again in the commercial landscape.

Balancing the needs of a region and nation versus the impact on local communities

Following up on a possible railroad merger that would affect multiple Chicago suburbs, several suburban leaders acknowledge that there are both community and larger interests at stake:

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Communities’ concerns about the length and frequency of trains are valid, but the key is to find a balance between alleviating their concerns and letting the railroads operate efficiently, bringing needed goods from one place to another, said Karen Darch, village president of Barrington and a board member of the Chicago Metropolitan Agency for Planning who has worked on railroad issues.

“We need transportation, this is a big industry for us, for the country,” she said. “And yet we want our communities to be safe and livable.”…

“It’s hard to argue against the commercial benefits that will occur from unifying these lines, and so the city’s trying to be realistic in terms of balancing its own interests with the greater benefit that can come for the U.S. economy,” he said. “We’re just asking, with the recognition that the railroads are going to benefit from this merger, we need some help.”

This is a conundrum that faces communities, regions, and the nation in multiple areas. The issue often arises in transportation but could also include eminent domain and land use, the move of a company from one location to another, and uneven development across communities. Whose interests should win out? How much room for compromise is there? How much can everyone involved see all of the layers?

There is little question that the Chicago region is an important region for railroad traffic in the United States. At the same time, that traffic impacts day-to-day experiences as well as long-term prospects for communities. What is good for the region or for national traffic may not look like what communities want.

The key here might be the efforts of the railroads themselves. What would they be willing to change about their operations and how much money would they contribute to help alleviate problems? This could range from listening to concerns, rerouting traffic away from residential areas, and contributing to the construction of bridges or underpasses to alleviate issues at at-grade crossings. This also helps make the contributions of railroads more tangible to suburbanites; people may know abstractly that railroads are important but have little to no direct interaction with any railroad company or representatives.

The factors affecting housing in the Chicago region in 2022

Several experts suggest housing prices will continue to rise in the Chicago area in 2022 but not at the same rate as they did in 2021:

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Rather, changes in home price growth, the supply of homes for sale and upticks in rock-bottom interest rates are more likely to stabilize the market after an unpredictable 2021, they said. That likely won’t mean an end to competition or high prices — and it doesn’t bode well for first-time homebuyers — but the market could ease up compared with 2021…

In the nine-county Chicago metro area, the median home sale price from January to November was $300,000, up nearly 12% over the same months in 2020, according to the Illinois Association of Realtors…

Prices are likely to rise next year, but won’t continue the exponential growth of 2021, said Daniel McMillen, head of the Stuart Handler Department of Real Estate at the University of Illinois at Chicago. Without an influx of new residents to the area or big increases in incomes, that growth will become unsustainable, he said…

Homebuyers are continuing to look for amenities like home offices and workout areas, Melbourne said. Kitchens are a priority. Condo-buyers are looking for bigger units, rather than one-bedrooms.

The pressure from COVID-19 moves will hopefully subside. Then, the more regular patterns in Chicago area real estate might take over again. There are at least several interrelated factors:

  1. Limited population increases in the Chicago region. This reduces demand.
  2. Uneven development within the region where some neighborhoods and suburbs will be popular and others not. Prices will go up in desirable places.
  3. Construction of new residences has been down. What kind of units will be built? If recent trends hold, it will be housing aimed more at wealthier residents. Additionally, these units will be constructed in some locations and not others.
  4. If there is a long-term shift in what homebuyers and renters want from units, does this significantly shift demand? Continued or more working from home has the potential to affect the individual and collective experience of places.
  5. The particulars of certain communities. Communities understand themselves as having certain characters and prioritize particular goals. Local regulations could incentivize or discourage certain kinds of development.

There are numerous factors affecting housing to pay attention to amid changing conditions.

Fighting for decades against more freight trains in the Chicago suburbs

The mayor of Barrington, Illinois recently spoke about a long fight against large train companies and more freight traffic through the suburban community:

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Karen Darch was elected mayor of Barrington in 2005, only two years before the merger of the Canadian National and EJ&E that would increase the freight traffic in Barrington from three trains to up to 20 each day. She understands what worries Roselle and other suburbs along the Canadian Pacific line, as CP and the Kansas City Southern pursue a merger.

The merger could bring six to eight more freight trains a day through Roselle, Itasca, Wood Dale, Elgin, Bartlett, Schaumburg, Hanover Park and Bensenville. Leaders in those towns are concerned about potential traffic backups, emergency vehicle delays, additional noise and more pollution, as vehicles idle for longer…

Under Darch’s leadership, Barrington fought to extend the oversight period over CN, arguing that crossings were being blocked for longer than what the railroad agreed to.

The village also worked for years to get federal money to build an underpass for Northwest Highway at the CN tracks — improving traffic flow and making it easier for ambulances to get to Advocate Good Shepherd Hospital.

I first ran into this issue in the late 2000s while conducting research involving a community that was also affected by the moves of Canadian National. To many leaders and residents in such suburbs, the increased traffic was not just a nuisance; in a region with many at-grade rail crossings, more and/or longer trains has the potential to snarl traffic, limit the ability of emergency vehicles to get around the community, and create more noise and pollution.

The irony is that many Chicago suburbs were founded along railroad lines and the region itself is central to the American passenger and freight rail network. Without the railroad, the Chicago region and many of its communities would not be the same. That same train that makes day to day suburban life more difficult is important for Barrington and the region as a whole.

There still might be solutions to these problems. One solution underway for a while is to move more of the freight train around the outskirts of the region so that it is does end up in communities and the city itself. A second solution is to limit the number of at-grade crossings so that roadways and trains do not interact as much. A third option is to see the whole of the region in these discussions so that what is good for Barrington and other suburbs could also be good for the region and vice versa.

Rising real estate values in affordable markets make it harder to enter that market

Whether reading about rising real estate values in Elkhart, Indiana or Chicago area locations, this has an effect on who can enter the market as homeowners:

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But after prices soared during the COVID-19 pandemic, even the lower-priced homes became out of reach for many low-income households, according to a recent report from the Joint Center for Housing Studies of Harvard University…

In June 2020, a home slightly below the median price was comfortably in that range, selling for $196,450, Hanifa found.

But one year later, a home that was 80% of the median price would sell for $220,562, meaning even lower-priced homes were no longer affordable for low-income buyers.

The loss of affordability was not limited to Chicago. Hanifa found low-income families could afford a home in just 20 of the country’s 100 largest metro areas in 2021, down from 39 the year before…

The hot housing market has had a trickle-down effect on neighborhoods such as Garfield Park, Humboldt Park and Belmont Cragin, he said. As buyers have been priced out of more expensive neighborhoods, they begin looking at a lower or middle-income neighborhoods where they can make offers over asking. Then residents of those neighborhoods can’t afford the homes for sale.

Rising home values are often viewed very positively. Those who own homes can benefit from the increase in prices without much work of their own. Over time, homeowners hope prices go up and they can get a strong return of investment at a sale.

But, this data is a reminder of the flip side of those same rising prices. If prices go up faster than other factors including accessing mortgages and rising incomes, those who want to enter the housing market – and reap the benefits of increasing real estate values – have a harder time doing so.

This dynamic is recognized in particularly expensive real estate markets. When people discuss Manhattan, San Francisco, Seattle, Los Angeles, and a few other locations, people know there is a limited or nonexistent cheaper market for homeownership. This does not come up as often in cheaper markets, often in the Midwest or South, where prices are not as high and there are more options. If prices increase there as well to beyond what lower-income residents could afford, then what happens?

My quick takeaway: the need for affordable housing is great all over the place. If Americans continue to think that homeownership is a laudable goal, there is a lot to do to help make that possible for all.