Frank Campise wants Chicago’s apartment rent growth to slow down.
That might sound odd for a multifamily landlord with prominent holdings in the city.
But that’s how the co-founder of JAB Real Estate kicked off Thursday night’s Lincoln Park Builders Forum, where hundreds of Chicago real estate pros gathered to ding and dote on the city over drinks.
While being able to push rents benefits landlords, it’s not what’s best for the city, Campise said.
Chicago’s nation-leading rent growth over the past year-and-a-half is the result of a lack of investor interest in the city that has led to a dropoff in development. Meanwhile, stagnant and even falling rents in markets like Denver and Salt Lake City — where Campise’s firm also owns — stem from big waves of new construction.
But Chicago’s restrictive zoning policies, overly burdensome building codes and — the biggest barrier to more investment — unpredictable property taxes that have recently skyrocketed for many are holding developers back, he and a panel of industry experts said.
“If you would let us build, we will deliver tax revenue like nobody’s business,” Campise said.
The panel included Planning and Development Commissioner Ciere Boatright, an appointee of Mayor Brandon Johnson who was playing defense for much of the evening while public policy was criticized.
“We’ve spoken to plenty of institutional investors, and we’ve begged them to come to Chicago,” panelist Adam Friedberg of Mavrek Development said. “We’re contrarians because we actually continue to develop here. The biggest hurdle I hear on a daily basis is, ‘We don’t invest in Cook County because of the taxes.’”
The city has made a concerted effort under Johnson to streamline the approval process for real estate projects, an initiative dubbed “Cut the Tape,” which has already cut down the average time to get project applications through Plan Commission by 40 percent to 79 days, Boatright said.
She also touted that the Plan Commission approved $6 billion worth of projects this week, including a massive quantum computing facility that Related Midwest is plotting on the South Side and an office-to-residential conversion on Wacker Drive by Friedberg’s firm.
The cost and financing tools for affordable housing also constrain the industry, and Boatright encouraged developers to more frequently target neighborhoods outside of downtown.
“We’ve lost a lot of population in our city, and so when we think about affordable homeownership, I want to really think about how we can put our vacant lots back in productive use,” Boatright said. “I want to leverage the [$1.25 billion] housing and economic development bond to help support developers who recognize that our neighborhoods are valuable communities. They deserve investment.”
The city’s Department of Buildings has diverged in some ways from the International Building Code that has driven up the cost of affordable housing projects, including by allowing fewer floors to be built above a podium than other jurisdictions, panelists said. Michael Herman, CEO of Chicago House social service agency, said his firm’s project to build four six-flats featuring affordable units cost $14 million, or more than $580,000 per unit, which he acknowledged as “expensive.”
“The project that we finished for Chicago House in Englewood was per square foot … the most expensive residential apartment conversion in my 25 years of working here in Chicago, and the complete antithesis of what affordable housing should be,” panelist Jean Dufresne of Moth Architects said. “And we’re not talking granite countertops and beautiful bathrooms, we’re talking laminate and vinyl.”
Herman urged the city to reserve more “cash in lieu” funds — the fees paid to the city by developers to avoid building affordable units on the same site as their market-rate units — for housing projects like his that are reserved for very low-income households making 30 percent or less of the area median income. Much of the cash-in-lieu funding ends up backing units reserved for people making 60 percent or 80 percent of the area median income.
“There is a lot of potential with those dollars that could really promote low-income housing. Because affordable housing is working-class housing, which we absolutely need, but we cannot do it at the cost of eliminating all the dollars helping very low-income housing,” Herman said.
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Chicago real estate pros gather, gripe at Lincoln Park forum