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Is COVID-19 affecting Chicago building permits?

Published on Oct. 13, 2020 by Steven Vance

Updated on Oct. 16, 2020

One of Chicago Cityscape’s members is a service provider for property owners and was trying to see building permit trends and if the novel coronavirus pandemic was affecting building permits in the city. They emailed me after looking at the year-over-year building permits spreadsheet in their custom sales area (which is drawn as a Personal Place). Knowing the trend is key to their forecasting and business development efforts.

The short answer of COVID-19’s impact on building permits, based purely on the rate of building permits issued, is it’s hard to tell. That’s because the rate of issuing building permits for new construction in Chicago declined by 1.5 percent from 2017 to 2018, by 10.4 percent from 2018 to 2019, and we don’t have enough information to know if would have continued through 2020. (So far, though, the decline is 44.7 percent from 2019 to 2020.)

A complete rehab of the apartment building at 1926 W Harrison St — now known as Atrio — is underway (left, before the highway), and Gateway Chicago (foreground) received building permits this year for two major buildings to follow the construction of the two visible 1-story buildings.

One impact with issuing permits happened on the supply side this year — at the Department of Buildings — when staff had to switch to working from home, and the department had to modify procedures. Additionally, inspections and violation citations fell drastically in March and April, with a particularly notable fall right after Governor Pritzker’s shelter in place order took effect on Saturday, March 21, 2020.

On the demand side — those applying for building permits — the rate has fallen, but there isn’t enough information in the Chicago Cityscape datasets to understand how much of this is due to a “natural” decline versus a COVID-related decline.

Chart showing new construction and demolition permits issued, and projects proposed to City Council, in Chicago from January 1, 2017, to October 12, 2020. The dashed lines are 3-month moving averages. (Scroll to the end to see a bonus chart.)

Another data point to look at is Proposed Projects. Every month, property owners and developers submit zoning change applications to City Council when a property’s zoning classification doesn’t match the applicant’s proposed design and use.

The number of Proposed Projects has also gone down. Obviously, 2020 isn’t complete, but the number of projects that would need to be proposed in November and December of this year to meet 2019’s level would mean a 71 percent increase over the number of Proposed Projects introduced between January and October this year.

The same Cityscape member also uses Proposed Projects, to generate leads, gather contact info and jumpstart their sales process. Contact us if you want access to this.

The number of Proposed Projects increased by 0.8 percent from 2017 to 2018, and then decreased by 14 percent from 2018 to 2019, and decreased by 41.5 percent from 2019 to 2020 (January 2020 to October 2020). See the gray lines in the chart above.

Not all zoning change applications are for new construction or significant, market-making projects. Sometimes it’s a zoning change to make an existing nonconforming use or building a conforming one. Other times it’s to allow an additional dwelling unit, in the basement, a zoning change type which the delayed ADU ordinance would make unnecessary.

How much of a role do you think the COVID-19 pandemic has changed development in 2020? How much do you think it will change in 2021?

Regardless of the cause, fewer projects are being proposed, making it more competitive for service providers to sell into these opportunities. If you want to see how Cityscape members connect with business opportunities early in the development process, we’ll show you on a short coaching call.

Bonus chart shows residential unit permitting activity in Chicago, Cook County, and the six collar counties (Kane, Kendall, DuPage, Lake, McHenry, and Will). The data comes from the U.S. Department of Housing & Urban Development which collects the information from municipalities directly.

HUD’s data here is counted in number of dwelling units permitted. The vast majority of dwelling units permitted in Chicago (86 percent) are in buildings with 5+ units.

Is COVID-19 affecting Chicago building permits? 😟 was originally published in Chicago Cityscape on Medium, where people are continuing the conversation by highlighting and responding to this story.

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