Perception Of Cities Plagued By Crime A Narrative CRE Industry Is Trying To Shake
After teasing a departure over the city’s rise in violent crime for months, billionaire Ken Griffin finally bit the bullet this past June, announcing plans to move his investment firm Citadel from downtown Chicago to Miami, complaining the city had become too dangerous to house the multinational hedge fund.
“If people aren’t safe here, they’re not going to live here,” Griffin told The Wall Street Journal this spring, pointing to colleagues who'd been mugged at gunpoint, stabbed or burglarized. “I mean, that’s a really difficult backdrop with which to draw talent to your city from.”
Griffin is not the first executive to express major concerns about crime’s impact on the city's business community nor the first to decamp for greener pastures — aerospace giant Boeing and equipment manufacturer Caterpillar also announced plans to leave the city in recent months.
Perception of a city plagued by crime carries weight. And Chicago’s longstanding reputation as the place former President Donald Trump once referred to as “worse than Afghanistan” is one that precedes it.
It's also a narrative the commercial real estate industry is trying hard to shake, but acknowledges looms large over the city's future.
“Chicago is a large city and easy to talk about," Palladius Capital Management CEO Nitin Chexal said of the city's image problem. "It’s the third-largest in the country, but there’s crime increasing everywhere. It’s the same with Los Angeles, Miami and New York.”
To be sure, crime is up in certain categories across the city and in neighborhoods that have seen a dropoff in crowds of tourists and office workers since the beginning of the pandemic.
But despite its reputation, Chicago doesn't even crack the top 100 most dangerous places to live, according to a study by analytics firm NeighborhoodScout, based on raw violent crime data compiled from all 18,000 U.S. law enforcement agencies serving populations of 25,000 or more. So far in 2022, homicides are down 17% compared to the same time last year, according to figures provided by the Chicago Police Department — though that drop is tempered by the fact 2021 was the city’s deadliest year on record since 1995.
Even so, worry abounds about the city’s continued ability to attract and retain business amid spiking robberies, thefts and car heists, and high-profile incidents like the July 4 mass shooting at a Highland Park Independence Day parade that killed seven and injured dozens more.
Crime was one of the most consistent topics raised in a midyear DePaul University-Urban Land Institute survey of real estate professionals. “Crime, some of which is pretty insidious, will undermine why people come here, as investors, tourists or job seekers," said Mary Ludgin, head of Global Investment Research at Heitman, a global real estate investment management firm.
Perceptions that crime is up, well-founded or not, are not unique to Chicago. Similar trends have also been reported across nearly every urban metro over the past two years, according to a Bloomberg report, and many are reporting an uptick in violent crimes, including shootings and assaults — though rates remain comparatively low against those of the 1980s and 1990s.
“Crime has been cyclical and there have been periods it’s been especially bad and the city took measures to improve it,” Chexal said, adding he believes crime will taper off when the city returns to pre-pandemic normalcy and more people enter the job market.
Crime rates changed dramatically across the U.S. during the pandemic and Chicago was no exception.
The city has seen year-to-date theft cases rise from 6,964 in 2021 to 11,569 so far in 2022 and from 5,704 motor vehicle theft cases in 2021 to 8,992 in 2022, per CPD. And where murders are down, sexual assault and aggravated battery remain about the same.
Meanwhile, in the city’s Central Business District, Police Superintendent David Brown recently confirmed what CRE heads have known for years — the downtown area is hurting and displacement is happening in relation to the rise in crime.
“We’re starting to see increases in areas that we normally don’t have those increases,” Brown told the Chicago Sun-Times about the spread of crime across the city, particularly to wealthier areas downtown.
A notable victim of the pandemic and rising crime is retail along the Magnificent Mile, which has slumped in recent years. As the city’s economic engine, a spike in the area’s crime has become a flashpoint in the news, with some outlets capitalizing on the issue to cultivate a narrative about the city overall, according to Texas State University associate professor in the School of Criminal Justice and Criminology Lucia Summers.
But "cities are not homogenous," Summer said, adding it is important to look at crime statistics over time and across the city’s map to appreciate the complexity of the situation.
West and South side neighborhoods like Englewood, Fuller Park and East Garfield Park have faced a disproportionate amount of violence for years, and it is those neighborhoods that suffer the highest number of fatal and nonfatal shooting victims per 10,000 residents according to data via the city’s Violence Reduction Dashboard.
To say the entire city is enduring violent crime would not be accurate, according to Summers, who said different topics, cities and people get disproportionate attention in the media at different points in time for various reasons.
“If you zoom in, the same amount of crime is not occurring everywhere,” she said. “There are some neighborhoods in Chicago that are very safe and others that are quite dangerous but you have a lot of variation. The most ‘dangerous city’ is not the most dangerous throughout.”
Yet crime remains top-of-mind for real estate professionals who rated their concerns surrounding the issue high on a 1 to 5 scale in the DePaul-Urban Land Institute’s 2022 Mid-Year Sentiment report.
The report places fear of crime’s impact on investor perception at a 4.16 ranking and concern for attracting tourists and others to downtown retail and entertainment districts like the Magnificent Mile, State Street and Millennium Park at 4.11. Unease over crime’s potential to slow return-to-office ranked 3.8.
Meanwhile, a spike in crime on public transit is not helping the city’s campaign to bring people back to the office and repopulate downtown. The number of crimes on CTA vehicles this year through July 19 was the highest it has been since 2011, and the second-highest in two decades, even though ridership is still down by almost half, the Chicago Sun-Times reported.
Office attendance numbers are a far cry from what they once were with average office occupancy teetering around 40% of pre-pandemic levels for the week ending Aug. 10 in the Kastle Back to Work Barometer, which tracks average weekly keycard swipes in buildings using its technology.
While myriad factors are keeping people working from home or out of the workforce altogether, attracting people to the downtown area and back to work are key ways experts and city officials say crime incidents will start to fall.
To do so, Chicago needs to focus on building a more vibrant city center and becoming more consumer-oriented, said James Shilling, professor and chair at the Real Estate Center at DePaul University.
“The urban service retail sector is 55% of the total employment of the U.S. economy, so we can’t disentangle these links,” he said. "Jobs and a stronger economy clearly help and if we want some of that to recover, we need to have reasons to go downtown and we need to have businesses, restaurants and shops that have closed during the pandemic reopen.”
27th Ward Alderman Walter Burnett, whose ward includes the Fulton Market District, where strong real estate sales persisted through a slow pandemic year, said tourism is part of Chicago's bread and butter when it comes to keeping residents safe. However, it can only ramp up if the gap in available jobs is filled.
“Everyone is hiring right now, which is good because we need to get people into the workforce,” Burnett said. "The more people work, the less crime we will have. It’s about changing the mindset and the culture of society.”
He said Chicago needs to rely more on its natural infrastructure when marketing itself and that “the city has to brace itself for the economic boom that’s happening in real estate,” citing recent increases in property values and rents.
“We have to put affordable housing in certain areas to balance out the communities because things are selling for so high,” he said.
As businesses work to attract investors, tourists and office workers back to hollowed-out areas in the post-pandemic recovery period, some companies are taking another tack: boosting private security spending and participating in city-led safety initiatives amid the rise in crime.
This summer, the city rolled out a street ambassador program as part of its recovery plan initiative. The program is set to hire and train over 100 neighborhood residents to patrol targeted retail districts and provide extra security to businesses across the city.
Organizations like the Magnificent Mile Association are behind the program for its own area, as well as River North and the Loop, where a number of prominent firms are located.
"The Corridor Ambassador program is an exciting new tool to create welcoming and safe neighborhood shopping destinations," Mayor Lori Lightfoot said in a release. "By partnering with established community organizations that employ local residents, we can help ensure that businesses and shoppers have on-the-spot contacts for any assistance they may need to have a positive experience."
The news for Chicago is not all bad. Chicagoland still broke its own record in number of development projects kicked off this past year, with Site Selection magazine naming it the top metropolitan area in the U.S. for corporate relocations for the ninth consecutive year.
And despite the pullout of value-adding firms like Caterpillar and Citadel, Shilling said he is anything but bearish on the city's fortunes considering the range of companies in Chicago compared to a market like San Francisco, which is heavily dependent on revenue built from tech companies alone.
“We’re more diversified across the board and have about the same level of value-added as New York or Atlanta,” he said. “We have a wide array and employment base of value-added companies here so there really are positive things to think about going forward that exist separate from the current crime statistics."
