Robert Darrow, @properties

Archive for the ‘Development’ Category

Your guides have been watching developments throughout the downtown market for signs of life.  But instead, they seem to be dropping like flies.

The latest news on Wacker Drive at the Waterview Tower is that the hotel planned for a portion of the building has served notice to the developer that they are terminating their agreement to open the Shangri-La Hotel inside the building.

The developer, Teng & Associates, has been unable to get new financing from sources in China, and construction crews stopped working on the building in the fall last year.  Nothing has been happening on the construction site since then.

Remarkably, Chicago has not had many construction projects that go belly up during construction.  Besides this development, the only other unfinished eyesore is the mid-rise condominium building located at the corner of Fullerton and Clybourn on the west edge of Lincoln Park.

Over at Trump Tower, the developer and the bank have agreed to set aside their differences and try to work out a solution to the final sell-out of remaining units in “The Donald’s” Tower.  Financing restricted the developer from lowering prices on the remaining units which has caused sales to grind to a halt even though competing re-sale units in the building are tens, if not hundreds, of thousands less.

Although there are several un-sold units remaining for sale, the building is practically complete. 

From the New York Times:

http://www.nytimes.com/2009/02/04/business/04chicago.html?partner=permalink&exprod=permalink

A concise update on the progress (or not) of two of the largest developments that broker ground, and soon after ground to a halt.

The second project was Waterview Tower, a 90-story mixed-use hotel and condominium building in the Loop, the central business district. It also was to be among the 10 tallest buildings in the city. The developer is Teng & Associates, a local firm.

Both projects got off to fast starts in terms of sales and construction, but both have now ground to a halt amid the many mechanics’ liens filed by subcontractors as the developers struggle to find additional financing.

At the padlocked lakefront site of the Spire, a seven-story-deep hole is ringed with 34 massive caissons that go down to bedrock.

The Waterview site on Wacker Drive, meanwhile, is even more unsettling. Workers had completed the first 26 floors of the building before they stopped work for good late last summer.

Taken together, the two are the most visible signs of the financing squeeze that has all but paralyzed the real estate market here over the last six months.

In yesterday’s post containing predictions for the market in 2009, I noted that builders are going to complete 2,147 condos in the South Loop during 2009.

But after this crop of condos is finished, there are no more in the pipeline.  The developments that are to be finished in 2009 were all started in 2006 and 2007 before anyone knew the economy was headed for its fall. 

But no more developments got underway in 2008 which means no more will be finished beyond this year.

So if any readers have a desire for a brand new condominium instead of a “pre-owned” or “used” home in the South Loop area, 2009 is the year for you.  There should be plenty of good deals with incentives, price reductions, and inventory to choose from.  After that, you’ll be looking at re-sales only.

The Uptown Theater, originally uploaded by Michael_Lehet.

Check out the article in Today’s Sun Times about a new deal to give control of the Uptown Theater (4816 N. Broadway) to someone else besides Jam Productions. The problem is that Jam Productions paid $3.2 million for it in a foreclosure auction last summer.

David Roeder notes of a longstanding feud between Alderman Mary An Smith and Jam Productions.

http://www.suntimes.com/business/roeder/1365026,CST-FIN-roeder07.article

Your guides hear that the development of apartments and retail along Clybourn – south of North Avenue – is still in the works despite the rotten economy.

Sun Times article here.

On the site of the land owned by the New City YMCA along Clybourn (and also facing onto Halsted) the developer plans to break ground by the middle of 2009.

The developer says that the neighborhood already has stores with the very best sales for their particular chain.  And that this neighborhood is now second only to Michigan Avenue for popularity with shoppers.

The development will be six buildings.  One will be 19 stories tall – 280 apartments.  The tower was supposed to be a 480 unit condo develpopment, but that plan was changed recently due to the plunging real estate sales market.  There will also be a parking garage for 1,250 cars.

Already crowding into the area are big retailers like Crate & Barrel, The Container Store, Banana Republic, Restoration Hardware, and in the oldest mall in the area at North Avenue and Sheffield, Best Buy and Sam’s Wine & Spirits.

Located across the street from this development – to the west – is SoNo – the twin high rise condominium development.  Some residents are already moving into the first tower.

Over at the Chicago Spire, work has ground to a halt.

Your guides hear today that due to a financial crisis in Ireland with the construction lender, financing for the development is in jeopardy.

Sun Times article here. 

Anglo Irish Bank, the main lender, faces nationalization by the Irish government to avoid collapse.  The banks stock has lost 98% of its value since its high point in the middle of 2007.  There’s an investigation as to whether the chairman hid $121-million in personal loans he got from the bank. 

The construction company, Shelbourne Development, has already borrowed $69.5-million for the construction so far, but Santiago Calatrava, the architect for The Spire, says the developer owes him over $11-million. 

Who knows if the new nationalized Anglo Irish Bank will continue to lend on the project?  The developer is actively looking for cash or equity investors, but worldwide sources of cash have dried up.  Bad news for Chicago as all we have to show for it so far is a $69-million hole in the ground.

At the corner of Clarendon and Montrose in Buena Park is the old Maryville Academy – a 3.5 acre site sitting on both sides of Clarendon on the north side of Montrose.  Maryville has been vacant for years, and developers have been leery about developing property in the challenging neighborhood. 

But the lure of townhomes, houses, or a high rise with views of the lake in one of Chicago’s few undeveloped parcels seems to be quite the temptation.

Read the Sun Times’ article here.

A regular reader and customer writes:

How do you see Lincoln Square development in the next 3 years compared with Albany Park?

Lincoln Square should come out ahead of Albany Park. Why, you ask?

1. Transportation. In Lincoln Square there’s slightly better access to transportation. Even though the brown line runs through Albany Park, the ride is shorter from Lincoln Square. Western Avenue busses get you north and south – which are more difficult on smaller north-south routes like Kedzie and Pulaski.

Plus Lincoln Square has access to the Ravenswood Metra train. Twelve minutes to Downtown if you catch the right express train.

2. Shopping. The retail center along Lincoln Avenue draws shoppers from all over Chicago. Heck, you could argue that stores attract shoppers from as far as Hollywood if you count the day Angelina Jolie visited Timeless Toys.

3. Stability. As the market softened, sales stalled and foreclosures shot up in Albany Park. Lincoln Square stayed firm, and had fewer foreclosures.

4. Higher prices. Lincoln Square has higher prices. That’s because the types of properties for sale are nicer. That’s a problem, however, if you can’t afford the higher prices. But the higher prices should attract more development and developers to Lincoln Square.

5. It’s closer to the Lake. Sure, Albany Park is right next to Lincoln Square. But it’s always more desirable to be closer to the lake. Lakefront neighborhoods enjoy higher prices, shorter market times, and better appreciation.

Your guides weren’t seeing things.  All the seemingly un-related stories about the slowing or halting of construction on condominium high rises all over Chicago are the direct result of the credit crunch and sour economy. 

Although there are a record number of condominiums scheduled for delivery in 2008, and a remarkable number still in 2009, construction on anything with delivery in 2010 and beyond has pretty much ground to a halt.

The Chicago Tribune reports on the Appraisal Research Counselors latest figures in today’s paper.  It looks like that despite finishing 4,900 condominiums in 2008 and 4,600 in 2009, developers are projected to complete and deliver only 500 in 2010.

The report is specific to condominium deliveries in high rise buildings – defined as twelve stories or more.

Developments that have slowed or stopped construction in the downtown area include:

• Most famously – the Chicago Spire, where work has slowed except the finishing work on some utilities and caisson work.
• A new development in the New East Side near the Aqua has been put on hold indefinitely.
• At the Waterview Tower on Wacker Drive at Clark Street the developer has indicated that alternative financing is in the works, but the construction site has been quiet for months.
• A hotel development called Stabridge Suites at 127 W. Huron in River North has been idle since July.

While it’s never good news when there’s trouble in the marketplace, we’re relieved to hear that the pace of construction is going to slow to match demand.  It’s the first step in a recovery to a more balanced market.  It should be an interesting ride along the way.

Ty Warner, founder of the Ty Company that makes these little $5 stuffed animals has reportedly purchased the 141st and 142nd floor of The Chicago Spire (400 North Lake Shore Drive) for a cool forty million dollars.

That’s 10,000 square feet in what will eventually be the highest homes in the world.

I definitely need to figure out a way to turn stuffed animals into deluxe digs.  Your guides can’t keep working forever!

The developer of the St. Clair condominium high rise located near Cityfront Plaza has canceled the construction of the building and sold the land to an apartment developer.

The developer was Centrum Properties and the plans were for a 41 story tower to begin the second stage of the Cityfront Plaza development near Navy Pier and the Chicago River.

After 15 months of marketing, Centrum Properties reportedly only sold 40% of the 261 units in the building.

Add the St. Clair to a long list of developments that have been canceled in 2008.  The second quarter report from the Appraisal Research Counselors indicates that projects totaling more than 1,400 condos have been canceled this year.  Yikes!