Wedged between New York and San Francisco, Chicago could be a creative investment choice
Chicago. Also known as The Windy City, The Second City or Chi-town. It is one of the most historically, politically and economically significant cities in the United States, but remains somehow one of its more low-key metros. Almost three million people live in the city that was once considered the link between east and west in the Unites States. Though the resident population is diverse and cosmopolitan, it seems like almost everyone you speak to in Chicago is from Chicago. And if not they’re from really close by. Not surprising really, given there’s no real valid reason for leaving.
Chicago is the locus for some of the most incredible art (it would take several days to really comb through the Art Institute of Chicago) and culture (some forms of jazz and blues were born in Chicago), architecture (the neo-gothic Tribune Tower, Wrigley Building and Field), food (hello deep dish pizza) and 15 World Series, NBA, Stanley Cup and Super Bowl championships. Industrialist and Hyatt founder Jay Pritzker founded the prestigious Pritzker Architecture Prize in Chicago, and its 19th century building boom gave the world the skyscraper, without which there would be no Manhattan skyline, never mind Hong Kong.
The more unsavoury elements of Chicago’s long history should be a major turn-off for tourists and potential residents, but the likes of Al Capone, the Black Sox scandal, record murder rates in 1993, the disastrous 1871 fire, the dark cloud of troubled public housing projects like Cabrini- Green (demolished in 2011 and slated for mixedincome redevelopment) and Rod Blagojevich’s senate blunder, just a few of the city’s more notorious benchmarks, only add to the city’s indefatigable mystique. Besides, where else in the world can you ride a transit system that had rock band named for it?
Nestled on the shore of Lake Michigan, Chicago may be on the cusp of getting its due beyond North America. Business in the city is good and it has one of the US’s most balanced economies. Media, arts & culture, tourism, retail, engineering, education, finance and trade are among the engines that drive Chicago’s economy, and major developers are starting to take notice. The Mag Mile is the most famous part of Michigan Avenue (North Michigan to be precise), but from State Street and the central Loop all the way up to its terminus at Oak and bordered on one side by Grant Park, Michigan Avenue is the embodiment of modern Chicago. This is where you’ll find every major label boutique and department store in the city, as well as media and banking offices, chic dining outlets and five-star hotels (the Peninsula Chicago sits on Superior). The Mag Mile and its surroundings are also the prime location for luxury residential towers, among them the Ritz-Carlton (currently under construction) and Trump International Hotel and Tower.
But none of that is exciting investors just yet according to Patrick O’Neill, CEO of American property specialists ONeill Group Hong Kong. However the city shouldn’t be totally discounted. International investment in the US topped US$80 billion last year, and the country remains in the number one position on the investment destination list. “With the majority of foreign investor interest focused on the two coasts, Chicago has not been on the radar in comparison to cities like New York and San Francisco,” O’Neill concedes. As O’Neill sees it, his clients, like many others, are looking for capital appreciation, stability and security. “The vast majority of our firm’s Hong Kong investors are interested in New York City followed by Los Angeles and Hawaii.” That may be true, but Cathay Pacific didn’t start a direct route to Honolulu last year as it did to Chicago. That could be taken as a sign the city’s status for business and leisure is rising.
“The business ties between Chicago and Hong Kong would naturally lead to some property investor activity,” O’Neill states. “Chicago registers the second largest manufacturing payroll at nearly US$22 billion and is one of the largest financial cities in the US.” Research by Colliers International for the third quarter 2011 stated that though office space demand remained consistent for the previous six quarters, the market straddled a vulnerable line between stability and market softening. However, indicators pointed at stabilisation with the global economic outlook the biggest factor in uncertainty. It’s a game of wait and see, which the residential sector is likely to follow.
There is certainly no lack of high-end real estate for sale in Chicago, from condominium apartments to homes, in the downtown core and the surrounding suburbs, from US$500,000 up to $10 million. The vintage architecture of treelined lakefront districts like Streeterville remain the go-to spot for houses (new builds and historic structures alike), while the central Loop district, home to the Board of Trade, the Willis (formerly Sears) Tower and Millennium Park just up the road. And even though Chicago remains in the shadow of NYC, San Francisco, Los Angeles and even DC, O’Neill admits that, “As investors are looking for the bargains found in secondary cities, Chicago may begin to attract additional foreign capital.” A secondary property market, perhaps, but far from a truly secondary city.