Luxury development heads south as “new” locations go high-endÂ
by Alison Soltau
Not so long ago, if you had several million dollars to lavish on a high-end condo in downtown Chicago, all, or at least most, roads pointed to the tony Gold Coast. The fabled neighborhood was, and still is, the darling of many buyers of ultra-luxury homes, offering lake and skyline views, top-flight dining, abundant nightlife and world-class shopping on the nearby Magnificent Mile. Not to mention the snob appeal of a Gold Coast address.
But developable land is rare in the dense neighborhood, and the official Gold Coast, bounded by Oak Street, North Avenue, the lake and Clark Street, currently is home to just one of the 18 or so ultra-luxury developments underway in downtown Chicago. Only The Ambassador, an upscale adaptive reuse project that has been on the market for several years, at 1300 N. State Parkway, qualifies.
As downtown development has boomed in recent years, high-end builders increasingly have turned to “new” locations. Some of these neighborhoods, such as the Loop / New East Side, are new in the sense that until lately, they had seen little residential development of any kind. Others, such as River North, had seen plenty of new housing, but not at the sort of stratospheric prices current ultra-luxury projects are fetching.
Some of the latest luxury locations are short on the kinds of amenities well-heeled buyers generally want – posh retail, fine dining, swank bars. Ultra-luxury developments in these locations likely will be limited to sites that command premiere views of the river, lake and skyline for some time.
But a couple of these neighborhoods have the kinds of infrastructure, attractions and institutional base that could transform them into blue-chip addresses in the coming years. Some already are well on their way.
Gold Coast South
For years, the River North Association, a non-profit business group, has claimed the area between the Chicago River and Division Street for its members, attempting to annex the two blocks of the Gold Coast between Oak and Division streets as part of River North. The Gold Coast, though, has the tonier reputation, and if perceptions of neighborhood boundaries are shifting here, it’s the Gold Coast that’s cutting into River North turf.
Both Ten East Delaware and The Elysian Hotel and Private residences, 11 E. Walton St., market themselves as being in the Gold Coast – the Elysian marketers going so far as to say the development sits “in the heart of the Gold Coast.” Never mind that the southern boundary of the Gold Coast is Oak Street, and both of these projects are about a block south of there, in River North.
The truth is, these developments are so close to the Gold Coast that most buyers aren’t going to quibble, and over time, an address just south of Oak might be generally accepted as true Gold Coast. These ultra-luxury developments, along with 50 E. Chestnut, The Palmolive Building and The Residences at 900 sit in an area that might be dubbed Gold Coast South.
Some buyers no doubt see a location south of Oak Street as better than the Gold Coast proper because it’s that much closer to Mag Mile shopping. Being on or close to Michigan Avenue always has had a luster of its own for ultra-luxury buyers. Projects such as 50 E. Chestnut, The Elysian and Ten East Delaware tout their proximity to the Magnificent Mile, and The Palmolive Building and The Residences at 900 are making the most of Boul Mich locations, just as ultra-luxury projects ranging from The Water Tower to The Park Tower did before them.
JMB Development has converted office space in the Bloomingdale’s Building into upscale homes at The Residences at 900, 900 N. Michigan Ave., touting the upscale retail downstairs. Residents can shop at Gucci and other high-end shops in the seven-story mall located inside the building. Draper & Kramer’s grand art-deco high-rise, The Palmolive Building, 159 E. Walton St., sits along Michigan Avenue, a Louis Vuitton store occupying ground-floor space on that side.
River North East
Yes, it’s a silly idea for a name, but is “River North East” any more contrived than the “Cathedral District?” The Fordham Company and friends dreamed up the Cathedral District to market residential development in the area between Michigan Avenue, State Street, Ontario Street and Chicago Avenue.
This pocket of River North (the “Cathedral District” is not sticking as far as we can tell) is home to a distinct collection of new upscale towers that started with The Fordham and The Pinnacle. There actually are a couple of ornate cathedrals here – Holy Name and St. James – unlike the area around a North Side development called Cathedral Hills (no cathedral, no hills). A number of classy old brownstones also managed to hang on, now housing everything from offices to art collections.
And there are several ultra-luxury developments planned or underway in the vicinity, including Canyon Ranch Living and 30 W. Erie, on the western fringe of this tiny pocket. On the eastern edge of this enclave sits the single priciest luxury high-rise development in Chicago during 2006, Prism Development Company’s The Ritz-Carlton Residences, 664 N. Michigan Ave. Homes here are priced from $1.25 million to $9.2 million, and as you might have guessed, the Michigan Avenue address has been key to the marketing effort.
“The Ritz-Carlton waited about five years to find just the right location,” says Jane Shawkey, of sales agent Rubloff Residential Properties. “It had to be on the Avenue or within a block from the Avenue. The brand is so phenomenal that it needs a phenomenal location.”
A river runs through it
If you guessed that this story would continue heading south (we’re speaking in geographic, not literary terms), you were right. That’s the direction that ultra-luxury developments have moved recently, pushing toward and fording the Chicago River, until recently seen as the border between blocks dominated by business (south) and those with a more residential flavor (north).
A booming housing market, weak demand for office space and a newfound appreciation for the Chicago River’s aesthetic value have spurred building along the waterway once treated as a sewer. Developments such as MCL’s River East, The Enterprise Companies’ Kinzie Park and Bejco’s River Bend started the trend (sure, there were others, but in the interests of space we’ll only mention one more: Harry Weese’s wonderful River Cottages). It was the all-powerful Trump name, however, that blazed the current water trail.
The Trump International Hotel & Tower, 401 N. Wabash Ave., has “pushed up the desirability” of a sliver of River North that’s better known for office buildings, says Gail Lissner of housing analyst Appraisal Research Counselors. Trump Tower, where high-end units command as much as $1,000 a square foot, is the second-most expensive development in the downtown market.
“[Trump] has greatly improved the marketability of existing properties, and now there are rumors that the IBM Building is a potential conversion candidate,” Lissner says.
Across the river from Trump, Teng Associates’ 89-story Waterview Tower, 111 W. Wacker Drive, will slant to the southeast, giving homeowners views of the river, the lake and the skyline from its tall, slender profile. The building will be close to Loop offices, the Theater District, State Street retailers and – if you like a good walk – Millennium Park.
Although these riverfront sites have not been known as residential locations, they are in the heart of downtown with stunning views that will never be blocked by competing high-rises – an asset that promises strong investment value as downtown continues to grow.
South Streeterville
The MCL Companies tried to call it River East, but the nondescript area immediately north of the river and west of Lake Shore Drive never took to this name. Many Chicagoans don’t really think of it as Streeterville either.
The neighborhood’s identity complex soon could get massive relief, however, if Dublin-based Shelbourne Development follows through on plans for 400 North Lake Shore Drive. The Irish developer bought the project formerly known as the Fordham Spire from The Fordham Company in 2006. The planned 2,000-foot building with a cutting-edge design by renowned Spanish architect Santiago Calatrava, would be the tallest tower in North America and perhaps the priciest in Chicago. The corkscrew profile would be a beacon on the lakefront, and such a development could have a massive effect on the surrounding area, one with lots of developable land in the form of surface parking lots.
“If the Spire comes in, I think it will have a similar impact to the Trump development [in River North], bringing a lot of interest to the neighborhood,” says Gail Lissner, of Appraisal Research.
Not that the neighborhood isn’t starting to hop already. In mid-2006, the price of a new-construction condo averaged $450 to $500-plus per square foot in Streeterville, buoyed by projects such as Urban R2’s 600 North Fairbanks and Sutherland Pearsall’s 550 St. Clair, according to Appraisal Research. Last year, the median price for attached housing in Streeterville was $372,500, well above the citywide median of $285,000, according to the Chicago Association of Realtors.
Greater Loop, Newer East Side
Steps toward the city’s goal of creating a 24-hour downtown, the theater district and most of all, the development of Millennium Park have inspired a mini high-rise boom south of the river. Mesa Development’s The Heritage at Millennium Park, 130 N. Garland Court, was the first of this wave and proved well-heeled home buyers would cross the river, given a good enough reason.
When The Heritage came on the market, Millennium Park was still under construction and despite its inclusion in the project’s name, the park was in many ways, an intangible. Now that Chicagoans can buy homes with views of Frank Gehry’s striking Jay Pritzker Pavilion and Anish Kapoor’s luminous Cloud Gate sculpture, living near Millennium Park has gained its own cachet.
Other ultra-luxury projects on or near the park include Palladian Development’s Mandarin Oriental Tower, 215 N. Michigan Ave. and Walsh Investors and Mesa Development’s The Legacy at Millennium Park, 60 E. Monroe St. Nearby projects with lower price points also are building the greater Loop’s residential base, both new high-rises such as Modern Momentum and conversions in former office buildings, such as 55 E. Monroe, Metropolitan Tower and Metropolis.
Magellan Development Group’s large Lakeshore East community, immediately north of Millennium Park in an area some call the New East Side, has been very successful largely because of its lake, river and park views – and the scale of the project. This mixed-use community includes a school, rentals, hotels and commercial components that will provide residents with some built-in retail and conveniences in an area that still feels business-heavy and institutional. Lakeshore East includes LR Development’s luxury 340 on the Park high-rise and Magellan Development’s Parkhomes, Aqua and Chandler projects.
John Jacoby, a partner in a Loop law firm, bought a two-bedroom condo in this area, at The Legacy at Millennium Park, overlooking sculptor Jaume Plensa’s Crown Fountain partly because of its proximity to the park.
“I can see myself using the park facilities for morning workouts,” Jacoby says.
Views are key in the Loop, which is still short on residential amenities, especially after hours, and you should be ready to pay top dollar for them. A typical unit on the east side of a building with clear views of Grant Park tends to be priced from $550 to $650 a square foot. A similar unit in the same building facing west would cost around $300 a square foot, according to Appraisal Research Counselors.
As the residential development boom moves south, Loop prices are heading north. The average sales price of a Loop condo was $355,802 during the first eight months of 2006, up 25 percent from the same period in 2004, according to figures from the Multiple Listing Service of Northern Illinois compiled by Jameson Realty Group.
The North South Loop
When condo buyers at The Enterprise Companies’ high-rise, One Museum Park, 1215 S. Prairie Ave., move into their new homes they’ll have front-row seats at a world-class show. The expansive glass windows of One Museum Park gaze out on a panoramic view that takes in Soldier Field, the stately Museum Campus, Lake Michigan and Millennium Park.
Enterprise took a gamble asking buyers to fork out as much as $500 a square foot for units when sales opened at One Museum Park in early 2005. The high prices made this tower the first – and so far only – ultra-luxury development in the South Loop. The prices of high-end homes at One Museum Park have kept pace with the ultra-luxury market, and today the going rate for one of the top condos is about $600 a square foot.
The South Loop, bounded roughly by Van Buren Street, Cermak Road, the river and the lake, may have postcard looks and proximity to the Loop, the Museum Campus and Soldier Field, but the evolving neighborhood can’t compete with River North or the Gold Coast for nightlife and fine dining. Restaurateurs have been slow to arrive in the South Loop despite the frenetic pace of residential development. The neighborhood dominated new home sales in the downtown market in the second quarter of 2006, with a 24 percent market share, according to Appraisal Research, but most of the new condos built here have been sold at more moderate prices.
South Loop development continues to push toward and even beyond Cermak Road, and one reason that One Museum Park was able to fetch ultra-luxury prices was that this part of the neighborhood – a place someone less concerned about confusing readers might call the North South Loop – is comparatively settled. Building in and around Central Station has added thousands of new residents, and new restaurants such as Opera, Gioco and Zapatista – clustered at 13th and Wabash – are making the area feel more like a true neighborhood.