Chicago will grant $150 million in subsidies to real estate developers to convert unused office space in the once-vibrant downtown district into hotels and apartments in hopes of revitalizing the deteriorating area..
Under the plan — the most generous by any city addressing the commercial real estate crisis sparked by the pandemic — the taxpayer money will help create 1,000 apartments in four buildings, as long as about a third will be set aside as affordable units, according to The Wall Street Journal.
The move comes as the Democrat-led Windy City has been plagued by rampant crime and the flight in recent years of major companies — including Ken Griffin’s hedge fund Citadel and aerospace giant Boeing. Griffin said the last straw in his decision to relocate Citadel to Florida in 2022 came after a colleague was robbed while having a gun pressed to his head during a coffee run.
Aside from the city’s lawlessness, Chicago’s office market has been beset by weakening demand, higher interest rates and difficulties in refinancing, The Journal reported.
Mayor Brandon Johnson, a progressive who defeated Lori Lightfoot last year, ran on a platform of increasing taxes on businesses. But he has been forced to ally with the real-estate community to save the downtown’s commercial office district.
Earlier this year, he appointed a real-estate executive to lead the citys Department of Planning and Development, and Johnson’s subsidy plan has earned praise from the business community.
In March, Chicago businesses backed Johnson’s plan to sell up to $1.25 billion in housing and economic development bonds designed to spur economic growth and the construction of more affordable homes.
He does not want to be the mayor who loses downtown, David Reifman, who served as commissioner of planning and development under former Chicago Mayor Rahm Emanuel, told The Journal.
Other US cities — including New York, where some unused office buildings are being converted into residential real estate. — have faced similar difficulties since the pandemic, but Chicago’s woes are the among the worst.
In early 2020, Chicago’s office vacancy rate was 11.9%. In the second quarter of this year, the vacancy rate stood at 16.3% — well above the national average of 13.8%.
Last year, fewer than five large-office buildings were sold, according to the Building Owners and Managers Association of Chicago. The deals that were finalized resulted in losses ranging from 50% to 90%.
Data from KBRA Analytics shows that three-fourths of the mortgages that back Chicago office space are either in default or are at risk of default.
Chicago, the birthplace of the skyscraper, has seen some of its tax revenue dry up thanks to the declining values of commercial real estate.
In a sign of just how dire the commercial real estate market is nationwide, Starwood’s Real Estate Income Trust, which is run by real estate mogul Barry Sternlicht and his company Starwood Capital Group, announced that it would impose tighter limits on investors’ ability to pull money from the $10 billion fund.
The move by SREIT is seen as an effort to delay selling off assets at a loss. By the end of April, SREIT had just $752 million in available liquidity, according to Bloomberg News.
Before the move, investors could redeem withdrawals of up to 2% of net asset value. Now they could only withdraw 0.33%.
Sternlicht said in an emailed statement that the company believes “the real estate markets are bottoming and will continue to improve from here” and thus “further leveraging the vehicle or selling our portfolio’s assets to meet monthly redemptions would negatively impact all investors.”
Treasury Secretary Janet Yellen said earlier this year that she expects additional bank stress and financial losses from weakness in the commercial real estate market but believes this will not pose a systemic risk to the banking system.
Yellen told a Senate Banking Committee hearing that regulators are working with banks to address risks caused by higher post-pandemic vacancy rates for many office buildings in larger cities, and higher interest rates for refinancing loans.
Gillian Anderson has warned homelessness is a growing problem in the UK – one that will only get worse if we enter a recession.
The award-winning actress, who is playing a woman facing homelessness along with her husband in her latest film, The Salt Path, told Sky News: “It’s interesting because I feel like it’s even changed in the UK in the last little while.”
Born in Chicago, and now living in London, she explained: “I’m used to seeing it so much in Vancouver and California and other areas that I spent time. You don’t often see it as much in the UK.”
Her co-star in the film, White Lotus actor Jason Isaacs, chips in: “You do now.”
“It’s now becoming more and more prevalent since COVID,” said Anderson, “and the current financial situation in the country and around the world.
“It’s a topic that I think will be more and more in the forefront of people’s minds, particularly if we end up going into a recession.”
Image: Gillian Anderson and Jason Isaacs in The Salt Path. Pic: Steve Tanner/Black Bear
The film is based on Raynor Winn’s 2018 memoir, which depicts her and her husband’s 630-mile trek along the Cornish, Devon and Dorset coastline, walking from Minehead, Somerset to Land’s End.
Written from her notes on the journey, The Salt Path went on to sell over a million copies worldwide and spent nearly two years in The Sunday Times bestseller list. Winn’s since written two more memoirs.
Isaacs, who plays her husband Moth Winn in the movie, told Sky News that Winn told him she “hopes [the film] makes people look at homeless people when they walk by in a different light, give them a second look and maybe talk to them”.
With record levels of homelessness in the UK, with a recent Financial Times analysis showing one in every 200 households in the UK is experiencing homelessness, the cost of living crisis is worsening an already serious problem.
Image: Pic: Steve Tanner/Black Bear
The film sees Ray and Winn let down by the system, first by the court which evicts them from their home, then by the council which tells them despite a terminal diagnosis they don’t qualify for emergency housing.
Following the loss of their family farm shortly after Moth’s shock terminal diagnosis with rare neurological condition Corticobasal Degeneration (CBD), the couple find solace in nature.
They set off with just a tent and two backpacks to walk the coastal path.
Isaacs says living in a transient way comes naturally to actors, admitting like his character, he too “lives out of a suitcase” and is “away on jobs often”.
Shot in 2023 across Somerset, Devon, Cornwall and Wales, Anderson says as a city-dweller, the locations had an impact on her.
Anderson reveals: “As I’ve gotten older, I have become more aware of nature than […] when I was younger, and certainly in filming this film and being outside and so much of nature being a third character, it did shift my thinking around it.”
Meanwhile, Isaacs says he discovered a “third character” leading the film just the day before our interview, when speaking to Winn on the phone.
Isaacs says the author told him: “I feel like there’s three characters in the film,” going on, “I thought she was going to say nature, but she said, ‘No, that path'”.
Isaacs elaborates: “Not just nature, but that path where the various biblical landscapes you get and the animals, they matter.
“The things that happen on that path were a huge part of their own personal story and hopefully the audience’s journey as well.”
The Salt Path comes to UK cinemas on Friday 30 May.
Sir Keir Starmer could decide to lift the two-child benefit cap in the autumn budget, amid further pressure from Nigel Farage to appeal to traditional Labour voters.
The Reform leader will use a speech this week to commit his party to scrapping the two-child cap, as well as reinstating winter fuel payments in full.
There are now mounting suggestions an easing of the controversial benefit restriction may be unveiled when the chancellor delivers the budget later this year.
According to The Observer, Sir Keir told cabinet ministers he wanted to axe the measure – and asked the Treasury to look for ways to fund the move.
The Financial Times reported it may be done by restoring the benefit to all pensioners, with the cash needed being clawed back from the wealthy through the tax system.
The payment was taken from more than 10 million pensioners this winter after it became means-tested, and its unpopularity was a big factor in Labour’s battering at recent elections.
Before Wednesday’s PMQs, the prime minister and chancellor had insisted there would be no U-turn.
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Will winter fuel U-turn happen?
Many Labour MPs have called for the government to do more to help the poorest in society, amid mounting concern over the impact of wider benefit reforms.
Former prime minister Gordon Brown this week told Sky News the two-child cap was “pretty discriminatory” and could be scrapped by raising money through a tax on the gambling industry.
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Brown questioned over winter fuel U-turn
Mr Farage, who believes Reform UK can win the next election, will this week accuse Sir Keir of being “out of touch with working people”.
In a speech first reported by The Sunday Telegraph, he is expected to say: “It’s going to be these very same working people that will vote Reform at the next election and kick Labour out of government.”
Sir Alan Bates has accused the government of presiding over a “quasi kangaroo court” for Post Office compensation.
Writing in The Sunday Times, the campaigner, who led a years-long effort for justice for sub-postmasters, revealed he had been given a “take it or leave it” offer that was less than half of his original claim.
“The sub-postmaster compensation schemes have been turned into quasi-kangaroo courts in which the Department for Business and Trade sits in judgement of the claims and alters the goal posts as and when it chooses,” he said.
“Claims are, and have been, knocked back on the basis that legally you would not be able to make them, or that the parameters of the scheme do not extend to certain items.”
More than 900 sub-postmasters were prosecuted between 1999 and 2015 after faulty Horizon accounting software made it look as if money was missing from their accounts.
Many are still waiting for compensation despite the previous government saying those who had their convictions quashed were eligible for £600,000 payouts.
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‘It still gives me nightmares’
After the Post Office terminated his contract over a false shortfall in 2003, Sir Alan began seeking out other sub-postmasters and eventually took the Post Office to court.
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A group litigation order (GLO) scheme was set up to achieve redress for 555 claimants who took the Post Office to the High Court between 2017 and 2019.
Sir Alan, who was portrayed by actor Toby Jones in ITV drama Mr Bates Vs The Post Office, has called for an independent body to be created to deliver compensation.
He added that promises the compensation schemes would be “non-legalistic” had turned out to be “worthless”.
It is understood around 80% of postmasters in Sir Alan’s group have accepted a full and final redress, or been paid most of their offer.
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‘Lives were destroyed’
A Department for Business and Trade spokesperson told Sky News: “We pay tribute to all the postmasters who’ve suffered from this scandal, including Sir Alan for his tireless campaign for justice, and we have quadrupled the total amount paid to postmasters since entering government.
“We recognise there will be an absence of evidence given the length of time which has passed, and we therefore aim to give the benefit of the doubt to postmasters as far as possible.
“Anyone unhappy with their offer can have their case reviewed by a panel of experts, which is independent of the government.”