Chicago vs Los Angeles CRE?
Which market has the most potential for growth in the future? I currently live in Chicago, but would like to move to LA. Should I stay in Chicago, a city I know well in &amp; out, or move to LA? (For context, I would like to work in CRE in brokerage and/or development).
[{"id": "fov3d5k", "text": "I don\u2019t know if we have enough context here. Is your intention to work in the CRE industry, like brokerage? Or development? Or are you talking about owning commercial real estate in these markets?", "replies": [{"id": "fov3u2y", "text": "Can you provide an overview for brokerage &amp; development? I plan on working in the CRE industry in the future.", "replies": [{"id": "fov5dxx", "text": "If you\u2019re looking to do a space market analysis, find market reports from local brokerages like CBRE, JLL, or even CoStar &amp; analyze the historical trends in rents/vacancy/absorption/construction. \n\nThen do demographic research on the census website on things like population, employment, economic bases, and education levels. \n\nIMO the only way to determine if you\u2019re interested in a market is to do the analysis yourself. Lmk if you need any help!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fov473r", "text": "If you would like to move to LA, then move to LA. There will be plenty of opportunity to go around there and you only live once so might as well live where you please", "replies": [], "depth": 1}, {"id": "fov5c2m", "text": "I've done work in both markets. My experience is a little unique in that it's shared office focused, but here is my take on these two:\n\n1. Chicago and LA are fundamentally extremely different markets. If you study urbanism, you'll know that Chicago and LA are literally THE two different models for \"how cities work.\" Chicago follows almost a ring pattern radiating out from the CBD where LA is basically a bunch of villages that grew and eventually merged. This changes the character of LA dramatically, and means that the variability between your deals is probably higher in LA. While in Chicago you can be fairly sure that you're looking in Loop, River North, maybe West Loop/Fulton, in LA you can really be all over the place depending on the kind of business. Santa Monica and Culver City are tops (I think -- I don't know LA as well as Chicago) for CRE there but there's also just 0 supply, so good luck with that.\n2. In general, this also means that LA's market has much higher variance than Chicago's. For Chicago Class A I've seen like $55 gross as reasonable tops (though I know there have been higher deals done), and that's honestly fairly consistent across assets once you control for quality and age etc; for LA, I've seen like $90+ gross for certain assets in certain submarkets where downtown is $40s-50s. This is def going to change how much return you can get as a broker or developer, and how interesting it is to actually do the development.\n3. I don't actually know how much development is happening in either place so I can't help you there. I know there are some really cool multi use developments in both cities. In Chicago, I feel like there are generally more opportunities for high end developments in good neighborhoods that are gentrifying where in LA I feel like there are fewer opportunities because the driver in the good/high cost neighborhoods is the availability itself rather than the quality of the asset. But I could be wrong about that.\n4. One thing I get pissy about in Cali is that they have different standards, like monthly rent. I know this is irrelevant to your question but it is annoying and therefore I wanted to mention it.\n\nThat's all I got for now... I'll mull on the question. I don't know how much this actually helps.", "replies": [{"id": "fov8sey", "text": "Thank you very much! This is really helpful.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fovda75", "text": "If you'd like to work in development, consider these are both difficult markets, for different reasons. LA with a high cost of entry and a difficult entitlement process (IMO). Chicago/Cook County with its high taxes and cronyism in the permitting/inspection process.\n\nAfter completing a Cook County project, my eyes were opened and I would never do a project in the City of Chicago. I'd be very cautious doing another one in Cook County unless I was in a friendly municipality.\n\nNot what you asked, but you might consider other metro regions that are more developer friendly.\n\nAs for growth...they both face headwinds but I'd say LA, easily. Chicagoland's pension/tax burden is just too difficult for them to dig out of relative to surrounding areas. The core will always do ok but most of the suburban growth has moved a level out to Indiana and Wisconsin IMO, friendlier tax environments.", "replies": [], "depth": 1}]