I am in Chicago for Saint Patrick’s Day (celebrating drinking) and I am astounded by the tall buildings here.

To prove my point, here is the view from my Airbnb highrise:

Whenever I travel to a new city, I am always curious about the real estate scene in and around the city. Chicago is no exception. There are some great people on Twitter (Never X) who invest - namely Iman Jalali who owns 800+ units in Chicagoland from what I understand.

Industries:

Whenever I first look at a real estate market, I take a look at the industries present and large employers there.

Chicago is one of the few “American cities” (arguably more blue collar than any other city in the USA) - being a melting pot of a lot of Europeans when they came to work during the early 1920s. 2.7 million people call this place home so it’s no surprise there are lots of job opportunities here.

A few of the key industries from what I’ve seen are:

• Manufacturing

• Transit, distribution, logistics,

• Finance

• Life sciences

• Healthcare

• Food packaging

• Technology

• Retail

• Sports

• Construction/real estate

For manufacturing and food packaging, some of the large employers are the Kraft Heinz companies and Con Agra Brands (Hunt’s, Healthy Choice). McDonalds & Mondelez (Oreo, Cadbury parent company) are founded here. There are other manufacturing brands like Ingredion Incorporated which is HQ’d here.

When it comes to transit/logistics/distribution, a few of the big players HQ’d here are Echo Logistics and United Airlines.

Chicago is often synonymous with CMOE or Chicago Mercantile Options Exchange. A few of the big firms in finance here are CME Group, Morningstar (ratings agency), Northern Trust, TransUnion, Grant Thornton LLP (consulting).

In life sciences & healthcare, some of the big names are Tempus & Horizon Therapeutics along with Northwest Medical School & Rush University Medical Center.

In terms of tech, it’s no Silicon Valley, but a few big players HQ’d out here are Grubhub, Active Campaign (email sending software), BrainTree (aka company that bought Venmo for $800mm). There are a few regional offices for FAANG, Salesforce, and others.

Within the retail sector, Ulta Beauty (your girlfriend will know what this is) and Walgreens both call Chicago their home and HQ.

Obviously, Chicago is home to some die-hard sports fans. Chicago Cubs, Bears, Bulls, Blackhawks, and the White Sox call this city home. With so many sports teams, inhabitants don’t have any issues when it comes to picking a team.

Real Estate & Construction - JLL and Cushman & Wakefield, two of the big 4 brokerages call Chicago home. Clayco (big construction firm) is also HQ’d here as well.

So as you can see, there are a wealth of industries that call Chicago their HQ. It checks my boxes when it comes to diversity of industries and reduces concentration risk on only one industry/employer. There are also many different jobs from white collar workers to blue collar workers that offer a diversified tenant mix.

Real Estate Available

Given so many industries that are here, they require a variety of different buildings. News flash: Buildings are always for sale.

With manufacturing, you’ll have industrial buildings - necessary for manufacturing, distribution, warehousing/storage, and more.

With white collar work for tech, you’ll need centralized offices (aka good for office buyers).

With life sciences, they all need pristine, class A lab space that’s usually built to spec.

Since there are 2.7 million folks, there need a place to live, places to shop so you can buy retail & apartment buildings here.

Age of Inventory

One thing I always look out for is age of inventory. After dealing with my Cleveland properties from the 1960s, it’s good to understand what’s the typical age of construction in an area.

Just walking around, I can see there is a LOT of new developments in certain parts of the city. These are probably owned by institutions or HNWI’s and they probably don’t need to worry about maintenance for quite some time.

There are a lot of high rises which mean infrastructure issues in the next 20-30 years when elevators start malfunctioning and the “sexy tech” might have some bugs. Have you ever seen a car from 10-15 years ago with an outdated infotainment system? It’s the same concept.

In downtown, most of the buildings seem new. When you venture out to the suburbs, that’s when I can see a lot of the construction from the 1950s & 1960s are there too.

Taxes & Capital Expenditures

The biggest factor I consider is property taxes when looking at a market.

Property taxes are the biggest item that eats into cash flow aside from insurance. This is the main obstacle that’s kept me from investing in Texas & ironically, Chicago.

Chicago’s pretty much bankrupt as a city. Some of the fiscal allocations include pensions & capital expenditures.

Earlier this year (Jan 2025), Chicago was downgraded from a BBB+ to a BBB bond credit rating according to the S&P.

Chicago has recently had a strong of public projects they have to fund. Some big ticket items include the O’Hare Airport expansion & transit expansion too.

These capital expenditures are usually formed in the vehicle of a bond. The city will pay those back using city taxes (sometimes including property taxes).

Cook County has one of the highest property tax rates in the country. Mayor Brandon Johnson also proposed a $300mm hike in property taxes in 2026. The main driver for this was bankrolling the city’s pension for workers. Source: Illinoispolicy.org.

Rising pension costs take away property tax revenue going to libraries, colleges, and other public infrastructure projects.

Landlord laws

One of the major things I preach is understanding landlord laws and tenants rights. This is why I loved Ohio for rentals. I am also weary of San Francisco and Los Angeles because if you have a professional tenant, that can screw you out of years of cashflow.

Coming back to the topic at hand… landlord laws in Illinois.

Illinois is extremely tenant friendly.

In Illinois, they have some of the basics:

• No rent control

• 30 day notice for rent increases in month to month leases

• Landlord has responsibility for habitable area

But when it comes to Chicago in particular, they have a few nuances.

• For rent increases with <6 month leases, you have to give 30 days notice.

• For rent increases with 6+ month leases, you have to give 60 days notice.

• For rent increases with 3 year leases, you have to give 120 days notice.

• The eviction process is between 40-90 days in Chicago

• Failure to release security deposit within 45 days (with itemized deductions) can cost up to 2x deposit amount

• Chicago has rent control capping growth at 5% annually (not the worst)

• Lot of tenancy advocacy groups

Submarkets

Let me break down the different areas of Chicago - and trust me, each one has its own personality (and price tag).

Downtown/Loop & Central Areas

This is the beating heart of Chicago - think suits, tourists, and those iconic skyscrapers you see in postcards.

What's cool here:

• Corporate big dogs keep office demand high

• Hotels everywhere (hello, tourism dollars)

• High-end retail that keeps getting pricier (5th Avenue???)

• Tons of new development keeping things fresh

The catch? It's expensive as hell, but occupancy stays solid because, well, location location location.

West Loop & River North

If you've ever wanted to see gentrification in action, this is your spot. These areas went from warehouse districts to "where the cool kids live" practically overnight. Think of this like Brooklyn or Oakland…

The deal here:

• Tech bros and healthcare professionals LOVE it

• Restaurant scene is insane (seriously, try the restaurants)

• Those old warehouses? Now they're $3K/month lofts

• Vacancy rates are super low because everyone wants to live here

Fun fact: Most of my Chicago real estate buddies are trying to get their hands on anything in these areas. It's like printing money if you can get in.

Hyde Park & South Shore

Think "smart money" - literally. With University of Chicago anchoring the area, this submarket is steady as they come.

Why it works:

• Students and professors = reliable tenants

• Historic buildings with character (and maintenance needs, heads up)

• Limited new construction keeps vacancy tight

• More bang for your buck compared to northern neighbors

North Side Vibes (Uptown, Logan Square, Evanston)

This is where Chicago gets interesting. Each neighborhood here has its own thing going on:

• Logan Square: Hipster central, great for smaller multifamily

• Uptown: Old school meets new money

• Evanston: College town feel (Northwestern University) with suburban perks

Pro tip: Look for properties near the L (transit lines). That's where your appreciation will be.

The 'Burbs

Don't sleep on the suburbs. Places like Naperville and Oak Park are where families are heading when they get priced out of the city.

There’s a running joke when I meet people who say they’re “from Chicago” and turns out they’re from Naperville. (Note: I do the same thing - I am from a suburb but say I’m from San Francisco).

What's working:

• Better schools = stable tenants

• New construction opportunities

• Lower entry points than city center

• Strong rental demand from commuters

Transit-Oriented Developments (TODs)

This is the future of Chicago real estate. Anything near major transit hubs is gold, especially with mixed-use zoning.

Why I like these:

• Multiple revenue streams (retail + residential)

• Usually newer construction (less maintenance headaches)

• Great for both young professionals and families

• ESG friendly (if you care about that sort of thing)

Final Thoughts on Chicago Real Estate

Look, I came here for Saint Patrick's Day shenanigans, but I'm leaving with some serious thoughts about Chicago real estate. For a big city, it offers quite a good value, but you have to do your due diligence.

Here's the deal:

The Good:

• Diverse economy (seriously, everything from tech bros to factory workers)

• Tons of different property types to choose from

• Some neighborhoods are literally printing money (looking at you, West Loop)

• Solid transit system that's actually expanding

• Better cap rates than coastal markets

The Bad:

• Those property taxes are no joke (and probably getting worse)

• The city's basically broke (BBB rating... yikes)

• Super tenant-friendly laws that'll make you miss Ohio

• That pension problem isn't going away

• Maintenance costs on aging buildings could be a nightmare

Would I buy here? Maybe. But I'd be pretty picky about it:

1. I'd focus on transit-oriented developments

2. Look hard at those up-and-coming neighborhoods (before they're fully gentrified)

3. Stay away from anything that needs major repairs

4. Double check those property tax assessments

5. Have a REALLY good property manager who knows the local laws

For now, I'm heading back to my Airbnb to enjoy this view one last time.

P.S. If you're thinking about investing here, grab a beer with some local investors first. The real intel doesn't show up in market reports.

-Mohit