Like many cities, Chicago was hit hard by the impact of the coronavirus pandemic. Now, Mayor Lori Lightfoot is laying out a plan to draw more people back to the Windy City. And it extends to not just tourists but locals as well.
A much-needed revitalization
Like cities across the U.S., Chicago was forced to implement restrictions in an effort to curb the spread of COVID-19. But that did a number on the city. By the spring of 2020, pedestrian traffic plummeted by about 80%, and the city's hotel occupancy rate plunged to 20%.
Meanwhile, last summer, Chicago's unemployment rate topped 12%. That's a major hike from the 3.8% jobless rate the city was enjoying before the outbreak hit.
Not surprisingly, office buildings took their own hit. By the end of 2020, unleased office space in downtown Chicago reached a record of 21.4 million square feet. And even today, more than 20% of retail space along the city's famed Magnificent Mile shopping district is vacant, reports Cushman & Wakefield.
But rather than succumb to the blow of the pandemic, Mayor Lightfoot and company are taking steps to rebound via their Central City Recovery Roadmap. The goal is to bring locals and tourists alike back to the city's key shopping and business districts. The plan also seeks to attract new businesses to the area, replace lost jobs with new opportunities, and develop more affordable housing options in the heart of the city.
Chicago was experiencing its share of financial woes even before the pandemic began as residents have drifted away from the city through the years. The city’s unfunded pension liabilities alone have grown to over $30 billion, and the city needs a serious influx of revenue to work its way out of that hole.
The good news is that the city is in line to receive about $1.9 billion courtesy of the American Rescue Plan -- the same massive relief bill signed in March that put the most recent round of $1,400 stimulus checks into Americans' pockets. Part of Chicago’s $1.9 billion windfall may be earmarked to fuel this recovery effort.
But it'll take more than that single lump sum to revive the city. What Chicago really needs right now is people -- both tourists and business travelers alike. In 2019, tourism generated $16 billion in spending across nearly 58 million visitors, contributing $1.1 billion in tax revenue for the city and supporting 150,000 jobs.
To support its recovery plan, Chicago plans to offer grants that will allow businesses to use streets for outdoor shopping, dining, and arts. The city will also work to reopen shuttered performance venues. And it has plans to draw in crowds via citywide festivals and free events during the warmer weather months.
The investor takeaway
Real estate investors with Chicago properties, or those invested in REITs (real estate investment trusts) with Chicago holdings, may be worried about their portfolios, given the city's recent challenges and ongoing financial problems. But the fact that there's a solid plan in the works to revive the city should bring them comfort. Now that the city has largely lifted its pandemic-related restrictions, there's a real opportunity to breathe life into it, and we may see a host of former residents flock back to the Windy City once they see just how much they're missing.