The historic LaSalle Street corridor has been an economic engine for the city since the turn of the last century.
But in recent years, the once vibrant financial district has suffered as major banks such as Bank of America, BMO Harris and other financial institutions that anchored the area have moved to new buildings elsewhere in the city.
The COVID-19 pandemic and a switch to remote working only accelerated that process of decline, said Crain’s Chicago Business commercial real estate reporter Danny Ecker.
“There was this sort of identity crisis happening on LaSalle Street before the pandemic about what was going to happen to a lot of these buildings,” Ecker said. “Before the pandemic, it looked like there was at least a chance that owners would put money into them because the office market downtown was just thriving. Then that all changed in 2020, where all of a sudden a lot of these buildings' owners couldn't justify spending money to update them. Most companies are cutting back on office space. And so, you ended up with a kind of slow burn of buildings on LaSalle and near LaSalle that are seeing companies leave or significantly downsize, and their buildings are worth a lot less than they were before.”
Now, a plan to rejuvenate the area is beginning to take shape as some high-profile Chicago developers pitch preliminary plans after a request for proposals from Mayor Lori Lightfoot in September.
Ecker said the city is trying to attract developers by “dangling money and other potential subsidies to help either the existing owners of these buildings or prospective buyers of these buildings turn LaSalle Street into a much more dynamic area.”
The city is hoping to see the district transformed with former offices becoming mixed-use developments with residential apartments and retail spaces to attract foot traffic. However, to qualify for city support, developers must commit to ensuring at least 30% of residential units are developed as affordable housing.
So far, that doesn’t appear to have dissuaded developers. Ecker recently reported that would-be developers have submitted $1.2 billion worth of projects to revamp former office buildings into downtown housing.
And just last week, the City Council’s Finance Committee approved a $5 million grant program to encourage neighborhood restaurants and other cultural establishments to open new locations on LaSalle Street.
“It's just kind of another piece to this,” Ecker said. “They're basically saying, ‘Look, we have the main effort here, which is focused on converting outdated office buildings into apartments. But we also need to make sure that a lot of these empty storefronts along LaSalle can get filled again.’ And a lot of these retailers can't justify signing new leases because there's no one there. You aren’t going to get people to want to live on LaSalle if they don't have retail and places to eat and places to buy groceries.”