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A Recap of RE Journal’s Chicago CRE Forecast Event


RE Journal recently hosted the 21st annual Chicago Real Estate Forecasting Conference. It was a great event with several hundred attendees and numerous accredited speakers. For those who were not able to attend, below are a few tidbits that may assist you as you progress in 2023. 

Peter Billmeyer from the Society of Industrial and Office Realtors led things off by providing an overview on Chicago’s Office and Industrial sectors. Direct vacancy for office space  in Chicago’s Central Business District (CBD) sits at 21%; a poor number, but also up from the 40-50% vacancy seen during the darkest days of the pandemic. Office and retail in the CBD are in a chicken and egg scenario as retail is in need of office workers to survive, but with the current lack of retail options, it becomes just one more reason not to commute into the city. 

The Lasalle Street Reimagined project ( was brought up during this initial presentation and multiple times throughout the day as a way to re-think the CBD and also address affordability. The Lasalle Street Reimagined request for proposal generated over $1B in proposed redevelopment costs to turn the existing office space into over 2,000 apartment units. There were several comments that the desired minimum benchmark of 30% affordable housing would put a much needed dent in Chicago’s affordability problem, but would also potentially cause the overall project not to pencil without substantial subsidies and/or tax breaks. 

The industrial sector was covered in less detail as it’s still the darling of the dance when compared to other sectors. Industrial has been on a tear and 2022 was the thirteenth year of continued positive absorption. National vacancy was at an all-time low but it is forecasted that this vacancy number will rise as the wave of new construction built over the last two years will inundate the market and soften overall demand. Even with this surplus of supply ready to hit the market, the national and Chicago industrial sectors have stable outlooks for 2023.   

John Augustine, Chief Investment Officer at Huntington Bank, provided a memorable presentation on the nation’s 2023 economic outlook laced with several data points specific to Chicago. Augustine feels there is a 50/50 toss-up that the nation ends up in a recession and the actions of the Federal Reserve will be the true arbitrator. For this presentation, a recession was defined as GDP declining for six consecutive months.

In his reasoning against a recession, Augustine echoed Warren Buffet’s mantra to never bet against the US Economy, while also providing several interesting data points. A major crux in his argument against a recession is the current employment data. Employment is still growing and our nation has only had one recession when employment was increasing (1974). He also believes that ISM indexes are not low enough to drive us into a recession. For context, ISM stands for the Institute for Supply Management and the ISM Index is a monthly indicator of our nation’s economic activity based on a survey of hundreds of purchasing respondents at manufacturing firms. As a reference point, the red line in the graph below shows where our country’s current ISM rating compares to other low points in 2001, 2008 and the 2020 (note that all pictures and charts are property of Huntington Bank, not me).

In his rationale that a recession will happen in 2023, Augustine points to the current trajectory of the Leading Economic Index and current inventory levels, both illustrated in the charts below. Following the trajectory of the Leading Economic Index, it would be historically unique if the economy did not follow the same pattern, which would land us in a recession. For inventory levels, Augustine referenced that companies like Walmart and Target have taken inventories to record highs and there is a chance that demand will not be there to absorb this inventory. 

Augustine also spoke specifically to Chicagoland, noting that our employment numbers are still recovering. Augustine believes that while our labor force numbers are not threatening, Chicago desparately needs more people willing and ready to work to meet demand. Chicagoland is obviously the lionshare of Illinois’s GDP and in the most recent CNBC Business Ranking of States, Illinois moved up the ranks to 19th out of 50 states. That is not an overly impressive ranking, but it’s important to note Illinois is trending the right way, moving up from 39th on the list.

Chicagoland single-family and condo prices finally surpassed their 2008 peak and then flattened with the recent interest rate increases. Compared to our coastal counterparts, Chicago and the rest of the Midwest typically do not experience the same extreme booms and busts, and Augustine believes Chicago housing will remain flat, ultimately move inversely to interest rate adjustments.

If you have any questions on any of the above content or would like to hear more about the RE Journal event, feel free to reach out via

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