South Side development was on a roll — until recession

A decade ago, the South Side reveled in a surge of development, with condos and town houses sprouting from some of its empty lots.

But the recession, which stifled construction all over the city, hit the South Side the hardest, a Tribune analysis of building permit data shows.

Between 2006 and 2013, neighborhoods south of the Stevenson Expressway posted an 84.3 percent decline in the number of building permits for new construction — covering everything from new porches to high-rises. That's much more than the citywide decline of 68.1 percent.

Meanwhile, North Side neighborhoods — those that begin above North Avenue — experienced a decline of only 50.7 percent.

Before the recession, the South Side had a slight edge over the North Side in the number of permits issued. In 2006, there were 1,146 permits filed for South Side neighborhoods, compared with 1,092 on the North Side.

In 2013, the situation was reversed. The North Side had 538 permits — almost three times as many as the 180 issued on the South Side.

Construction on the South Side has also had a weak recovery since the recession. The number of building permits issued there has increased by only 25.9 percent since 2010, less than half the citywide average.

Some South Side developments disappeared in the recession's turmoil, such as a planned $24 million retail strip in Englewood that went into default in 2010, leaving a long strip of Halsted Street vacant.

Other projects were thrown off balance, including a planned retail and residential development at 45th Street and Cottage Grove Avenue in Bronzeville. At one point, the project was set to break ground in fall 2008, but today, it is still struggling to find financing. By contrast another neighborhood project, the Shops and Lofts at 47, near Cottage Grove and 47th Street, was built after a previous plan went awry because of the housing crash.

"Have we had some hard times, some tough times? Absolutely," said Bernita Johnson-Gabriel, executive director the Quad Communities Development Corp., which works to bring development to the South Side. The shops and lofts project "took seven years, and I felt every year of that pain."

Part of the reason for the South Side's bigger dip, and its weak recovery, is the lack of wealth there, experts said.

"The folks that live in Lincoln Park and Bucktown are not as affected (by the recession) and are willing to go ahead with their projects, whereas the people who live on Cottage Grove, they just don't have as much affluence," said Jeff Raday, president of McShane Construction Co. and chairman of the Chicago chapter of the Builders Association.

During the boom times of the early to mid-2000s, investors sought opportunities in "fringe markets" such as the South Side, said Rachel Weber, an associate professor in the urban planning and policy program at the University of Illinois at Chicago. When the economy faltered and investments disappeared, those areas didn't have a base of wealth to lean on, as many northern neighborhoods did.

Since the recession, investors have become more reluctant to invest in neighborhoods they consider risky, Weber said.

"I think there's a caution now, after that," she said. "If you don't know the money is behind you, your investments tend to be in areas that are a good bet."

Another factor in the South Side's fall is that neighborhoods there were hit harder by the foreclosure crisis, said Spencer Cowan, vice president of the Woodstock Institute, a nonprofit that advocates for low-income communities.

"You start with the predatory lending that targets those communities. When the recession hits, housing prices are hit more there. You have more people trapped in bad loans, you have more foreclosures," Cowan said.

Hyde Park has been an anomaly in the South Side, with some of the city's most expensive projects coming to life there, most linked to the University of Chicago. In 2009, for example, permits were issued for an addition to the Joseph Regenstein Library and for the $700 million Center for Care and Discovery at U. of C. Medicine.

In 2012, construction began on Harper Court, a mixed-use project on 53rd Street and Lake Park Avenue that includes a 12-story office building, a Hyatt hotel and shops. The U. of C., which owns the land, helped conceive the project, and it got a boost from the 53rd Street tax increment financing district. In TIF districts, real estate values that determine how much government bodies collect in property taxes are frozen for up to 23 years; additional tax revenue resulting from any increase in property value is used to build infrastructure to promote economic development. (An earlier version of this story incorrectly described how a TIF works.)

Another TIF district sparked City Hyde Park, a 15-story residential tower at Hyde Park Boulevard and Lake Park, set to open in 2016 with a Whole Foods on its ground floor.