Buyers drawn to extra amenities at city’s booming mega-projects
For a while there, residential development in central Chicago seemed to be going the way of banking, media and other industries that have seen the emergence of fewer and fewer players with bigger and bigger holdings bent on dominating their respective marketplaces.
Massive developments with anywhere from 900 to several thousand units – projects with their own roads, parks and in one case, even a school – seemed poised to take over the downtown market for new homes. But with several of these mega-projects far along in sales and several others a year or more away from marketing, 2004 will have as many Davids as Goliaths.
While the giants have left room for the little guys in new housing, the master planned developments enjoy a host of advantages that stem from economies of scale – greater amenities, variety and momentum. Several, most notably Central Station, Lake Shore East and Kingsbury Park, are poised to grab a significant number of new-home buyers this year. And if all of the monster developments on the drawing board actually go forward, 2005 will be the year of the planned community in Chicago.
One reason the mega-projects have proved so successful is the confidence developments of such size can inspire, though it’s not always obvious at the earliest stages.
When Kathleen Ryan first visited the University Village development on the Near West Side a few years ago, her cab driver thought she’d made a mistake on the address, 1440 S. Halsted.
“The cab driver said, ‘lady, you don’t want me to take you there,'” says Ryan, who was visiting the project as an interested broker. “I told him to just follow the balloons they had up. It looked like a war zone then, but now it’s become a neighborhood. People are living here, and it’s a real community. It’s not just a building, like so many projects that have 50 or 100 or 250 units. This is going to be 930 units, and it’s not just one style. There are lofts and mid-rise condos and walkup condos and townhouses. There’s retail and green space and parking.”
Today, Ryan is sales director at the development, marketed by New West Realty, and she, like many, is amazed at the transformation. The old Maxwell Street Market is gone and the grubby character of the historic Halsted has been replaced with period lampposts, new infrastructure and uniform rows of red brick buildings – new condos, townhouses and stores, as well as dormitories for the expanding University of Illinois at Chicago campus.
“We think that long-term, these massive projects have probably a little more appeal than individual projects because you get the synergies of a cohesive development and can provide a much nicer amenities package,” says John Jaeger, of Appraisal Research Counselors.
For example, 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, in the South Loop. Lakeshore East, located between Randolph and the river at Lake Shore Drive, will include hotels, offices, parks and retail, but the development also offers buyers an amenity no small project can – its own public grade school.
“We’re building a village within the city, surrounded by the lake, the river, the park,” Joel Carlins, of Magellan Development Group, says of Lakeshore East. “There really is nothing else like it.”
Developers of the mega-projects say that master planning also allows them to offer a wider variety of product and price points and to optimize sightlines, green space and access as well as amenities.
“We have a wonderful variety, with lofts, townhomes, walkup condos, a mid-rise building – and we’ll have single-family homes across the street,” says Ryan, of University Village. “It’s not just a building here.”
Kingsbury Park, at Chicago and the river, also has offered a wide range of product – lofts, townhouses, mid-rise condos and highrise units in the Montgomery, the former headquarters building of Montgomery Ward & Co.
However, buying in a mega-development also can present challenges for buyers. The first move-ins at any project must put up with the noise, dirt and myriad inconveniences that come with ongoing construction. In a typical project, that inconvenience might last a few months to a year. In a mega-project, buyers might be living in construction zones for the next decade.
But Carlins says careful planning can mitigate this problem. At Lakeshore East, for instance, the central park will be completed before residential occupancy to provide a buffer for the first residents. And as one phase or area is completed, construction moves away from the occupied parts of these diverse developments.
At Lakeshore East, Magellan Development and partner Near North Properties have started construction on two towers, a condo building called the Lancaster and the Shoreham, a rental highrise. Two more condo towers and the low-rise Park Homes also will market units there during 2004.
At Central Station, Enterprise Development is marketing Museum Pointe and Museum Tower, highrises with a total of nearly 500 condos, as well as the remaining units at Museum Park Lofts. Centrum Properties is selling the 243-unit Montgomery highrise at Kingsbury Park, which also includes projects like River Village and Domain.
These and other mega-projects will amount to a significant share of the market, and that’s not including several redevelopment projects at Chicago Housing Authority sites, including Roosevelt Square and Westhaven Park, both on the Near West Side, and North Town Park, in Old Town – all mega-projects in their own right.
But if sales are any indication, supply appears to be more in line with demand than it did a year ago. After a long stretch of rising inventories, there were many fewer announcements of new projects during 2003, when nearly 4,200 new units were delivered, according to Appraisal Research. The housing analyst predicts far fewer deliveries this year, around 2,319.
But if plans become reality, several new mega-projects will join the current batch in 2005. D2 Realty Services reportedly wants to develop Franklin Point, the eight-acre site at the river and the Eisenhower Expressway, as 1,500 residential units and 100,000 square feet of retail. And at press time, Rezmar Development Group had gotten zoning approval for up to 4,600 units at its planned Riverside Park community, in the South Loop.
Each builder promises a one-of-a-kind development, and in many ways, each delivers.
“What we like about Central Station is that the developer is able to share these club house amenities with several buildings and make them spectacular,” Jaeger says. “At Lakeshore East, the six-acre park will create great view corridors and they’ll have a nice amenity with the school there. Being on the River, for Kingsbury Park has been a great amenity, and of course they have great variety, with lofts, townhomes, highrises, new construction.”
Here is a brief overview of mega-projects planned and underway:
Central Station. More than 1,350 housing units have been completed at the 80-acre development south of Grant Park, with hundreds more under construction. The project has the potential for more than 6,000 homes when complete.
The diverse offerings here have been selling extremely well. They include Legacy Development’s 23-story highrise and 48 townhouses at Prairie District Homes, as well as Lakeside on the Park, a 14-story brick building with 164 units priced from the $190s. Bejco Development lost its Prairie House project, but the Radco Companies has reached the 75 percent sold mark since taking over the 203-unit development.
The biggest current success at Central Station is the Enterprise Companies’ Museum Park community, which has introduced two new highrises in addition to the first two towers and a new construction “loft” building. Museum Pointe has 208 condos with two to three bedrooms priced from the $280s to about $1.65 million. Museum Tower is a 276-unit highrise with one- to three-bedroom units priced from the $200s to $1.25 million.
Franklin Point. D2 Realty Services has announced plans for a large mixed-use development on an eight-acre site along the Chicago River, next to the Eisenhower Expressway in the South Loop. The project could hold up 1,500 apartments and condos and 100,000 square feet of retail, though it’s still in the planning stages.
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 pulling from development. The 4.5 acres bounded by Clinton, Kinzie, Halsted and the Metra railroad tracks could hold more than 1,500 additional units, but at press time, the Fifield Companies and Jameson Development, LLC had not begun to develop it.
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 high-tech and telecommunications space.
At press time, Centrum had sold around 100 condos at the Montgomery, a conversion of the 28-story former Ward’s office tower. This modernist highrise has 243 units with one to four bedrooms priced from the $280s. The developer was all but sold out at Domain, where at press time, nine loft condos remained in the Ward’s catalogue building. The sprawling building, which hugs the river at Chicago, contains 288 residential lofts and 1.8 million square feet of office space. The retail component includes Japonais, an upscale French-Japanese restaurant, and Eporium, a European-style market selling everything from coffee to flowers and fine wine.
Other components here include River Village, condos and townhouses priced from the $170s, and City Club, luxury townhouses starting around the $790s.
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 more than 90 percent sold at the Lancaster, a 206-unit highrise where remaining condos have two or three bedrooms, priced from the $440s to the high $800s. The developers are introducing the Regatta, the community’s first riverfront highrise this spring. Its 320 units are priced from the $290s for a convertible to around $1 million for the top three-bedrooms.
The first 26 “park homes,” low-rise units that ring the development’s central park, will be introduced later this year, and LR Development is marketing 340 on the Park, a luxury highrise on the community’s southern edge that is a joint venture with Magellan. The park in the center of Lakeshore East should be open by late summer or early fall, according to Carlins, and the public grade school is expected to open in 2006.
Construction also is underway on the Shoreham, a 549-unit rental tower in the northwest corner of the community. With rapid sales at the Lancaster and the introduction of several new projects, 2004 promises to be a big year for Lakeshore East.
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. The MCL Companies is more than 80 percent sold at River East Center, a 620-unit tower with condos priced from the $180s and a sales center at 441 E. North Water, according to Michael Maier, assistant vice president of sales and marketing. A refinancing deal worked out last year gave control of River East Center to another developer, but MCL is still marketing the units. MCL has remained the developer of River View II, however, a high-end tower with one-bedrooms starting in the $490s and five-bedrooms priced up to about $2.72 million. Townhouses at River View are priced from $1.45 million to $2.2 million, and the top 9,000-square-foot penthouse goes for $6 million.
Riverside Park. Rezmar Development just received zoning for up to 4,600 residential units as well as 650,000 square feet of retail space on a 61-acre site bounded by the Chicago River, Roosevelt, Clark and 16th Street. The $1.5 billion project likely will take 10 years to develop, and Rezmar may parcel out portions of the site to other developers.
University Village. The development team behind the 930 lofts, townhouses and condos that will comprise a new neighborhood at 1440 S. Halsted, has sold more than 620 of the 661 units it has marketed so far. “Sales are going very, very well, other than to say I wish I had more product,” says Sales Director Kathleen Ryan.
At press time, 21 of 98 condos remained for sale in a mid-rise scheduled for first occupancy this fall, with prices ranging from the $260s to the $580s. Fourteen of 24 townhouses were available, priced from the $450s to the $620s, and a few penthouses remained in the loft building.
New retail has been added, including a 7-Eleven, Jamba Juice, Caribou Coffee and Stone Cold Creamer ice cream. A new phase that will probably include single-family homes is planned for east of Halsted, possibly starting in late fall or early spring of ’05.