Chicago, Illinois Employment in the Chicago metropolitan area in 2002 was down for the third consecutive year. Nonagricultural employment declined by 65,700 jobs between 2001 and 2002. Three major employers reported significant job cutbacks: Lucent Technologies, United Airlines, and Arthur Andersen. The unemployment rate in the metropolitan area was 6.5 percent as of November 2002 compared with 5.7 percent in November 2001. Construction employment averaged 188,000 jobs annually in the 2000–02 period, an 18-percent increase over the previous 3-year period. Nonresidential construction activity in the Chicago area has been robust for the past 3 years. Boosted by construction of additional warehouse facilities, approximately 10 million square feet of space has been added annually in the past 3 years, nearly double the 5.5 million square feet added in the 1997–99 period. Activity in 2003 will likely remain strong. Construction of the $70 million military barracks at the Great Lakes Naval Training Center is expected to boost the local economy in north suburban Lake County. The planned $350 million expansion of the Alexian Brothers Medical Center campus in northwest Cook County over the next 5 years will include a new hospital, office buildings, and an assisted living community for the elderly. In Chicago’s South Side the new $100 million Solo Cup manufacturing facility will open in 2004 to 1,000 new employees. Both Illinois and the city of Chicago are investing more than $30 million in infrastructure, job training, transportation, and educational and recreational facilities on the site of the former U.S. Steel South Works plant. Strong residential construction activity in the metropolitan area during the past 4 years has helped boost Chicago’s economy. According to Strategy Planning Associates Inc., residential building permit activity in the area averaged 37,700 units annually in the 1999–2002 period compared with 32,200 units annually in 1995–98. Single-family permit activity averaged 26,800 units annually and multifamily averaged 10,800 units annually, up 14 and 26 percent, respectively. Contracts were signed for 13,000 new homes in the metropolitan area, up 10 percent from 2001. This strength is due to low mortgage interest rates, high demand, the availability of homes in many price ranges, and increased investment in real estate versus other investment opportunities. Sales of existing homes in the Chicago area were also strong in 2002. The Chicago Association of REALTORS® reports that 120,192 existing homes were sold in the metropolitan area in 2002, up 9 percent from 2001. Sales of existing condominium units in the city of Chicago were even stronger, up 13 percent. The median sales price for existing homes increased 9 percent to $230,200 as of the third quarter of 2002 compared with $211,800 in the third quarter a year ago. To boost homeownership the Banc One Corporation and Fannie Mae will provide $12.5 billion in mortgage assistance to first-time homebuyers during the next 5 years. In addition, Chicago plans to stimulate construction of affordable housing by requiring builders to set aside 10–20 percent of their housing units as affordable for projects receiving Chicago financial assistance or developed on city-owned land. Instead of the unit set-aside, builders can contribute to a fund for affordable housing. In Chicago’s South Loop one of the city’s hottest sales and rental markets, Park Boulevard Towers, will offer 176 affordable apartments, 90 of them for seniors. Chicago’s apartment market is soft overall. CB Richard Ellis’ 2002 survey of 33,100 new and existing apartments in suburban Chicago showed that occupancy has declined from 95 percent in the third quarter of 2001 to 90.3 percent in the fourth quarter of 2002. Apartment occupancy ranged between 89 percent in DuPage County and the western suburbs to 91 percent in northwest Cook County. The survey also showed class A luxury projects in suburban Lake County to have the lowest occupancy rate at 87 percent. Downtown Chicago’s hot residential market cooled in 2002 as the slowing economy dampened demand for new housing. The downtown market will likely remain soft because a record 6,400 new condominiums and apartments are expected to enter the market during 2003.

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