Our friend Ric Cox just finished his three-part profile of Magellan Development Group‘s Lakeshore East properties on his Chicago Condos Online blog.
Ric’s story starts in 1996, when Joel Carlins set foot on what was then a nine-hole golf course owned by Illinois Central, Pepsico and Met Life, and explains how Carlins and Jim Loewenberg put together the massive development of condos and apartments on the New East Side over the past decade.
Near the end of the profile, Ric talks to Joel Carlins’ son David about the importance of flexibility in a project of Lakeshore East’s size.
Historically, 1% of Magellan’s buyers fail to close. On this project, because of the slower economy, the failure rate is 3%. As he tries to line up financing for the next building, David is not certain, given today’s economy, that Magellan could have obtained the $403-million loan for Aqua.
Looking back on the first half, David, who was promoted to president in December 2006, says that another key to success has been the ability to adapt to changing circumstances.
The prime example of adaptability is the solution Magellan found for one of its main challenges: How to develop the huge property fast enough. “If you plan to build 16 high-rises and each takes a minimum of 1.5 years, it would take 24 years to complete the project,” David explains. “No one can afford to hold the land that long. Fortunately, we discovered that we could build, and sell, three buildings at once, to three different markets: rental, high-end condos, medium-priced condos.”
A second example: Originally, Aqua was going to be all office space. It’s now condo, five-star hotel (an extension of the Fairmont across Columbus), rental, townhome and retail, with only one office: Magellan’s own.
– Part one of Chicago Condos Online’s Lakeshore East profile
– Part two of Chicago Condos Online’s Lakeshore East profile
– Part three of Chicago Condos Online’s Lakeshore East profile