Chicago Economy thread (real estate market, leases, hotel)

[Vlajos]

Thought I would start a thread to keep track of Chicago economic news. To start, we are lagging our peers by quite a bit in job growth.

llinois as of March (the most recent available month) had an estimated 6,119,000 payroll jobs, seasonally adjusted. That’s up from the low of 5.32 million in April 2020, after pandemic shutdowns hit. But it’s still about 26,000 below the pre-pandemic peak of 6,145,400 in January 2020. In comparison, the country as a whole is up 3.2 million jobs, or 2.1%, from its previous peak.

I had thought statewide figures might reflect slow job growth downstate, with the Chicago area doing much better, as it has during most of the past 30 years or so. In fact, Chicago is recovering more slowly than Illinois as a whole, with an estimated 3,795,700 jobs last month, about 26,000 below the pre-pandemic peak of 3,822,000.

Moreover, according to Sarah Crane at Moody’s, the gap between us and New York and L.A. is growing, not shrinking. And Chicago, New York and Los Angles are the only ones in the country’s 20 largest metropolitan areas that have not passed their prior total jobs peak, according to Bryce Hill, director of fiscal and economic research at the Illinois Policy Institute.

https://www.chicagobusiness.com/greg...icago-illinois

[Vlajos]

Terrible news on tax collections in the state.

The fiscal gravy train that has buoyed Illinois' treasury for the past few years has come to a screeching halt, at least for now.

In a new report issued today by the Illinois Legislature's fiscal arm, the Commission on Government Forecasting & Accountability, said revenues from nonfederal state sources declined a whopping 21.5% in April compared to the same month a year ago, plummeting by about $1.9 billion.

https://www.chicagobusiness.com/poli...rop-april-2023

[wjj]

Originally Posted by Vlajos

Terrible news on tax collections in the state.

The fiscal gravy train that has buoyed Illinois' treasury for the past few years has come to a screeching halt, at least for now.

In a new report issued today by the Illinois Legislature's fiscal arm, the Commission on Government Forecasting & Accountability, said revenues from nonfederal state sources declined a whopping 21.5% in April compared to the same month a year ago, plummeting by about $1.9 billion.

https://www.chicagobusiness.com/poli...rop-april-2023

The IRS tracks migration of people and adjusted gross income from state to state every year. They have been doing it for a long time and is one of the most accurate measures of the economic impact of out-migration. Anyone can download the data. In the latest year available (2020-2021) Illinois lost a NET adjusted gross income of $8.5 BILLION. Not only are higher income people moving out but those moving in earn about 40% less than those who are leaving. Tracking the IRS data, this has been going on for quite a long time. At the current tax rate, $8.5 billion would have generated about $420 million in tax that has gone elsewhere. The largest recipients of Illinois out-migration income were Florida, Texas, Indiana, and Wisconsin.


This report summarizes the data for Illinois very well. They issue reports every year. At least Illinois was not the worst state. California and New York fared even worse.


https://wirepoints.org/bleeding-peop...20-wirepoints/

[IronWright]

United Airlines to hire 15,000 workers with the majority (3,800) in Chicago.

https://news.wttw.com/2023/05/03/uni...0-jobs-chicago

Or we can pretend that there's only ever negative, doom & gloom type reports to discuss.

[Vlajos]

Originally Posted by IronWright

United Airlines to hire 15,000 workers with the majority (3,800) in Chicago.

https://news.wttw.com/2023/05/03/uni...0-jobs-chicago

Or we can pretend that there's only ever negative, doom & gloom type reports to discuss.

How many did United let go due to CoVID?

[IronWright]

Originally Posted by Vlajos

How many did United let go due to CoVID?

What's the relevance to that as far as adding jobs is concerned? It's like the hotel industry needing to lay-off thousands and then when the sector rebounds they are hiring back those positions and more due to demand surpassing pre-pandemic levels. Does the fact there were lay-offs negate the impact of the jobs returning?

In United's case it's nearly 4,00 jobs that could have either never rematerialized or went to other locations. The news is still a positive.

[Bitey]

Downtown is hurting, bad. There's gonna be a bloodbath in the commercial real estate market when current commercial leases come up. Chicago's not the only city having this problem -- SF for instance has been hit even worse for several obvious reasons -- but it's not happening to every major city either.

[Vlajos]

Originally Posted by IronWright

What's the relevance to that as far as adding jobs is concerned? It's like the hotel industry needing to lay-off thousands and then when the sector rebounds they are hiring back those positions and more due to demand surpassing pre-pandemic levels. Does the fact there were lay-offs negate the impact of the jobs returning?

In United's case it's nearly 4,00 jobs that could have either never rematerialized or went to other locations. The news is still a positive.

If these jobs are just refilling those lost during COVID, it's not much of a gain.

[Vlajos]

Originally Posted by Bitey

Downtown is hurting, bad. There's gonna be a bloodbath in the commercial real estate market when current commercial leases come up. Chicago's not the only city having this problem -- SF for instance has been hit even worse for several obvious reasons -- but it's not happening to every major city either.

It appears to be getting worse too.

The amount of available workspace in the central business district rose during the first quarter to 22.4%, up from 21.4% at the end of last year, according to data from real estate services firm CBRE. The new vacancy rate is up from 21.3% a year ago and dwarfs the 13.8% vacancy rate at the start of the public health crisis.

Particularly troubling for office building owners was a recent drop in demand: Net absorption, which measures the change in the amount of leased and occupied space compared with the prior period, fell by 323,000 square feet during the first three months of 2023, according to CBRE. That was the worst period of demand since the third quarter of 2021 and ended a streak of five consecutive quarters in which net absorption was positive.

https://www.chicagobusiness.com/comm...mic-fears-grow

[Kmanshouse]

Oh YAY!! Another Chicago thread where everyone just says one negative thing after another!

Just what we need!