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Winds Of Change Could Ease Construction Of Affordable Housing

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New political leaders like Illinois Gov. J.B. Pritzker and Mayor Lori Lightfoot have brought winds of change to every level of government, and along with opening up what had been a rather insulated political culture, it may bring a renewed focus on issues like affordable housing.

Skender factory event
Freeborn & Peters LLP partner Tina Bird, d'Escoto Business Development Director Peter Ousley, Property Markets Group Managing Partner Benjamin Brichta and IBT Group founder and President Gary Pachucki

“There is an interesting shift happening in Chicago right now, and I think people can feel it,” said Peter Ousley, d’Escoto’s business director of development, at Bisnow’s Chicago Construction & Development event May 30 at Skender’s new modular housing manufacturing plant on Chicago’s Southwest Side.

Chicago’s just-adopted building code is a good illustration of the upcoming changes, he said. The new code finally brings the city in line with national and international standards, and may bring new builders to town that for decades shied away from competing for projects here.

That change was instigated by Mayor Rahm Emanuel's administration, but Lightfoot signaled in her first days in office that a deeper transformation may be underway. One of her first moves was to issue an executive order that curtailed the power of the city’s 50 aldermen to control development in their respective wards.

“It was an advantage for local developers,” Ousley said of the old system, because local developers understand the political climate and personalities far better than outsiders.

The greater competition should put downward pressure on the costs of construction here, which could help the new administration fulfill its promises to build more affordable housing.

Other panelists said launching new projects in Chicago was still daunting, especially for outside developers. Gary Pachucki, founder and president of IBT Group, said the requirements of the city's Affordable Requirements Ordinance cause some uncertainty, especially for projects in the two sections of the city covered by a new pilot program, where developers may need to set aside up to 20% of their units as affordable housing.

“That equity has to come from somewhere,” he said.

Skender factory event 2
Hundreds attended Bisnow's Chicago Construction & Development event May 30 at Skender's new modular housing manufacturing plant on Chicago’s Southwest Side.

Benjamin Brichta, managing partner of Property Markets Group, said the city has the opportunity to create new affordable housing by picking some low-hanging fruit, perhaps renovating underutilized retail spaces into residential use, or renovating the city’s many coach houses to increase density in gentrifying neighborhoods.

Ousley said one of the chief difficulties in creating new housing in Chicago is the sheer political explosiveness of the gentrification issue, and the construction of new units in neighborhoods such as Pilsen or Logan Square frequently sets off protests.

Chicago already does have a great deal of affordable housing, he said, and has low rents and low vacancy rates in many neighborhoods in the south and west sides of the city, areas far away from the gentrifying neighborhoods near downtown or along the train lines. 

“There is affordable housing in Chicago, but maybe it’s in the wrong place,” he said.

Brichta said that shows what role the Lightfoot administration could play.  

“We need a more coherent, urban-wide strategy.”