Transwestern’s Janice Sellis sees some investors looking beyond Chicago for less tax-sensitive Indiana. Transwestern’s Janice Sellis sees some investors looking beyond Chicago at less tax-sensitive Indiana.

CHICAGO—Janice Sellis believes in Chicago. The investment services group director for Transwestern tells GlobeSt.com that the city is attracting talented, white-collar workers as well as the companies to hire them, including Google and start-ups germinating in the local tech hub downtown.

So why is she concerned? “The biggest concern everyone has right now is the financial condition of our state and our city,” she tells GlobeSt.com. “It keeps getting worse and not better. The concern is that the state and the city are out of money and unable to pass a budget, which means that, in all likelihood, they’ll have to raise real estate and income taxes to make up that deficit.”

(Scroll to the end of this story for an EXCLUSIVE video with Janice Sellis at ICSC RECon 2016.)

Indeed, the fiscal state of the state and the city is not pretty. According to Crain’s Chicago Business, “A state legislative report says Illinois’ unfunded pension liability is $111 billion.”

Crain’s Chicago Business also reports from a 2015 Moody’s study stating Chicago had a three-year average of unfunded pension obligations of nearly $30 billion, which, at 15.9% percent of its entire property tax base, was the highest of America’s 50 largest local governments.

“How is that going to impact real estate?” she asks. “Obviously, it means that rents are going to go up.  Everyone is keeping their eye on that.”

She notes that, of all the property types, retail will probably fair best with a rise in taxes than would office or industrial. “Residents are a little slower to leave the market than a company would be if things continue this way,” she believes. “So the affect in retail will lag, which is a good thing.”

Now, it should be noted that no plans are in place to raise taxes.  But, as Sellis believes, to dig out of this hole, 10 to 15 years in the making, “It’s inevitable.”

And concerns are already leading to action. Sellis reports that she’s already noticed a decrease in investor inquiries directed to Chicagoland.

Rather, “I do a fair amount of work in Indiana, which has a fiscally sound economy. I’m seeing more interest there than I historically would.” Interestingly, investors are eyeing northwest cities in the Hoosier State. Sellis cites Valparaiso and Merriville, both within hailing distance of Chicago.

But ultimately, long range, that is, Sellis believes in the basic strengths of Chicago, and she looks beyond the period of adjusting to whatever solutions come along. “There are a lot of things going on in Chicago,” she says, “and we shouldn’t let the deficit overshadow those.

“There are a lot of companies moving in and there’s definitely growth in jobs downtown,” she says.  “So, not surprisingly, residential population in the CBD has been growing.”

This is true particularly within the tech sector. “A lot of companies have grown out of the 1871 Tech incubator, and Google has increased its presence here,” she says.  And Google always attracts “me-toos.” And of course, tech growth means job growth, which in turn bodes well for both retail and residential.

Which in turn leads to Sellis’ ultimate optimism. “Chicago will be fine.”