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redIQ C hicago’s 2019 elections brought a new generation of politicians—and their perspec- tives—to power in the Windy City. A new mayor, Lori Lightfoot, and a now further left-leaning city council promise to shake up the existing slate of major multifamily developments in the city and the life of multifamily professionals going forward. Under Mayor Rahm Emanuel, Chicago became the city of the real estate megaproject. Massive mixed-use developments includ- ing Lincoln Yards, The 78, River- line, and others have vied for city subsidies and the few remaining large plots of empty land. Like Hudson Yards in New York, these projects have ushered in a new era for development in Chicago. Each promises to bring apartments, condominiums, offices, and public space to Chicagoans, transforming former industrial sites into vital parts of the city. However, Lightfoot may change that. Though her term only began in May, her ability to follow through on campaign promises has caused problems for Lincoln Yards. The
redIQ cuts underwriting time in half. “That’s a significant benefit when you’re underwriting $2 billion of transactions per year.”
mayor has long been skeptical of the project and the subsidies it received, and her position has remained firm during her time in office. As of August, the project’s previously approved tax increment financing (TIF) remains in jeopar- dy. While the mayor’s office has not intervened to block the project entirely, the administration’s lack of support is a stark contrast from Emanuel’s staunch support for Lincoln Yards and development in Chicago generally. Lightfoot and the new city council members plan other reforms. To kick off her term, the mayor elimi- nated “aldermanic privilege”—a set of rights formerly granted to city council members (known as alder- men), allowing them outsize influ- ence on real estate developments in their districts. For developers, this change means fewer “mini-mayors” to contend with, and for members of city council, it means no more veto authority over existing zoning. For smaller scale projects, this means fewer hurdles and a more above- board approval process. New city council members, in- cluding 40th Ward Representative
Andre Vasquez, support regulations and taxes that will increase operat- ing costs for multifamily companies active in the Chicago market. Like other Democratic Socialists elect- ed in Chicago this year, Vasquez supports a 1.2% tax on real estate transactions over $1 million. The money would go to building shel- ters for the homeless in the city. Vasquez and others also support a new regulation that would require developers to designate up to 30 percent of new buildings in gentri- fying neighborhoods affordable to guarantee existing residents aren’t forced to leave their neighborhood. As few of the new measures have passed, developers and real estate owners will need to wait to see the full impact of this new generation of politicians, but now more than ever it will pay to keep an eye on the headlines. •
—Scott LaMontagne Managing Director, JLL
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