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Making the Market for Chicago’s New Skyscrapers

Making the Market for Chicago’s New Skyscrapers

(p.156) 6 Making the Market for Chicago’s New Skyscrapers
From Boom To Bubble
Rachel Weber
University of Chicago Press

Chapter Six reveals how the practices of local real estate actors, including the City of Chicago, contributed to the overbuilding and overvaluation of Loop real estate. In low-growth situations, demand for new buildings must be constructed through marketing and subsidies. Tenants were attracted by the generous concessions, which real estate brokers helped negotiate, and by property tax incentives, which subsidized their relocation from older buildings to more recently constructed ones. Tenants also speculated, as cheap credit made it possible to upgrade to more expensive buildings and industry professionals fed their desire for status and prestige. The majority of downtown tenants relocated at least once during the boom, most to new construction in the West Loop. Small, local developers and the City of Chicago also stepped in to kill off some of the excess capacity created by overbuilding. With public money, obsolete buildings were demolished or, in the case of office-to-residential conversions, the buildings themselves were saved but the office uses were eliminated. Adaptive reuse and demolition acted as corrective surgery to remove surplus space, tightening markets and allowing them to absorb more of the new stock.

Keywords:   office market, subsidies, economic development, adaptive reuse, demolition, real estate broker, tenant relocation

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