Chicago Could Offer Downtown Density Bonuses for Steep Fees

Downtown Chicago could see a surge in housing options after a city council committee voted to allow developers to buy more density in the city’s largest buildings.

Under the proposal, developers could pay hefty fees to increase the square footage of projects within the city’s most expansive zoning classification, and it would allow landlords of existing buildings to create additional residences by permitting smaller units, Crain’s reported.

Alderman Lamont Robinson’s proposal would allow commercial property owners to purchase additional density for new and existing buildings through the city’s Neighborhood Opportunity Fund, which finances commercial and cultural projects in neighborhoods that lack private investment.

Robinson’s plan, which is backed by Mayor Brandon Johnson, attempts to address the need for more housing, including affordable units, in desirable downtown areas.

“By allowing more units to be built on a piece of land, this change can make some projects possible that otherwise wouldn’t be,” Robinson said. “This means more homes, more construction jobs, and more real estate taxes for our city.”

The proposal would also give ““affluent people moving to the city additional options where they want to live,” Alderman Carlos Ramirez-Rosa said.

Alderman Brendan Reilly argued that allowing density bonuses in new buildings would deter investment in residential conversions of aging office buildings. He proposed limiting the density bonus to existing buildings that haven’t previously added density.

Developers using the incentive would still need to navigate the city’s stringent zoning approval process, which means the local alderperson could block requests for the density bonus.

Ramirez-Rosa highlighted the broader benefits of the ordinance, suggesting that increased downtown housing options would reduce pressure on other neighborhoods and mitigate displacement.

The full city council is expected to consider the ordinance this week.

Chicago’s downtown apartment occupancy sat at about 93 percent in the fourth quarter, according to Cushman & Wakefield. But the downtown condo market is not good. Zero condos are under construction downtown, and the downtown luxury market has yet to bounce back with the rest of Chicagoland.

—Quinn Donoghue