Business Tips » How Will Chicago’s Property Tax Hike Affect You?

How Will Chicago’s Property Tax Hike Affect You?

How Will Chicago's Property Tax Hike Affect You?

No doubt that if you are a business person in Chicago, you are very well aware of the $543 million property tax hike that passed last month. It was either cut the budget or raise the taxes to pay for the long overdue pensions of city public safety workers, and many felt like there wasn’t much of a choice.

As Chicagoans, we’re no strangers to high property taxes. This year, Illinois ranked as the state with the second highest property taxes in the country, falling just behind New Jersey. But this new increase will likely boost us up to first as it is put into effect over the next four years.

The ones who will most likely feel the impact of this rise will be renters and small businesses. Mayor Rahm Emanuel, who pushed for this increase, has said that he believes the brunt of this increase should be shouldered by those who can best afford it. By that he means, the city’s central business district, keeping the burden off of the middle and lower income classes.

As residential owners, this can come as relieving news, but as business owners, this is a huge slap in the face. Businesses have already been paying a larger percent of property taxes in Chicago over the past years. These properties are already assessed at roughly two and a half times the amount of residences.

For multinational corporations, this is just another bump on the road, but for small businesses, this could be the end of the road. Leasing an office space won’t spare many business owners as a lot of leases include paying partial or even full property taxes or a partial or full amount of any increase.

If you have a net lease, this is likely the case. And while an increase of a few percentages here and there made you appreciate your lower rent in the past, you won’t feel the same way next year. Between the property tax reassessment this year and now the record-breaking hike, some are saying that commercial properties in the Chicago Loop could see increases in property tax as high as fifty percent.

Unfortunately, these are the downfalls and the risks associated with leasing commercial space. When you are paying for a space at a rate per square footage, you are susceptible to these lease stipulations. Many landlords try to include at least partial payment by the tenant for additional expenses like property tax on leases.

Thankfully, being in the shared office business, we are able to spare our members this burden. While taxes and other costs are included in part of the overall cost of renting an Amata office space, the direct impact of such a huge hike will not be felt by our members.

With a shared office space, our members pay for not only the use of our prime real estate space, but the additional services that we offer, rather than paying per square foot. By sharing the space with other professionals, we are able to keep our member’s out of pocket costs low, in what would otherwise be an expensive commercial property.

If you are currently in a commercial real estate lease and you are responsible for a large majority of the property taxes for your space, we recommended talking to a professional to determine how the increase will affect you and your finances.