Vacant Chicago Storefronts Could Become Affordable Housing

With the great shortage of affordable rental housing in Chicago, the city could develop an innovative incentive program to transform vacant storefronts into residential live/work spaces.


There are hundreds, maybe thousands of vacant storefronts in Chicago—especially in the South Side neighborhoods of Hyde Park, Woodlawn and South Shore, where three in five small retail spaces on 75th Street laid vacant last year.


On the North Side, take a drive west on Irving Park Road and other major thoroughfares and you’ll see dozens of vacant storefronts, so this truly is a city-wide problem. Many old corner saloons, churches and funeral parlors have been reborn for residential use. Transforming vacant storefronts throughout the city is far from a crazy idea.


All that’s needed to create an open-floor plan, loft-like residence is installation of a strip kitchen, and a shower adjoining the powder room. Add partition walls for bedrooms and closets, and window treatments and the job would be done.


An affordable storefront live/work housing conversion plan would dovetail nicely with Mayor Lori Lightfoot’s recent creation of five neighborhood target areas for new construction of coach houses, basement and attic apartments—also known as accessory dwelling units (ADU).


The ADU ordinance, which repeals Chicago’s 63-year ban on illegal over-the-garage coach houses, or “carriage houses,” so-called basement “garden” apartments and attic units, allows owners to add moderate-cost rental units in those spaces under a special pilot program.


A 1957 rewrite of the Chicago building and zoning codes “grandfathered” such existing dwelling units built prior to 1948 due to the after-effects of the 1930s Great Depression and the severe post World-War II 1940s housing shortages.


Since then, thousands of existing, but officially unauthorized apartments, were affordably rented in ethnic and gentrified neighborhoods alike.


After the war, some three-flats were split into six rental apartments often with a seventh unit in the basement, and at the time, that was legal.


In the late 1940s, these small, 500-square-foot apartments rented for as little as $20 a month, and included shared bathrooms, ingress and egress. Of course, most blue-collar tenants were earning $50 a week during that era, but those apartments were truly affordable housing by today’s standards.



Following decades of policy decisions that limited their construction, the ordinance amends the city’s Municipal Code to lawfully permit ADUs in five target areas, creating cost-effective housing options in many Chicago’s neighborhoods, while providing a financial boost to owners with existing ADUs.


So, why not add storefronts to the list of affordable live/work housing options?


Curtail storefront tax breaks?


A coalition of small business advocates on the South Side want to limit the run-away tax breaks some property owners are receiving on vacant storefronts on blighted commercial strips, reported Block Club Chicago, a non-profit, independent journalist-run news organization.


Cook County Assessor Fritz Kaegi currently allows owners to apply for up to two years of tax relief for vacant commercial properties if the owner has made “good faith efforts” to rent the property.


South Side businesses and chambers of commerce leaders—in addition to coalition members in Logan Square, North Lawndale, Greater Englewood, and Uptown—have proposed an ordinance that would cap the frequency of storefront vacancy-tax break at three times every 10 years.


“People on the North Side will think there’s not as many challenges, but there are still vacancies all over the city,” Diane Burnham, executive director of the South East Chicago Commission told Block Club Chicago last week.


City-wide storefront owners face many problems:

  • Some shops remain vacant because the building owner can’t afford to make improvements to bring the property up to existing codes.

  • Many storefronts are rehabbed and ready for occupancy. However, rising real estate taxes have pushed up rents, making them too expensive for local small business owners.

The assessor currently sets valuation of one-story stand-alone retail storefronts utilizing a complicated formula that analyzes recent sale prices, rents, expenses and capitalization rates of 7% to 11% to establish tax assessment levels.


If vacant storefronts were converted to residential live/work units, assessment levels could be adjusted downward to a simple 10% of market value, and real estate taxes on these properties likely would be greatly reduced.


Loft-style storefront for $495K

Not all city storefronts are destined to become affordable housing. A loft-style 2-unit storefront property at 2868 N. Elston in the Avondale neighborhood currently is listed for sale at $495,000. Features include exposed brick walls, 11-foot timber ceilings, exposed ductwork and three parking spaces.



“This fabulous 2-flat at Diversey and Elston avenues is the perfect solution for an investor looking for a large live/work commercial space plus a 2-bedroom, 1-bath residence with 1,600 square feet of living area, central air conditioning and a private balcony,” said broker George Christos of Urban Abodes.


The storefront space, currently leased to a tattoo parlor for $2,400 a month, features a kitchenette with granite counters and cabinets, and a bathroom with shower. For more information, contact Urban Abodes managing broker Bee Christos, 312-259-8115, or online: bee@urbanabodes.com.


For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”

 

Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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