A majority of Chicago real estate professionals feel neither optimism nor pessimism for the second half of 2025, but nearly two-thirds expect a recession by the end of 2026.
Those are among the conclusions of an annual mid-year survey by The Real Estate Center at DePaul University and the Urban Land Institute Chicago District Council.
The report will be released publicly on Wednesday morning when the university also conducts an online discussion with industry professionals.
The wait-and-see attitude for the remainder of 2025 differs from the past two years, when respondents were overwhelmingly pessimistic in 2023 before sharply shifting to optimism last year.
“There has been a palpable shift in local real estate sentiment,” said Reagan Pratt, Douglas and Cynthia Crocker Endowed Director of DePaul’s Real Estate Center, in a statement about the report. “Although there is long-term optimism, the near-term sentiment reflects a sort of agnosticism.”
Uncertainty comes from President Donald’s Trump’s fiscal policies, including the effects of tariffs and slow progress toward reducing inflation, as well as local factors such as concerns about the leadership of Mayor Brandon Johnson, unfunded pension liabilities and continued worries about rising property taxes, according to the survey.
It all adds up to an unusual mix of conclusions, with 66% of survey respondents expecting a recession by the end of next year and 51% expecting inflation to rise in the next year. Typically, inflation falls during a recession.
Economic uncertainty
Yet Trump’s ongoing trade wars, and slow progress toward negotiating trade deals with individual countries, have clouded the long-term prospects for the global economy.
“A year ago, I felt confident we were headed toward a soft landing and multiple Fed rate cuts in 2025,” Shawn Clark, CEO of development firm CRG, said in the report. “Today, I'm more cautious. There's real uncertainty about where inflation and long-term rates will settle, especially after the current round of tariff negotiations plays out.”
Mavrek Development Principal Anthony Hrusovsky said his firm was in advanced talks with a large equity investor for a multifamily project when “tariffs killed the negotiations.”
“It introduced a level of uncertainty around cost, which had previously been riskless in our eyes,” Hrusovsky added. “The last thing Chicago needs right now is another reason for an equity group to not do a deal.”
Despite worries about stagflation — weak economic growth coupled with high inflation — 69% of respondents described themselves as bullish or leaning toward optimism over the longer time frame of two to three years.
“Economies tend to operate more like oil tankers than speedboats — they turn very slowly,” Jim Shilling, the George L. Ruff Endowed Chair in the Real Estate Center at DePaul University, said in the report. “This is especially true when there is a large amount of momentum in the economy — like low unemployment, moderated inflation, and a lot of consumer spending.”
Just 1% of respondents said they were satisfied with policies from Chicago’s City Hall, with 85% unhappy.
“There is always a concern with the fiscal situation,” Emi Adachi, managing director and co-head of global investment research at Heitman, said in the report. “There are negative perceptions from investors who tend to avoid the market. They’re very cautious because of the fiscal situation and property taxes. Those are legitimate concerns.”
As for White House policies, just 6% expressed confidence, with 61% dissatisfied.
Relatively speaking, Chicago real estate pros expressed the most confidence in Illinois Gov. JB Pritzker, with 53% displeased and 21% confident.
“That’s not a political statement, it’s reality,” Max Meyers, managing partner at Anagram Capital, said in the survey of haphazard city and Cook County fiscal policies. “On the positive side, uncertainty and chaos creates the opportunity for investors to take advantage of dislocations.”
Best property types for investment
Data centers, suburban multifamily, grocery-anchored retail centers/strip malls and downtown multifamily were rated as the best properties to deploy capital into, with life sciences, regional malls, downtown office and suburban office rated the lowest.
Respondents said efforts to transform the Loop business district into a mixed-use neighborhood will have the greatest long-term impact on Chicago. That was followed by the Project 1901 mixed-use development around the United Center, a planned quantum computing campus on the sprawling former U.S. Steel site on the south lakefront and The 78 megadevelopment along the South Loop and Chinatown.
Project 1901 is the name of a project by the owners of the NBA’s Chicago Bulls and NHL’s Chicago Blackhawks to bring more than 9,000 apartments, a concert hall, retail, entertainment, hotels, outdoor space and other attractions on land around the teams’ arena on the Near West Side.
Related Midwest is the lead developer of the quantum computing campus and The 78, a development site where Major League Soccer’s Chicago Fire recently announced plans to build a 22,000-seat soccer stadium.
“I hope that people never lose sight of the importance of mega projects,” KWILL Merchant Advisors co-founder Hugh Williams said in the report. “They give people something to hope and dream. I don’t think the mega project will ever go away because the mega project is the definition of urbanization.”