CHICAGO—“I don’t want to kill the buzz of this conference,” Christopher G. Kennedy began. The developer of Wolf Point and former head of the Merchandise Mart was giving the afternoon keynote presentation at Marcus & Millichap’s CRE Forum in Chicago on Wednesday and had a tough, but ultimately hopeful message.
Most speakers at the daylong conference, held at the University of Chicago’s Gleacher Center, expressed confidence in the region’s economic future. But Kennedy believes the specter of income inequality and corresponding social problems could threaten the region, and the US, in the long-run. He outlined his concerns in a morally urgent speech so laden with facts and figures it might have been stupefying in the hands of a less-skilled speaker.
He agreed that at first glance, much of the Chicago real estate market looks vibrant. The East Loop, for example, may have suffered mightily during the recession, but these days the presence of Millennium Park attracts throngs of new residents to the area, and the West Loop has also filled up with construction crews.
“But those buildings are generally residential,” Kennedy pointed out, “they are places to live, not places to make a living.” He’d prefer to see new office towers filled with well-paid employees, and the establishment of home-grown manufacturing facilities that provide good wages. And those in real estate should find the shortage of these quite troubling.
“If the younger generation is successful, they will occupy our buildings,” he said. If not, their lack of purchasing power will eventually undermine the recovery. And that lack has already paralyzed a sizable portion of the US population.
“Today it is nearly impossible for someone born in the bottom quintile of income to make it into the top quintile,” Kennedy said. In general, the rich stay rich, the poor stay poor and even someone born into the middle class can expect “a life of great tumult and threats.”
Around 65% of black and Hispanic students leave high school without a degree, one of the many sobering statistics he presented to illustrate the barriers to success an increasing number of Americans have to confront. “This is a new area of study, but few people have given it the attention it deserves.”
“I don’t want to redistribute all the wealth,” he added. Instead, he envisions the local business community, academia, and all levels of government joining together to strengthen the region’s research universities and turn them into economic powerhouses.
Kennedy pointed to his family’s hometown of Boston as a hopeful example. The city has experienced many gut-wrenching economic declines over the years, but somehow always revived. Most recently, it transformed into a high-tech center, largely due to the presence of a vast array of world-class university research facilities.
He urged the audience to show the same commitment to Illinois’ great universities exhibited by the business community in Massachusetts for the ones in their state. That commitment should include putting pressure on state, municipal and federal politicians to also provide support.
To refrain from creating new industries that provide jobs and taxable assets, Kennedy concluded, will make it impossible for growing numbers of Chicagoans to “rent in our buildings; we are walking away from millions of potential customers.”