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Chicago Loop Alliance: Multifamily and office sectors still vibrant in The Loop

Chicago Loop Alliance: Multifamily and office sectors still vibrant in The ,ph01

The Chicago Loop Alliance today released its “State of the Chicago Loop: 2018 Economic Profile,” providing data on a variety of industries in the Loop, including commercial and residential real estate, retail, infrastructure and more. Despite the ascension of areas like the West Loop and coming megadevelopments like The 78 and Lincoln Yards, the Loop remains the heart of an expanding, thriving central area, mostly due to accessibility and transit.

Chicago Loop Alliance last released an economic profile of the Loop in 2013, and in 2011 before that. This updated report on 2018 not only serves to show where the Loop is today, but how it has changed over the past decade. The report was completed by Chicago-based Goodman Williams Group.

“One of the ways Chicago Loop Alliance is able to advocate for the Loop is through releasing reports like this Economic Profile,” said Chicago Loop Alliance president and CEO, Michael Edwards. “There really isn’t another organization gathering and packaging data to this extent on the Loop specifically. We believe it’s important for the business community to know where the Loop stands and where the Loop appears to be going.”

Employment and office market

Most new office developments are being built outside the Loop where there is more space. The Loop’s competition includes the West Loop, River North and proposed developments like Lincoln Yards and The 78. However, The Loop now holds 28.4 percent of all private-sector jobs in Chicago, up 1.2 percent since 2010, with office vacancy rate in the Loop dropping in that time span from 17 percent in to 13.2 percent.

Employment in the Loop has continued to grow in recent years. Much of that growth can be attributed to office relocations from Chicago suburbs, with the report identifying 19 companies moving into 863,000 square feet from the suburbs to the Loop since 2013. Over the last nine years, the number of private-sector jobs in the Loop has increased by 23.5 percent, outpacing the City of Chicago, which saw an increase of 18.4 percent, and the Chicago Metro Area, which saw an increase in 14.8 percent.

“The information in Chicago Loop Alliance’s economic profile of the Loop is helpful data that WeWork needs to grow strategically in this market,” said Ben Blair, community director of WeWork. “Understanding trends in employment and the office market, and discovering how those trends connect to our business, allows us to stay ahead of the curve. And having this information within a larger snapshot of the Loop economy makes it that much more valuable.”

Retail, food and beverage

The retail sector is in the midst of a period of dramatic change, as retailers work to integrate online connectivity and experiential activities in their brick and mortar stores. This is reflected in the Loop by the opening of new store types (including Amazon Go) and many new culinary options (including many food halls). More than 66,000 square feet of new restaurant space can be directly attributed to food halls.

There are 4.37 million square feet of retail space in the Loop. Though the retail vacancy rate in the neighborhood increased to 12.1 percent, the Loop’s consumer confidence score is 138.4, well above the reading for a stable economy (90). Chicago Loop Alliance installed and manages Springboard pedestrian counters along State Street. While foot traffic is down nearly 5 percent from 2017, pedestrian counts are down nationwide, and State Street saw more than 99 million pedestrians in 2018.

Demographics and residential market

Once thought of as solely a place to do business, in recent years the Loop has seen the addition of thousands of residential units and new lifestyle amenities. Residential growth in the Loop has far outpaced prior estimates, turning the Loop into one of the fastest-growing neighborhoods in Chicago. Since 2013, the City of Chicago has gained 1.4 percent in population, while the Chicago Loop has gained 28.9 percent (21,258 residents).

The residential vacancy rate in the Loop is 5.9 percent. And demographics here are strong; compared to the city on whole, the Loop boasts smaller average household sizes (1.7 versus 2.6), higher median household income ($105,066 versus $52,908) and education (80.6 percent of 25-and-older residents having a bachelor’s degree or higher versus 38.2 percent). This has led to the addition of 4,449 new housing units to the Loop since 2010.

“As the owner of a service-based business in a city with the size and diversity of Chicago, it is crucial to understand the various hyperlocal markets in which we operate,” said Ben Creamer, co-founder and managing broker at Downtown Apartment Company. “Today’s report provides the data to support the continued demand to live in Chicago’s dynamic city center. And, as residential experts on the Loop, we get to see this exciting growth every day.”

Tourism and hospitality

2018 was another record-breaking year for tourism in the City of Chicago. Choose Chicago reports an estimated 57.7 million visitors to Chicago in 2018, an increase from 2013 of 19.5 percent. Since 2014, the average daily hotel rate grew by 7.1 percent to nearly $213, while revenue per available room also increased 6.7 percent over to a record $160 in 2018. However, 94 percent of Airbnb listings in Chicago are outside the Loop.

Domestic overnight visitors to Chicago spend an average of $1,093 during their stay, while international travelers spend just over $3,100. Overseas travelers account for only 3 percent of total visitors to Chicago. Three-quarters of 2018 visitors were domestic leisure travelers, while 22 percent were visiting Chicago on business.

Arts, culture and education

Arts and culture are largely responsible for the uptick in evening foot traffic in the Loop, having an annual impact of $2.25 billion, as cited in CLA’s 2018 arts in the Loop economic impact study. The Art Institute of Chicago alone welcomed 1.61 million guests in 2017 and the area offers more than 34,500 seats to theater-goers. The Loop is also home to 22 institutions of higher education, for an estimated total enrollment of just over 41,000 students.

“The Higher Education institutions in the Loop are a vital contributor to the economic life of the City of Chicago, and the data in Chicago Loop Alliance’s Economic Profile proves it,” said Fran Casey, director of community affairs at DePaul University. “Working with Chicago Public Schools and City Colleges, they provide a talent pipeline that builds a strong and diverse workforce for Chicago businesses and nonprofit agencies. In addition, these institutions make significant contributions to the arts in the city through multiple academic programs and events.”

Transportation, infrastructure and open space

The transportation landscape is changing in the Loop and beyond. While overall transit ridership is down, ridership on the “L” in the Loop is up. Rideshare is expanding, and a wave of new technology could forever change the way we move. The Loop is Chicago’s most transit-rich neighborhood, positioning it as Chicago’s premier business location.

CTA transit ridership across Chicago reached a 25-year high in 2012 with a total of 545 million rides, moving 314 million riders by bus and 231 million via the “L.” By 2017, a decrease in bus ridership (down 28 million trips) led to 64.5 million fewer CTA riders. Citywide, CTA “L” rides grew by 5.5 percent between 2013 and 2015, but has since leveled off to 2012 numbers.

New and alternative transit options have taken hold, however. Since Divvy was introduced in 2013, the number of rides has increased every year until 2018 while ridership of the Loop Link bus rapid transit was up 2 percent in 2018 over 2017. Rideshare is continuing to challenge the status quo of transportation.

“At Lyft, we’re thrilled to be working with the city of Chicago and Chicago Loop Alliance to be a true complement to public transit,” said David Katcher, general manager, Lyft Midwest. “While we’re proud of our ridesharing growth, we’re equally excited by the fact that nearly three-quarters of our riders take public transit at least once per week. Additionally, we’ve integrated public transit—including the CTA and Metra—into the Lyft App to show nearby transit lines and schedules, making multimodal transportation that much easier for Chicagoans.”