Change and Uncertainty Impact Commercial Real Estate
It goes without saying that we of Bloomington-Normal, McLean County have much to be grateful for our long-standing mix of agriculture, business, education, religious and charitable organizations, etc. All manner of commercial real estate is a part of our daily lives. It does not exist in a vacuum; it is subject to a multitude of economic forces driven by international, national, state, and local considerations. Both private and governmental entities are striving mightily with the winds of change blowing throughout the State of Illinois. Overwhelmingly, we can agree well-intentioned and talented people of good will are participating in all of the private and governmental enterprises seeking to improve the lives of all citizens impacted by the vision and decision-making processes from each economic sector. No one would suggest these tasks are easy and those who participate are to be commended.
However, one cannot ignore the unsettling multi-year budget crisis for which our state is now infamous. Illinois is renowned for having more separate governmental units than any other state. Let’s consider the following points:
- The continuing unfunded Illinois Pension Liability crisis now stands at nearly $124 billion for the state's combined retirement systems.
- Unfunded health care for state workers equals $56 billion.
- The Illinois Comptroller reports a current backlog of bills in the amount of $8.4 billion.
- Infrastructure deficits (roads, highways, bridges, sewers, water systems) across Illinois are estimated in the multi-billions of dollars.
All of the foregoing causes a substantial cloud of uncertainty, which continues to lead many individuals and businesses to leave the State of Illinois for greener pastures. Outward migration of population, along with nearly the highest property taxes in the country, give pause to commercial enterprises and people looking to invest in businesses in our state.
Locally, our excellent public and private schools and institutions of higher learning struggle with the overall budget conditions of the State of Illinois. The same can be said for the excellent medical related services that abound in our community. Also, we witness our local governmental entities struggle with budgets in the face of lessening revenues, causing cuts in personnel and services while at the same time increasing fees and taxes.
Now, let us mention a few of the more positive factors affecting the economic life of commercial real estate in our community:
- New economic life is up and running in the formerly vacant auto factory.
- The agriculture business has spurned new life in north Normal/Hudson on I-39.
- Our largest local employer has been and continues to be in transition (not leaving), along with many others, to remain competitive and financially sound. Its existence represents a multi-faceted impact on our community, not the least of which is their position as the number 1 property taxpayer in Bloomington Township for 2017: $172,221,745. The next nine (9) taxpayers in 2017 contributed a total of $82,000,000 in real estate taxes. In more ways than one, all commercial real estate assets and all the people working in them have a profound effect on our local community.
So, let us harken back to the beginning where I suggested “. . . commercial real estate does not exist in a vacuum . . . “. Did you miss the “elephant” in the living room? All of the positive and negative economic factors referred to above (and many others too numerous to list here) impact commercial real estate assets throughout our community. In turn, our greatest “assets” (the people who live, work, play, and contribute to the well-being of Bloomington-Normal and McLean County) are impacted physically, emotionally, and intellectually – sometimes quite joyfully and other times with great anxiety and concern.
As we exit our long “winter of discontent” it may be good to pause and reflect on the well-being of family, friends, co-workers, strangers, etc. and how each of us might enhance our attitude of gratitude reflected in civil discourse and meaningful dialog while striving toward our individual and collective goals. As one author so eloquently and accurately stated: “Relationships are the most valuable and value-creating resource of any society. They are our lifelines to survive, grow and thrive.”