Chicago’s commercial real estate posted the worst performance of all major metropolitan areas over the past year, The Wall Street Journal reported, even falling behind protest-stricken Hong Kong’s property market.
The prices of office buildings, retailers, hotels, and apartments in Chicago fell 4.1% in the last year, according to Real Capital Analytics data cited by The Journal. The total commercial real estate sales in Cook County, which includes Chicago, sank by 42% this year. Sales also slowed in surrounding counties, including those near the Illinois-Indiana border.
Hong Kong’s commercial real estate market tumbled 2.6% through the year as antigovernment demonstrations dragged the city into its first recession in a decade .
Residential buildings didn’t fare much better in Chicago. The Second City’s housing prices grew 1.5% from the third quarter of 2018 to the third quarter of 2019,according to the Federal Housing Finance Agency. The national average jumped 4.9% in the same period.
A combination of tax-hike fears and worse-than-expected growth weighed on Chicago’s properties through 2019. The number of job postings in the city fell 0.5% in November compared to the year-ago period, according to Glassdoor data cited by The Journal, below the national average of 1% growth.
The city has also struggled to pull in new companies, sitting between coastal giants like San Francisco or New York and expanding mid-sized cities like Nashville, Tennessee and Austin, Texas.
Chicago already hosts the second-highest residential property taxes in the nation, but rates could surge even higher, according to research firm Green Street Advisors. A new property valuation method used by the city’s tax assessor is raising uncertainty among business owners around how rates will change. Chicago is also looking for ways to pay off massive pension debts, but the firm previously warned that tax increases could drive workers away from the city.
“The primary reason that Chicago is struggling from an investment-sales perspective is the outlook of higher taxes in the future,” Green Street managing director Dave Bragg told The Journal.