Here’s the evidence—in case you needed it—that downtown’s been seriously damaged

Recent events have shaped the perception, fairly or unfairly, that downtown is no longer a safe place to live or work, and it’s time for everyone—public officials, civic leaders and business execs—to come to terms with that fact.

CRAIN’S EDITORIAL BOARD  | Crain’s Chicago Business

Anecdotes are one thing. Data is better.

We’ve heard the tales all summer—that Chicago’s downtown area has been damaged both literally and figuratively by the recent unrest as well as COVID. Now, thanks to reporting that’s exclusive to Crain’s, we have figures to back up what until now has mostly felt like unsubstantiated dread.

This unsettling reality is coming into sharper focus, and it’s something that should worry even those who don’t live and work downtown: The pandemic, crime and lingering concerns over the city’s and state’s financial health have combined to form a toxic triple-whammy that threatens to have a lasting impact on the economic viability of the Loop and its perimeter.

The evidence turns up in reporting by Crain’s Dennis Rodkin, who found there is now a huge oversupply of homes for sale in several downtown neighborhoods. In the 60601 ZIP code, which covers Lakeshore East and the northern part of the Loop, there are enough homes on the market to fuel 15 months of sales. Immediately across the Chicago River in 60611, which is Streeterville up to Oak Street Beach, there’s 11.5 months’ worth of inventory on the market. And there’s a little more than eight months’ inventory in 60610 (Near North, Gold Coast) and 60654 (River North).

That’s compared to 3.1 months of inventory on the market now citywide. And, Rodkin notes, four to six months of inventory is generally considered a balanced, healthy market.

“Since the second round of looting, it’s been like the Hoover Dam broke and the water is gushing through,” one local broker told Rodkin. “My phone does not stop ringing with people who say they love Chicago but they’ve had enough.”

Similarly, Crain’s Alby Gallun reports in this week’s issue that apartment dwellers are also voting with their feet. The downtown apartment occupancy rate was down to 89.2 percent in the second quarter, its lowest level since 2002. Some tenants are fed up with the violence and mayhem that has resulted in boarded-up storefronts and made them uneasy. Others who now work from home due to the coronavirus pandemic are no longer willing to pay sky-high rents to live near an office that’s closed, or in a once-vibrant central business district that’s suddenly sleepy.

“The Loop’s like a ghost town,” says one renter who has decamped for his second home in Tampa, Fla.

Suburban landlords, meanwhile, are doing OK. The suburban occupancy rate has edged lower, to 95.1 percent from 95.3 percent in second-quarter 2019, Gallun reports, but the median net rent has risen 1.6 percent.

And in a troubling sign for the Chicago-area office market, less than a third of businesspeople say they’re going to need all the space they currently occupy when the COVID-19 pandemic finally passes. That’s one of the findings of the inaugural Harris Poll Chicago Executive Pulse, a survey of 200 Chicago-area business leaders conducted for Crain’s Chicago Business by the Harris Poll that’s highlighted in this week’s issue.

The survey, conducted online from Aug. 4 to 14 of owners and executives of small and midsize companies, indicates recovery from the pandemic is going slowly and may well be affected by concerns over violence and crime in the city, as well as continuing pension woes. Crime emerged highest on a question about important factors in “keeping your business located in Chicago.” Eighty-eight percent listed “public safety,” followed by the cost of doing business at 87 percent and level of taxation at 82 percent.

We have raised the alarm about Chicago’s latest image problem in the past, and some have scoffed that it’s an overreaction—downtown will bounce back. We would love to be wrong about this. But the late GOP strategist Lee Atwater was right when he famously said, “Perception is reality.” Recent events have shaped the perception, fairly or unfairly, that downtown is no longer a safe place to live or work, and it’s time for everyone—public officials, civic leaders and business execs—to come to terms with that fact. The only question now is whether the perception will be long-lasting. What we do collectively to fix what’s broken matters greatly, but we can’t make a plan of action if we don’t acknowledge the problem in the first place. The neighborhoods well beyond the Loop matter, too, but all of Chicago—even the suburbs—will suffer if we allow the city’s core to atrophy any further.

Read the full story at Crain’s.