Skyrocketing 2024 Assessments for Properties on the Magnificent Mile
The 2024 triennial assessments for all properties in Chicago have been released, revealing a staggering 30% increase in assessed values for properties in North Chicago Township, including those in Lincoln Park and along North Michigan Avenue.
Cook County Assessor Kaegi has significantly raised the assessments and market valuations for hotel properties on the Magnificent Mile. For instance, the assessment for the Intercontinental Chicago Hotel at 505 N. Michigan Ave. skyrocketed by 284% to $96.2 million in 2024. The Warwick Allerton Chicago saw its assessment rise by 239%, while the Omni Chicago’s assessment increased by 186% to $51.1 million. Other notable increases include the Peninsula Hotel at 158%, the Park Hyatt at 136%, and the Chicago Marriott Downtown Magnificent Mile at 85%. These dramatic increases indicate Kaegi’s belief that Magnificent Mile hotels have not only recovered from their pandemic losses, but may now exceed their pre-pandemic market values. Hotel owners, however, strongly dispute these valuation increases, citing elevated interest rates since 2022 as a continued burden on property values. Many hotels are still struggling to return to their pre-pandemic net income levels. According to CoStar Group data, revenue per available room (RevPAR), which reflects both room rates and occupancy, have only seen a slight increase compared to pre-COVID 2020 figures, falling short when adjusted for inflation.
The substantial assessment increases along the Magnificent Mile are not confined to hotels; retail properties are also experiencing significant hikes despite a record-high 30% retail vacancy in the area. Kaegi’s office raised the assessment for Water Tower Place by 96%, setting its 2024 assessment at $62.7 million. This distressed mall has lost large anchor tenants, including Macy’s, Lord & Taylor, Abercrombie & Fitch, Vera Bradley and Lettuce Entertain You Enterprises’ Foodlife food hall following lender MetLife Investment Management taking control of the mall in 2022 after Brookfield Properties, the mall’s former owner, departed in 2022.
Further examples include the mall at 900 N. Michigan Ave. which experienced a 49% increase in its assessment, now totaling $13.2 million. In addition, the retail property at 600 N. Michigan Ave. and the Shops at North Bridge saw their assessments rise by approximately 30% each. Recent property sales along Michigan Avenue do not support these significant assessment and market value increases. For example, a local investor purchased the four-story building at 605 N. Michigan Ave. for $47 million in the summer of 2024, a stark decline from the $140 million it was purchased for in 2016. Kaegi’s office did make some downward adjustments, including reductions for 444 N. Michigan Ave., which is on the market following a mortgage default, and the property at 500 N. Michigan Ave., which is slated to be partially converted into apartments.
The Cook County Board of Review will be reviewing tax appeals in the next few months for these properties on the Magnificent Mile. They will assess whether the substantial increases in assessments and market valuations are justifiable based on the current economic realities, and if not, will implement appropriate reductions.
