Cost of Living
Chicago is ranked 6th on the Cost-of-Living Index, with a rate of 118, above the national average of 100, but below New York, Los Angeles, Boston, Washington D.C. and Miami. According to CNN Money, a $50,000 annual salary in Chicago is equivalent to $100,615 in NYC, $77,295 in San Francisco and $63,000 in LA and Boston. Affordable housing is where Chicago most often beats competitors and why it is no wonder that Chicago remains a desirable destination for young professionals and businesses looking to attract them. According to rent.com, Chicago apartment renters paid an average of $2,801/month in 2022, whereas rents were $6,165 in New York, $4,564 in Boston, $4,251 in San Francisco and $3,474 in LA. Median home prices in the metro area are currently averaging $310,000, placing it 10th on the list of top competitors. Many Chicagoans that reside in the downtown area reap the benefit of not needing a car, as the city’s convenient public transit system stops are within walking distance of most apartment complexes, and passes are priced at $20 per week.
Cost of Business
Chicago’s affordability for living is noteworthy, but so is the low cost of business. Combined, the two help draw companies from other metros, particularly coastal competitors. Chicago’s Class ACBD net office rents were around $40/SF at the end of 2022. With one of the lowest average asking rates among the top 10 U.S. office markets, Chicago tenants can save on real estate and operations costs. Industrial real estate in Chicago is also significantly more affordable than other major markets with average triple net rents of $6.24/SF, the rest of the nation is over $9.00/SF, which has helped fuel the industrial market’s record levels of growth over the past few years. The lower cost of living in Chicago translates into a lower labor budget for companies. According to a study from The Boyd Co., annual labor costs for 200 support staff employees at the headquarters office in Chicago would cost $17 million annually, $2 million lower than New York City. Chicago’s high corporate income tax rate is one of the city’s least sellable traits. According to the Tax Foundation, Chicago’s corporate income tax rate of 9.5% is more than 60 basis points higher than the next closest competitor, Los Angeles, at 8.84%. Chicago has recently lost some corporate tenants to Texas, where the franchise tax is 0.75% of net revenues. Chicago can not compete with other metros like Dallas, Austin, Miami and Nashville who don’t have a personal income tax rate. However, Illinois personal income tax rate at 4.95% is the lowest of other competing metros. The city is highly competitive in terms of its cost of living and doing business. With unlimited access to fresh water and the absence of natural disasters, Chicago is at an advantage to welcome climate change refugees. Additionally, with its central location in the country, Chicago will always be a top contender in the corporate world.