Vacant Chicago storefronts could become affordable housing

Empty storefronts With the great shortage of affordable rental housing in Chicago, the city could develop an innovative incentive program to transform vacant storefronts into residential live/work spaces.

There are hundreds, maybe thousands, of vacant storefronts in Chicago, especially in the South Side neighborhoods of Hyde Park, Woodlawn, and South Shore, where three in five small retail spaces on 75th Street laid vacant last year.

On the North Side, take a drive west on Irving Park Road and other major thoroughfares and you’ll see dozens of vacant storefronts, so this truly is a citywide problem. Many old corner saloons, churches, and funeral parlors have been reborn for residential use. Transforming vacant storefronts throughout the city is far from a crazy idea.

All that’s needed to create an open floor plan, loft-like residence is installation of a strip kitchen, and a shower adjoining the powder room. Add partition walls for bedrooms and closets, and window treatments, and the job would be done.

An affordable storefront live/work housing conversion plan would dovetail nicely with Mayor Lori Lightfoot’s recent creation of five neighborhood target areas for new construction of coach houses, basement apartments, and attic apartments – also known as accessory dwelling units (ADU).

The ADU ordinance – which repeals Chicago’s 63-year ban on illegal over-the-garage coach houses (or “carriage houses”), basement “garden” apartments, and attic units – allows owners to add moderate-cost rental units in those spaces under a special pilot program.

A 1957 rewrite of the Chicago building and zoning codes grandfathered such existing dwelling units built prior to 1948 due to the after-effects of the 1930s Great Depression and the severe post-World War II housing shortages.

Since then, thousands of existing but officially unauthorized apartments were affordably rented in ethnic and gentrified neighborhoods alike.

After the war, some three-flats were split into six rental apartments, often with a seventh unit in the basement, which was legal at the time.

In the late 1940s, these small, 500-square-foot apartments rented for as little as $20 a month, and included shared bathrooms, ingress, and egress. Of course, most blue-collar tenants were earning $50 a week during that era, but those apartments were truly affordable housing by today’s standards.

Following decades of policy decisions that limited their construction, the ordinance amends the city’s Municipal Code to lawfully permit ADUs in five target areas, creating cost-effective housing options in many Chicago neighborhoods, while providing a financial boost to owners with existing ADUs.

So, why not add storefronts to the list of affordable live/work housing options?

A coalition of small business advocates on the South Side want to limit the runaway tax breaks some property owners are receiving on vacant storefronts on blighted commercial strips, according to published reports.

Cook County Assessor Fritz Kaegi currently allows owners to apply for up to two years of tax relief for vacant commercial properties if the owner has made “good faith efforts” to rent the property.

South Side businesses and chambers of commerce leaders – in addition to coalition members in Greater Englewood, Logan Square, North Lawndale, and Uptown – have proposed an ordinance that would cap the frequency of storefront vacancy tax breaks at three times every ten years.

“People on the North Side will think there’s not as many challenges, but there are still vacancies all over the city,” Diane Burnham, executive director of the South East Chicago Commission, told Block Club Chicago.

Citywide storefront owners face many problems:

• Some shops remain vacant because the building owner can’t afford to make improvements to bring the property up to existing codes.

• Many storefronts are rehabbed and ready for occupancy. However, rising real estate taxes have pushed up rents, making them too expensive for local small business owners.

The assessor currently sets valuation of one-story stand-alone retail storefronts utilizing a complicated formula that analyzes recent sale prices, rents, expenses, and capitalization rates of 7 to 11 percent to establish tax assessment levels.

If vacant storefronts were converted to residential live/work units, assessment levels could be adjusted downward to a simple 10 percent of market value, and real estate taxes on these properties likely would be greatly reduced.

Loft-style storefront for $495K

Not all city storefronts are destined to become affordable housing. A loft-style two-unit storefront property at 2868 North Elston Avenue in the Avondale neighborhood currently is listed for sale at $495,000.

“This fabulous two-flat at Diversey and Elston Avenues is the perfect solution for an investor looking for a large live/work commercial space plus a two-bedroom, one-bath residence with 1,600 square feet of living area, central air conditioning, and a private balcony,” said broker George Christos of Urban Abodes.

The storefront space, currently leased to a tattoo parlor for $2,400 a month, features a kitchenette with granite counters and cabinets, and a bathroom with shower.

Source: Loop North News