The value of Chicago’s commercial real estate was the worst of all major metropolitan areas over the past year, even falling behind crisis-stricken Hong Kong’s property market.
The prices of office buildings, apartment properties, retail centers and industrial real estate in Chicago fell by 4.1 percent over the past year, according to Real Capital Analytics data, first reported by The Wall Street Journal.
Total commercial real estate sales in Cook County, which includes Chicago, dropped by 42 percent this year, Real Capital said. Sales also fell in several nearby counties that include parts of suburban Chicago.
In Hong Kong, prices tumbled 2.6 percent this year amid six months of increasingly violent pro-democracy protests that pushed the Asian financial hub into a recession.
The city’s residential real estate market didn’t fare much better. Between the third quarter of 2018 and the third quarter of 2019, housing prices rose by just 1.5 percent in the Windy City, according to the Federal Housing Finance Agency. The national average grew by 4.9 percent in the same period.
Tax-hike fears and weaker-than-expected growth contributed to the lackluster housing market. Chicago has a major pension deficit, which could force the city to raise property or income taxes in the coming years. According to a report from real estate research firm Green Street Advisors, Chicago has one of the highest property taxes in the country.
"The results are most dire for Chicago...where fiscal death spirals, in which higher taxes lead to outmigration and yet higher taxes, are realistic scenarios," analysts wrote in the report.