The REIT paid $6.6 million in property taxes last year on its lone Chicago asset, the 1.07-million-sf 233 N. Michigan Ave., formerly Two Illinois Center in the East Loop. At $6.25 per sf, property taxes on the building are the highest in Parkway Properties' mostly Sunbelt portfolio.
"We like Chicago for other reasons," Rogers says during a recent NAREIT conference. However, even though the REIT aims to buy property at 20% below replacement cost or lower, that price may be going up here quite rapidly, he adds.
"Right now, replacement cost is at the highest level I've seen in my life," says Rogers, 49, pegging it at $250 per sf in Chicago, compared to about $200 per sf in other markets. "It's an extraordinary number."
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