An Unpopular Opinion?

Many Chicagoans are still reeling with disappointment over Chicago?s loss of the 2016 Olympics. But the impact on the near south and South Loop real estate markets may have been less than positive after the flame was extinguished.

While 2016 is a long way off in real estate time, the recent market crash has taught us all to plan further into the future. I have quietly held an unpopular opinion regarding the long term impact of the Olympics on our city. Olympic-based funding and other investments would certainly have fueled infrastructure, commercial, and residential development leading up to and during the events, but the aftermath was a subject rarely discussed in public forums.

A healthy, sustainable real estate market requires a balance between supply and demand. Supply includes commercial and residential units available for sale and rent, as well as funding required to buy or lease these properties. This supply would have undoubtedly increased markedly with the increase in demand prior to and during the events. Olympic-related jobs would have provided income for purchase and rent of these properties, and commercial enterprises would have set up shop to serve workers and visitors at a record pace. Following the closing ceremony, however, visitors return home, jobs end, and demand would have dropped off drastically.

This imbalance would have had a significant negative impact on existing property in and around the Olympic venues. Empty commercial space does not indicate a healthy neighborhood to potential buyers, and I wholeheartedly believe that prices of residential properties in both near south and South Loop neighborhoods would have taken a serious hit in pricing. As we have recently seen, high levels of inventory take years to absorb. Nothing good comes of an oversupply situation.  Post-Olympic buyers would not have benefited either – there wouldn’t be enough of them to take advantage of the situation.

The lessons learned in the past several years should have influenced how we understand supply and demand within the marketplace.  Healthy markets result from slow, consistent activity, not huge, one-time events. I am in this market for the long haul, and still hold my unpopular opinion.

We would like to thank jrjenks for sharing today?s photo via the Creative Commons License.

29 September 2009 ? With the final location announcement looming, Chicagoans are both excited and apprehensive. But little has been said of the long term impact of the enormous venues needed to host the 2016 games. Will we have a “Bird’s Nest” that only tourists visit, similar to Beijing? Not necessarily, according to the plans.

Washington Park will certainly benefit, but the 80,000-seat Olympic Stadium would be dismantled after the Olympics, leaving behind a 2500 seat amphitheater. Only the Olympic warm-up pool would stay in Washington Park, and pools from the Aquatics Center would be rebuilt in other city parks.

Other structures would complement the City’s ongoing plans, including World Sport Chicago, the nonprofit that Chicago’s Olympic boosters set up to get more city kids to participate in Olympic sports. The changes to the Michael Reese campus will happen despite the decision of the International Olympic Committee, in support of revitalization efforts on the near south side.

28 September 2009 ? With today?s announcement that President Obama will be going to Copenhagen for the final pitch on Friday to the International Olympic Committee on Friday, October 2, 2009 Chicagoans are feeling confident that we will be getting the 2016 Olympics. Plans for much needed work on replacing infrastructure, expanding public transportation, and what will be done with large parcels of vacant land are contingent on having the Olympics in Chicago. The decision the IOC make?s on Friday will shape the future of many of Chicago?s neighborhoods, most especially the former Michael Reese Hospital Campus along Chicago?s lakefront and the West Side, although there will be venues throughout the region. In the current economy, it appears there is no master plan for moving the city?s needs forward without the benefit of public and private funds that will be obtained to get Chicago ?Olympic Ready.?

25 August 2009 ? Recent changes to the City’s Olympic plans to level all but one building of the near-south Michael Reese campus include reusing additional buildings that were designed by architect Walter Gropius. After voting down a proposal to place the entire campus on the National Registry of Historic Places, the City’s landmarks commission suggested that a compromise saving a limited number of specific buildings might earn their support. In response, both advocacy group Landmarks Illinois and architects DeStefano Partners submitted proposals that save significant buildings and create a more livable, unique community less reminiscent of the City’s previous urban renewal projects. These two plans, while not yet final, combine functionality for the City’s Olympic bid with exciting and appropriate long-term development for the neighborhood.