Whiplash from the Past
The year was 1901, and Chicago was a blossoming city with a booming economy. At the forefront of its success were the lumber and meat industries, and the city was quickly becoming one of the largest manufacturing centers in the entire country. Perhaps one of its most important features was its unparalleled railway system, with nearly 3,000 miles of track laid within the city limits. So optimistic were its residents that property magnate H. H. Honore Jr., whose widow would later become president of a new women-led petroleum company, penned a thoughtful piece in the Tribune praising the city’s commercial real estate market and making predictions for its future. This month, we are going to dissect these predictions like a frog in a high school biology lab.
Firstly, and perhaps most hilariously, Honore Jr begins his analysis with the following:
“Commercial Chicago, with its inexhaustible and wonderful drinking water, made pure by its drainage canal at a cost of $35,000,000, with the best food market in the country, affording probably the greatest variety, is now in a position to attract the worker as well as the investor.”
We have a hard time imagining anyone describing the River water as wonderful or drinkable, but we concede that Honore was right about Chicago being the best food market in the country. At the very least, we have more variations of deep dish and italian beef than anyone could or should ever desire.
Honore continues by describing the city’s exponential growth. In 1855, he says, the city had only 60,000 people. In 1901 that number had reached 1.8 million. He predicts that figure to reach 6 million by 1925, and proclaims that by 1950, Chicago will have become the most populous city in the world with more country and people tributary to it than any great city has ever had in the world’s history.
Unfortunately, or fortunately depending on who you ask, Chicago’s population today is right around 2.5 million. That’s actually a drop of several hundred thousand since the 1920s, and a significantly smaller population than the actual most populous city in the world. That title goes to Tokyo with over 37 million people. That’s okay, maybe Honore has other dreams that have come true. He says, “before the middle of the century its wealth will be beyond parallel. No city in any country affords such opportunity for the young. Labor of all kinds is well paid and in demand. Art and science will flourish and inventive genius will be constantly into play, and will be richly rewarded here, because here business will center, goods will be produced, distributed, and wealth created.”
Honore actually wasn’t too far off here. Today, Chicago’s gross domestic product, or GDP, is the third largest in the United States and surpasses the total economic output of Switzerland. Last year, Chicago saw a herd of nine unicorns – that’s a privately-held company with a value of over $1 billion. We’re also home to over 6,100 tech companies, hundreds of which were founded just in the last few years. Fulton Market, as you all well know by now, is an absolute hotbed of young tech talent and innovation. We were named the number one city for corporate investment for seven years in a row. And there is no competition for our legendary film, art and music scene.
Honore goes on to say that to purchase commercial real estate in 1901 is to guarantee yourself an ever-increasing income which will multiply tenfold, particularly in the Central Loop. He says, “there is no city where you can so safely invest money in ground and buildings as in Chicago, and there is no street in Chicago where you can invest money more safely and with as much certainty of increase in the future as on Michigan Avenue. Business men are rapidly occupying it. They are going to the cleanest street in the city.”
Yeah…that didn’t age well. Chicago’s sublease space availability is about 23% and the direct vacancy rate is right around 21%. For reference, let’s look at the stats for 2002: sublease space in Chicago was up to 28%, and vacancy rates were the highest on record at 19%. Michigan Avenue is floundering, although a handful of new retail leases and subsidized security systems are helping to keep its pretty little head above water. The holiday season will be a major indicator of whether the Mile keeps its Mag, but we’re sure Honore is rolling in his grave.
It’s not all doom and gloom, though. He ends by describing Michigan Ave, and Chicago’s business and shopping districts as a whole, as the finest and most promising in the country. He says that many will pick up cheap bits and pieces of it without realizing its full potential, and will see mountains of wealth if they just wait a decade or two. Throughout this piece, Honore does something I haven’t seen much in recent years. He views Chicago through this childlike lens of wonderment and pride. He is naive and overly optimistic, a young hopeful looking wistfully toward the skyline in gratitude for just the opportunity to behold it. Certainly his dreams were warped by privilege and a lack of perspective, but we can’t say they were entirely inaccurate.
The commercial real estate world still does have value. It’s like a Faberge egg: looking at it, all you see is its elegant fragility, and you’re scared to touch it or even look at it too long for fear of destroying it. But at the end of the day, it doesn’t matter how much money someone spent on it. It doesn’t matter that its value is entirely based on some arbitrary conceptualization of opulence and exclusivity. It’s pretty. That’s why we look at it. That’s why we display it. That’s why we enjoy it. Chicago is really f*king pretty. It inspires the same beautifully careless admiration that Honore felt when he sat down to write this piece. Let’s take a second to look up from our listing agreements, close our checkbooks, and see the city the way we might have in 1901. Look at all the possibilities. Look at how far we’ve come. Look at all the places we’ve yet to go.