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Chicago Real Estate Experts Say We're In Early Chapters Of Broader Recovery Story

Few Chicago real estate experts are predicting a quick recovery. Direct and indirect impacts of the novel coronavirus make it more likely the region will see an elongated, Nike swoosh-shaped recovery, according to a survey by The Real Estate Center at DePaul University and the Urban Land Institute Chicago District Council.


The groups found in their Third Annual Mid-Year Perspective on Chicago Real Estate Markets that more than 60% of those surveyed are either concerned about the market's direction or trending toward concerned. Less than one-third are either optimistic or trending toward optimistic.

“COVID-19 has dealt every market across the country a set of challenges and circumstances no one could have anticipated,” said Charles Wurtzebach, the Douglas and Cynthia Crocker endowed director of the Real Estate Center at DePaul University. “Yet people want to be optimistic; they are tired of COVID and want it to be over.”

The greatest concerns among most real estate professionals are the pandemic’s unknown duration and severity, followed very closely by the financial crunch on local and state governments. Tied for third were rising unemployment and whether a vaccine will be widely available.

“The question everyone wants answered is how long does that last; and we don’t know,” JLL Senior Managing Director and Chicago Office Co-Head Keith Largay said. “It’s hard to predict the outcome and unintended consequences of 40 million job losses and the stress it puts on the balance sheets of people, companies and governments.”

More than 42% of those surveyed predict the present sharp downturn will be followed by a slow recovery and look like a Nike swoosh when plotted on a graph. That's primarily because historically, Chicago has avoided extreme highs and lows. Instead, it has usually been a moderate-growth market. More than one-third are less optimistic and said the Chicago region is more likely to experience a "W" recovery, or a series of sharp ups and downs. 

Charles Wurtzebach

More than 60% of survey participants said they expect companies will further embrace work-from-home strategies and start occupying less space. But at the same time, most also said using office space to build a corporate culture will continue.

“I don’t think people are effective working from home,” Riverside Investment & Development CEO John O’Donnell said. “It’s a huge setback in terms of building the strength of an organization and educating younger employees.”

The coronavirus could bring at least some permanent change to the Chicago suburbs. Suburban properties typically allow occupants more space and help workers avoid crowding onto public transportation. That makes many suburban properties look somewhat more attractive, those surveyed said.

More than three quarters believe there will be a nominal to modest increase in suburban investments. 

“The suburbs could benefit from the changing patterns we’re seeing,” NorthMarq Senior Managing Director Sue Blumberg said. “If you are working from home, a studio apartment gets awfully small. We could see renters looking to the suburbs where units and outdoor spaces are larger.”

But investors are in no hurry to start buying. 

“Buying during a recession tends to create good outcomes,” Heitman Head of Global Research Mary Ludgin said. “But we’re in the early days of a recession unlike anything we’ve seen before.”