Here we are, entering week 8 of shelter-at-home with at least another 4 weeks.  While it’s easy to get caught up in the flurry of our constantly changing environment, I am grateful for the constants I find around me and the promise of Spring.  This week I am happy to introduce you to two more individuals in our community – Bill Eager (POAH) and Brenda Swartz (Concordia Place), who in addition to Mary Ludgin, join our conversation.

Take care –
Cindy McSherry | Executive Director | ULI Chicago

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Tales From the Front Line | April 27, 2020

MARY LUDGIN
Senior Managing Director & Director Global Investment Research | Heitman LLC
Read Mary’s Bio

ULI Chicago Commentary…Week What?

I was supposed to have given a river tour today, showing off downtown Chicago’s architectural treasures to a group of real estate professionals, including Chicagoans and out-of-towners.  I committed to doing it six months ago, back when the only threats to the tour not happening were weather-related. So much that we took for granted – summer outings, baseball, being able to buy yeast at a grocery store, going to the office, Ravinia – now lies out of reach. I still occasionally find myself wondering if the Cubs are on – maybe I can catch a bit of a night game while brushing my teeth. Then I remember.

It was a week of sobering news. Monstrous levels of job loss. Sharp Q1 GDP declines in the US and abroad. Sharp isn’t a strong enough word to describe the enormity of the economic destruction captured in these GDP reports but my son needs my computer in 15 minutes for a video call so we’ll leave it at sharp. Human suffering that could have been avoided. Lives that didn’t have to be lost. And the risk lingers, even as people try to figure out the prudent way to return to the office, to reopen retail businesses, to conduct their lives.

At work, we’re trying to get a jump on valuing our US portfolio for Q2. So many questions. Every convention needs to be examined. What’s an appropriate inflation assumption? What’s the right discount rate in this strange time? What’s market rent for a restaurant space where it would cost the owner more to reopen under social distancing protocols than it does to keep it closed? What will the mounting amount of sublease space in downtown Chicago mean for office rents? Apartment tenants for the assets in our portfolio generally paid their rent in April. How long will that persist?

I’ll end with a few hopeful signs. The president of the college I attended sent an email to alums. She is working with her faculty and staff on a strategy for reopening in the fall. She’s not alone. We got an inquiry from the university in a market where we own student housing. The university would lease space as part of implementing social distancing in on-campus housing. Ingenuity is starting up.

BILL EAGER
Senior Vice President – Midwest | POAH
Read Bill’s Bio

As the quarantine enters yet another month, I am reminded constantly of how fortunate we are in the affordable housing industry – and that our mission of community revitalization seems more urgent than ever.  I am also sobered to think about the challenges for friends working on the front lines and for those whose lives have been upended economically.

I’m lucky that I can work safely from home, stir crazy as I might get. POAH’s development deals may move a little more slowly right now, but they are moving nonetheless. Current projects are wrapping up, new deals are on the horizon. My world is disrupted, nothing worse.

Compare that to the hundreds of property-based staff at our affiliate POAH Communities, who are trying to serve residents safely, keep buildings clean and deliver quality services. For some, that includes delivering meals each morning to hundreds of seniors.  For others it’s frequent scrubbing of common areas or making emergency repairs clad in PPE. Or perhaps lending an ear to a worried tenant.  It is truly essential work and we recognize that now more than ever.

What I’m most struck by, however, is the critical nature of our work. If any good comes of this crisis, perhaps the affordable housing industry – and community development more broadly — will emerge stronger than before. Hopefully state and federal policy makers will better understand the need for more development resources in underinvested communities, more rental subsidies for our low-income neighbors and more supportive services.

The following story about how COVID-19 is affecting lower-income communities underscores two important points: that it’s not simply density driving transmission rates in cities as much as people having to band together to afford housing. https://www.propublica.org/article/in-chicago-urban-density-may-not-be-to-blame-for-the-spread-of-the-coronavirus

If the safest place to be is home, then clearly, we need homes more than ever, for people of all income levels.

Brenda Swartz
President & CEO | Concordia Place
Read Brenda’s Bio

When I recount a story from my past, I sometimes have to add context, such as “that was before 9/11” or “that was before everyone had cell phones.”  It’s already clear this pandemic has created a profound demarcation in our lives.

Across the country (and the world) people are working from their homes, skipping the commute to the office. Businesses are racing to adapt to the new reality. The question is how will supporting industries adapt? Commercial real estate, public transportation, and even child care.

Traditional child care centers may need to adjust on two fronts – meet the needs of a larger home-based workforce and at the same time adapt facilities and protocols for new health and safety requirements.

Support a Changing Workforce

Concordia Place is a nonprofit in Chicago with four community-based centers that supports the learning and development of young children, youth and teens through early childhood, out of school time, and teen leadership programs.  During the stay-at-home order, Concordia Place has opened two emergency child care centers for the children of first responders and essential workers. While our regular programs are closed, Concordia teachers conduct remote circle time with young toddlers and preschoolers over Zoom.

Because of the strong relationships between the teachers and the children, the result is much more than screen time. Remote circle time can also give parents some temporary relief from juggling the demands of working and parenting.

High unemployment coupled with many businesses forgoing the expense of office space, the workforce may be more at-home than ever before. “On-demand” child care might surpass the traditional 5-day-a-week format. Parents register their children in advance and use the center when they need it as long as there’s availability. While early childhood educators may cringe at the potential loss of continuity of relationships and impact on the quality of learning, we need to recognize and adapt to a generation that embraces sharing – look at Divvy bikes, Zipcars, and WeWork office share.

Adapt Facility Functions

As child care centers across Chicago look to re-open this spring, another adaptation will be the way the facility functions perhaps much in the same way that airports have adapted check-in and security after 9/11. In child care centers, lobbies are places for people to gather. Parents escort children into the classroom and sign them in. In its emergency child care centers, Concordia Place is screening and taking temperatures of children before allowing entry into the building, among other added safety protocols.

New safety protocols may even effect how many children are in a classroom. The Center for Disease Control and Prevention limits group sizes to 10 at emergency child care centers. Most preschool classrooms are built for 20 children. If this new requirement remains for regular operations, 10 children don’t have a place to go.

And the extra space can’t be easily used for any other purpose. Centers were designed and built to the standards of the time. As regulations change, the problem is you literally run into the rigidity of your walls. If future centers could have the ultra-flexibility that allows a more dynamic re-allocation of square footage, then child care providers could optimize their space to best fit the changing landscape.

In the future, when I share stories of when my children went to preschool, I may have to preface it with “that was before the pandemic.”

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If you have questions or want to share your thoughts, email us at [email protected].