This Week's Chicago Deal Sheet

It is unknown what impact the omicron variant will have on downtown activity, but it could squelch what had become a gathering recovery. Chicago Loop Alliance just released its latest monthly report on the downtown and found office occupancy, pedestrians and CTA ridership all in the run-up to the holidays hit their highest-measured rates since the pandemic began.

In stark contrast to 2020, holiday attractions like the Christkindlmarket, the city of Chicago’s official Christmas tree lighting in Millennium Park and the Chicago Thanksgiving Parade returned, attracting tens of thousands to the Loop, according to CLA officials. Loop theaters also reported packed houses, and downtown retailers saw a rush of shoppers. 

“After many downtown holiday traditions were postponed or taken virtual in 2020, it’s wonderful to see the Loop so vibrant and spirited this season,” Chicago Loop Alliance CEO Michael Edwards said in a statement. “The sidewalks are bustling, offices are fuller than at any point since the pandemic hit, and…

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The Race Is On Between Multifamily Rental Increases And Inflation

Rising inflation  — now at its highest annual rate in three decades — has only added fuel to the multifamily fire, with rents skyrocketing across the nation in 2021. 

For developers and owners, this has led to a race of sorts between market forces largely out of their control: rising rents versus rising costs. 

Heading into 2022, the longevity of rental increases is no certain thing, while the cost of labor, materials, taxes and insurance represent a suite of wild cards for the industry. But for now, rents are outrunning costs, as owners continue to enjoy expanding revenue and profits, industry experts tell Bisnow. 

“We're seeing rent escalations keep pace with rising construction costs in a way that we haven’t seen in at least the last five years,” Focus CEO Tim Anderson said. “Delayed deliveries and pent-up demand as a result of the pandemic have had measurable impacts on rent growth.”Anderson, who is a…

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A Wave Of Distress Didn’t Come In 2021, But Debt Markets Changed Anyway

It wasn’t a question of if, but when. As the world went into lockdown in spring 2020 and the economies of the U.S. and UK fell off a cliff, real estate investors dusted off their playbooks and waited for the flood of distressed opportunities to come. 

They’re still waiting. 

In spite of the severe recessions of 2020 and the continued emergence of new variants of Covid-19, there has been very little in the way of debt distress in commercial real estate. In Q2 this year, just 1.3% of U.S. real estate sales came from distressed situations compared to a high of 9.8% in Q1 2009 after the collapse of Lehman Brothers, according to Real Capital Analytics data. And experts predict that unless there is another severe and prolonged recession, that number is unlikely to tick up. 

The reasons why highlight the extent to which the fortunes of commercial real estate have become intertwined with decisions taken in the headquarters of the Federal Reserve and the Bank of England. But the lack of distress also shows how…

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