Buyers are flocking to the mega projects that increasingly dominate downtown housing
In the coming decade, buyers of new homes in Chicago will be shopping for burgs not buildings. Developers enjoyed a banner year in 2004, and the hottest developments in the city were large planned communities offering their own infrastructure, retail, parks and services as well as multiple residential phases. These “mega projects,” as they’ve come to be known, essentially are their own small towns, and they represent the new face of residential building in Chicago.
Seven mega projects with the potential for 1,000 to nearly 6,000 homes each are underway within a one-mile radius of the Loop, and two more are on the drawing board. This tally does not include several major redevelopments of Chicago Housing Authority property or more distant projects, such as the 118-acre South Works site on the Far South Side.
“We have in our tracking numbers, the potential for 23,000 units in these mega developments, of which only 37 percent has been brought to market, so two-thirds of them are still in the pipeline,” says John Jaeger, of housing analyst Appraisal Research Counselors.
No other major American city has so many giant mixed-use developments underway so close to its core. In part, that’s a result of Chicago’s heritage as the nation’s railway hub. Centrally located land abandoned by industry and the railroads sat dormant for decades downtown, but it became very precious very quickly during the superheated residential real estate boom of the 1990s.
The market slowed down after the shock of Sept. 11, 2001, causing some to wonder if the ambitious communities being planned or expanded would actually get built. But buyers of new homes returned in force last year, and the mega projects dominated new construction in Chicago.
Topping the list was Central Station, the 80-acre development south of Grant Park that has the potential for up to 6,000 homes when complete. By the end of ’04, more than 1,350 units had been completed, and another 1,132 were under construction in the master-planned community, according to Appraisal Research.
In late ’04 and early ’05, three new developments were unveiled at Central Station. At press time, the Enterprise Companies’ 187-unit Museum Park Place was nearly 60 percent sold, and its new flagship One Museum Park was more than 80 percent sold out of its 276 units, both after very little time on the market. New West Realty already was more than 80 percent sold at the 143-unit Lakeside on the Park, another new Central Station highrise, at 16th and Indiana.
“Sales have really been phenomenal,” says Gerald Fogelson, of the Fogelson Companies, partners with Forest City Enterprises in Central Station Development Corporation. “Between now and the end of the year we will be introducing what we call follow-on products, which will include (Museum Park) Lofts Three, and quite a few more buildings in each quarter.”
Kingsbury Park, the redevelopment of the former Montgomery Ward and Co. headquarters, at Chicago and the river, finished 2004 with 537 units completed and 746 under construction, according to Appraisal Research, but as this community nears maturity in ’05, Lakeshore East, located between Millennium Park and the river, soon will top its numbers for completed units.
According to Appraisal Research’s fourth quarter Downtown Chicago Residential Benchmark Report, “Buyers in the market continue to exhibit preferences for these properties, with strong market share noted for these large projects.”
Why are the mega projects proving so popular with buyers? Is bigger simply better?
Well, yes, say the experts, although such a question simplifies the complex set of factors bringing buyers to these developments. Mega projects benefit from economies of scale, the ability to share greater amenities and services and a broad variety of housing types within a single development. University Village, a mega project nearing a sellout in phases located on the west side of Halsted and south of Roosevelt, just opened a new phase at University Village East. The earlier offerings included lofts, townhouses and a variety of condos. The new phase of 218 units also will include 31 single-family homes.
“The single-family homes are new to the mix, and they’ve been very successful,” says University Village sales director Kathy Ryan, of New West Realty, exclusive sales agent for the development. “We started selling 89 units total in the first phase of University Village East, and of the 12 single-family homes offered, we sold eight in the first week. Most of those buyers were people who live here and want to stay. It’s going to be very nice, with a private rose garden, a playground, a dog park. There’s a lot of green space.”
Mega projects not only can claim to offer something for everyone, they can turn homeowners from earlier phases into move-up buyers for later homes, especially if their units have appreciated substantially. And whatever type or size unit buyers purchase, they’re clearly impressed by the unbeatable amenities the giants can offer.
In addition to the amenities Ryan mentions, University Village has a retail component that already includes Quizno’s, Cingular, Mid-America Bank, Barbara’s Bookstore, Jamba Juice and Cold Stone Creamery. Several restaurants and additional stores also are coming.
Magellan Development Group and Near North Properties are planning a variety of retail at Lakeshore East, a development that also will include its own public school, but one of the first priorities was construction of a six-acre central park – a tangible amenity designed to attract buyers to all phases of the project.
“We overlook the park, and it’s a great view,” says Rich Schaefer, who bought a unit at the Lancaster, a new 207-unit highrise at Lakeshore East. “There’s a doggy park, which is great because we have a dog.”
While much of the Lakeshore East site still looks like what it is – a construction zone – Schaefer says it isn’t hard to imagine the community that’s taking shape.
“We’re close to the new park (in Lakeshore East) and Millennium Park and Navy Pier,” Schaefer says. “We like the area, and with Magellan’s plan for the whole development, it will be pretty nice, with all of the buildings and amenities they have planned.”
Central Station’s Museum Park project, where sales have been swift, includes an upscale clubhouse with a swimming pool, a convenience store, a gym, a sundeck and a party room with a restaurant-quality kitchen at 13th and Indiana.
Riverside Park, the newest of the mega projects, will include 670,000 square feet of retail space and more than 4,000 residential units. The 62-acre community will offer everything from highrise condos to riverfront mansions as well as parking, parks, plazas and a landscaped riverwalk, according to developer Rezmar Corporation.
The site is bordered by Roosevelt on the north, the Chicago River on the west Clark on the east and 16th Street on the south. Why has this premium location sat vacant for so long?
According Judi Fishman, a vice president and senior project director at Rezmar, the site was constrained by a lack of access, with railroad tracks, the river and the Roosevelt Road overpass making entry difficult.
“I call it ‘infrastructure-challenged,'” Fishman says. “We’re 30 feet below grade at Roosevelt with the Metra tracks along the east end of the site and the St. Charles Air Line (railroad tracks) all along the south end and the river on the west. Our first task was how to get in and out of this site.”
The project will open up Clark and LaSalle streets and better connect Chinatown and areas to the south with the South Loop, but that would have been difficult to achieve, according to Fishman, without the help of tax-increment financing from the city. TIF money is a common part of the formula spurring development of these sizeable parcels.
Rezmar’s plans call for a first phase of retail development built on a platform of parking with residential units on upper floors to begin construction this year, with delivery in 2007. The entire project is expected to take 10 years to complete, although, like all mega projects, this one will be subject to the vicissitudes of the market.
Are there enough buyers out there to consume the thousands of homes planned for these communities as well as for the many smaller developments being sold? Jaeger thinks so. After a couple of years during which the number of new homes for sale grew alarmingly big, Jaeger says, the market has reached something like equilibrium.
“The unsold inventory went down by 500 units last year despite record announcements,” Jaeger said. “If you look at what’s been delivered, there are only about 400 units ready for delivery right now.”
The city’s mega projects will be offering hefty numbers of homes for sale in the coming years, but if current trends continue, plenty of buyers will be lining up during the decade that these units are phased in.
Here is a brief overview of mega-projects planned and underway:
Central Station. The biggest current success at Central Station is the Enterprise Companies’ Museum Park community, which has introduced two new highrises with two cutting-edge designs by architects Pappageorge Haymes. The 23-story Museum Park Place is heavy on glass and steel with structural elements expressed and bold diagonal lines marking the cap. At press time, this tower was nearly 60 percent sold, with units priced from the $280s. The showboat One Museum Park already is more than 80 percent sold and its gently folding, variegated façade already is being held up as a future landmark on the edge of the museum campus. Condos here are priced from the $650s.
New West Realty also has enjoyed quick sales at Lakeside on the Park, where more than 80 percent of the 143 units, priced from the $190s, have been sold. A number of other developments within Central Station and earlier phases of Museum Park still have units available.
Kinzie Station. CMC Heartland Partners, a railroad company, built one tower and a mid-rise on this site between the Chicago River and Halsted, directly west of the Loop, before selling off much of the land. The 4.5 acres bounded by Clinton, Kinzie, Halsted and the Metra railroad tracks could hold around 1,500 additional units. At press time, the Fifield Companies and Jameson Development, were planning projects here. Charles Huzenis, of Jameson, says discussions with the city over possible locations for a future high-speed rail line to O’Hare have slowed the process.
A new Jewel grocery store is planned for the community and at press time, RDM Development was at work on Trio, a highrise and two mid-rises with condos priced from the $180s at 650 W. Wayman.
Kingsbury Park. The former site of Montgomery Ward & Co.’s headquarters, at Chicago Avenue and the Chicago River is being redeveloped by a joint venture of Centrum Properties and New York-based Angelo, Gordon & Co. The project covers roughly 30 acres and includes lofts, condos and townhouses for up to 2,600 residential units, as well as retail and 1.5 million square feet of office space.
Units at the Montgomery, a conversion of the 28-story former Ward’s office tower into 243 condos, has units with one to three bedrooms and large spaces that can be purchased raw and completely customized. River Place on the Park, by the Enterprise Companies, has one-bedrooms from the $200s and two-bedrooms from the $280s. The River Village and City Club projects also have homes remaining for sale.
Lakeshore East. This massive development on 28 acres, between Randolph and Wacker at Lake Shore Drive, is valued at $1.5 billion. At press time, Magellan Development and Near North Properties were nearly sold out of the Lancaster, a 206-unit highrise and were approaching a sellout at the Regatta, a 324-unit tower. Magellan was preparing for first occupancy at the 549-unit Shoreham, a rental building, and had a growing waiting list for the Chandler, which will be the next Lakeshore East highrise. LR Development was seeing strong sales at 340 on the Park, a tower where condos have one to four bedrooms, priced from the $310s, and stunning views overlooking Millennium and Grant parks and Lake Michigan.
LaSalle Park. This site, just south of LaSalle Street Station and bordered by Roosevelt Road on the south, Clark Street on the east and Wells Street on the west, is controlled by Higgins Development Partners and Mesa Development. Plans call for around 2,500 residential units as well as commercial development.
River East. At press time, the MCL Companies had only 18 of 620 condos remaining for sale at River East Center, priced from the $190s for studios, the $320s for one-bedrooms and the $490s for two-bedrooms. The River View II highrise has about 25 condos left, priced from the $590s. Four-level townhouses at River East are priced from about $1.65 million to $2.1 million and have three or four bedrooms. MCL’s latest development at River East is the Park View Condominiums, a 47-story tower planned for the corner of McClurg and Illinois. Prices for this project were not yet available at press time.
Riverside Park. Rezmar Development plans around 4,600 residential units as well as 670,000 square feet of retail space on a 62-acre site bounded roughly by Roosevelt, the Chicago River, Clark, and 16th Street. Plans call for parking, parks, plazas and a landscaped riverwalk. The first homes will be offered in 2005, but specifics were not available at press time. A wide variety of housing will be offered at Riverside Park, priced from around $200,000 to the high end.
University Village. Only about half a dozen of the 661 units in the planned community’s first phases remained for sale at press time, priced from the $360s to the $470s. The new 218-unit University Village East, on the east side of Halsted, will include walkup condos with one to three bedrooms priced from the $230s; two-bedroom two-bath duplexes priced from the $520s; townhomes with two or three bedrooms and three baths priced from the $580s; and single-family homes with four bedrooms and 3.5 baths priced from more than $1 million.