Contact Us
News

Can Commercial Real Estate Development Lead To A Turnaround For Chicago's Most Violent Neighborhood?

Want to get a jump-start on upcoming deals? Meet the major Chicago players at one of our upcoming events!

Nine miles west from the downtown center sits Austin, Chicago’s largest neighborhood by area and its second-most populous. But it grabs headlines for another superlative: being one of Chicago’s deadliest neighborhoods.

There have been 1,561 violent crimes committed in Austin so far in 2017, and 12.2% of the 548 murders recorded in Chicago this year happened in Austin. The unemployment rate is more than five times the national average, and more than one-quarter of the residents are living in poverty.

Slowly but surely, however, the foundation of a revitalization is being built in Austin, and real estate is emerging as one of its tentpoles.

Can Commercial Real Estate Development Lead To A Turnaround For Chicago's Most Violent Neighborhood?
Austin, Chicago

Austin’s history began sweetly. In 1922, Emil Brach built what was then the largest candy plant in the U.S. at the northeast corner of Cicero Avenue and Kinzie Street. The Brach’s plant produced millions of hard candies, caramels, chocolates and candy corn and employed tens of thousands of workers over its 81 years of existence. By the 1960s, Austin was a predominantly white neighborhood of over 140,000 residents who used the abundant manufacturing jobs as stepping stones to a middle class lifestyle.

As recently as the late 1980s, Brach’s still employed 3,500 people, but the company fell on hard times and shuttered the plant in 2004. Several ideas were floated to preserve the building, including turning it into a high school, a mixed-use housing development and a casino. Instead, the Brach’s plant was demolished in two phases, beginning in 2008 when Christopher Nolan used part of the site as Gotham Hospital in "The Dark Knight." In 2014, the remaining structures were destroyed.

401 North Cicero Ave., Chicago
This 29-acre site at 401 North Cicero used to be home to the Brach's candy plant. It is now vacant.

Today it is a vacant 29-acre lot with no visible ties to Chicago’s history, and a symbol of what has happened to Austin overall.

“When Brach’s was demolished, so was most of the manufacturing capability of the neighborhood,” JRG Capital Partners principal Harry Huzenis said.

The economic disinvestment led to a rise in crime and a drop in property values. Blockbusting efforts by realtors led to waves of white flight, completely reversing the neighborhood from 68% white in the 1970s to 84.2% black today.

The disenfranchisement of its residents is quantifiable: The neighborhood’s per capita income is $15,920/year, the unemployment rate is 21%, 27% of Austin’s households are below the poverty level, and one-quarter of Austin’s residents have not earned a high school diploma.

The options for most Austin residents are stark: leave the neighborhood to seek better opportunities in life, or get sucked into the vicious cycle of crime and poverty.

Austin Coming Together Executive Director Darnell Shields
Austin Coming Together Executive Director Darnell Shields at his group's 2017 awards luncheon.

A Third Option

As a youth, Darnell Shields and his friends associated success and opportunity with leaving Austin. But Shields grew up, earned two associate's degrees from the City Colleges of Chicago, a bachelor's degree in entrepreneurship from the University of Illinois at Chicago and opened a hair salon in Austin with his wife.

“If I want to be proud of Austin, what can I do to bring opportunities here so that future generations won’t go through what I did?” Shields said.

In 2010 Shields helped form Austin Coming Together, a nonprofit working to bring planning and investment to the neighborhood. Shields said Austin always had smaller community groups lobbying local politicians and businessmen to bring investment to the community. ACT brings these smaller groups together so they can spur positive economic outcomes in the neighborhood, collectively.

The efforts are beginning to bear fruit. ACT was selected by LISC Chicago to participate in an Austin quality-of-life survey, organize a planning process to draft a community plan centered on the highest priority needs of the neighborhood and identify which groups will be tasked with carrying that out. In 2016, ACT developed Thrive 2025, a strategy to stabilize housing and bring living-wage jobs to the community to make neighborhoods safer and improve early childhood education. The group was selected by the Chicago Department of Planning and Development in 2013 as the lead agency in Austin for the city’s micromarket recovery program, a neighborhood stabilization initiative targeting small geographic areas that are experiencing higher-than-normal problems with foreclosures. In Austin, that area spans from east to west between Laramie and Central avenues, and north to south between Chicago Avenue and Lake Street.

Shields said this has yielded significant data on vacant parcels in Austin, helping residents identify which blocks need more support than others, and connecting these people with support resources. ACT’s efforts so far are strictly residential; Shields said the group is not at a point where it can initialize commercial development along certain corridors. But ACT’s research points toward Chicago Avenue as a future epicenter of commercial development, because it seems to be the most stabilized.

Austin African American Business Networking Association Executive Director Malcolm Crawford
Austin African American Business Networking Association Executive Director Malcolm Crawford

That is largely thanks to Malcolm Crawford, who was working on revitalizing Chicago Avenue well before Shields and ACT entered the conversation. Crawford, executive director of the Austin African American Business Networking Association, worked with the Planning and Development Department in 2013 to create a commercial thrive zone initiative called the "Soul City Corridor" stretching along Chicago Avenue, from Cicero Avenue west to Austin Boulevard. The zone is intended to serve as a cultural benchmark similar to Chinatown or Greektown, where residents and visitors may experience the music and food that is unique to Austin’s African-American population, via small business development.

AAABNA’s research that led to the foundation of the Soul City Corridor revealed that 85% of the total disposable income of Austin households was spent in the neighboring suburb of Oak Park, which has the retail infrastructure Austin lacks.

“That’s millions of dollars a year leaving our neighborhood. It’s a challenge because Oak Park is right next door,” Crawford said.

That is starting to turn around: Crawford said a handful of small businesses are moving into Austin, including insurance firms and restaurants. Ruby’s, the popular soul food restaurant in neighboring Garfield Park, is opening a storefront in the Soul City Corridor. Crawford said the most exciting development along the corridor is the opening of a campaign office for gubernatorial candidate and hotelier J.B. Pritzker.

Laramie State Bank Building, Chicago
The Laramie State Bank building at Chicago and Laramie avenues is part of Austin's "Soul City Corridor."

Building Blocks

The challenges to investing in Austin are large, even for small-business owners who have resources. First Western Properties President Paul Tsakiris said that between a lack of capital and Chicago’s bureaucracy, there is a very small window of opportunity for mom-and-pop retailers to call Austin home.

“Retail leasing is difficult. National tenants aren’t crazy about Austin, and mom-and-pops lack the capital to cover taxes and expenditures once a lease is signed and they wait for the inspection process to work itself out,” Tsakiris said.

Those inspections may take months, and many small-business owners run out of funds before they get an inspection, approved and can open. If they cannot get relief from a landlord while the inspection process is ongoing, it winds up being difficult on all parties.

Tsakiris believes the wider, bustling retail and commercial corridor along North Avenue, in Austin’s northern border, is positioned for growth as development happening in nearby Humboldt Park pushes west.

Austin could also be a prime location for industrial tenants. The neighborhood has easy access to I-290, while the Blue Line and Green Line intersect the neighborhood. The former Brach’s site is only a two-block walk from the Cicero Avenue Green Line station.

“The Lake Street/I-290 corridor is ripe for industrial redevelopment, and many companies leaving or being pushed out of Fulton Market are looking there,” Tsakiris said.

A rendering of Pullman Crossings
A rendering of Pullman Crossings

Revitalization Through Real Estate

If Shields, Crawford and other Austin community leaders need inspiration for what they want to bring to their neighborhood, there is a proven successful model 21 miles southeast. The Far South Side Pullman neighborhood has seen over $250M in real estate investment from 2010 to 2017. Most of that activity is concentrated in Pullman Park, a 180-acre former Reyerson Steel plant that has been redeveloped into a mixed-use retail and industrial park by Chicago Neighborhood Initiatives. CNI’s Pullman Park’s linchpin developments include a 150K SF Walmart superstore, a LEED Platinum-certified Method home cleaning products plant with a 75K SF greenhouse operated by Gotham Greens, a 140K SF Whole Foods distribution facility developed in a joint venture with Ryan Cos., and Pullman Crossings, a recently announced 1.2M SF spec industrial development, also a joint venture with Ryan Cos.

CNI President David Doig said his group has been able to round up Pullman’s various community groups and, by taking an active role as the lead developer, is able to dictate how Pullman is being redeveloped and the types of activity in the area. CNI’s efforts have borne fruit: 1,050 new jobs have been created in a neighborhood that, like Austin, was suffering from crime and disinvestment. CNI got Walmart to sign an agreement ensuring a set $10/hour minimum wage, and mandating 80% of its hires come from within the neighborhood, an important move in helping Pullman residents gain collective agency in how their neighborhood develops.

But improvement is a slow process.

“These depressed neighborhoods didn’t get to where they’re at overnight. It’s taken 30 to 40 years for them to hit rock bottom. And they won’t improve overnight, either. Only consistent and constant redevelopment is the key,” Doig said.

Austin can take a page from CNI's playbook, but it will have extra hurdles.

Pullman is a far smaller community area than Austin, with fewer groups seeking a voice in how to revitalize the neighborhood. The sheer size of the Austin community area — an area the size of Rockford, Illinois — makes forming a revitalization plan where everyone can claim ownership a herculean effort.

Crawford believes his efforts and what Shields is building with ACT is a good start, but there are smaller healthcare and religious-based nonprofits whose missions appear disconnected from the more economically minded counterparts like ACT and AAABNA, and a lack of focus is preventing these groups from working together. Crawford believes Austin nonprofits need to spend more time working to bring business opportunities to the neighborhood.

Ultimately, little will be accomplished until the city takes a more active role in the neighborhood, and acts as a catalyst for change.

“Can you imagine what would happen if Austin received a fraction of the tax incentives that a downtown project like the Riverwalk received?” Crawford asked.