Chi_Coruscant
May 12th, 2005, 02:17 PM
I thought it is an interesting article to read.
Millennium Park seeds forecast of dollars in bloom
Real estate, hotels, restaurants among likely winners, study suggests
By Thomas A. Corfman
Tribune staff reporter
Published May 12, 2005
Despite cost overruns, construction delays and revenue shortfalls, Millennium Park may unexpectedly prove to be an effective economic development tool.
The 24.5-acre park will spark $1.4 billion in new residential construction in the East Loop over the next 10 years, according to a study commissioned by the city's Department of Planning and Development. Tourist spending is projected to surpass $1.9 billion during the same period.
While the study identifies a trend toward residential development in the East Loop that the city was already encouraging, it also highlights increased use of the lakefront, which could influence future planning, said Planning Commissioner Denise Casalino.
"Not only Millennium Park, but the amount of residents that are going to be lining Grant Park is transforming Grant Park," she said.
Millennium Park attracted slightly less than 1 million visitors last year after its July 15 opening, with popular attractions such as the wading pool with video towers and ice rink. The latest feature, outdoor art galleries, is scheduled to open next month.
The study sheds a new financial perspective on the costly park, which despite its broader economic benefits has had difficulty paying for itself.
The $490 million project was partly paid for with $220 million in donations, largely from corporations. But nearly two-thirds of the remaining cost was financed with bonds to be repaid by revenue from the park's underground garage. But that revenue has fallen substantially short of projections, forcing the city to tap other sources of cash.
Last week city officials said they would rent out the park Sept. 8 for a private meeting of Toyota car dealers for $800,000, a move that has caused some concerns.
And the city is seeking to renegotiate a controversial concession contract for the Park Grill, which they now say was too favorable to the restaurant's politically influential investors.
Despite these questions, visitor spending connected to the park could add more than $180 million in revenue from hotel and other taxes over the next 10 years, according to the report.
But the key to Millennium Park's economic impact is the study's prediction that attendance will triple this year, to 3 million people, and that subsequently the park will grow gradually in popularity.
The park's effect on business is undeniable but difficult to calculate, said the general manager of the Fairmont Hotel, a block away at 200 N. Columbus Drive.
"Can you quantify the room nights for Central Park in New York? No, you can't," said Kevin Frid. "Do we know it's a tremendous attraction, one of the attractions for people to go there? Yes, we do."
The report says restaurants and retailers should also feel some benefit.
"I think it's going to help Wabash Avenue significantly, being the shot in the arm that it needs to revive itself," Casalino said.
Located between State Street and Michigan Avenue and covered by elevated tracks, Wabash has shown scant signs of a rebound.
The $50,000 study was conducted by Goodman Williams Group Inc., a small Chicago real estate research firm, and URS Corp., a large planning and design company based in San Francisco.
The study looked at the area bounded by the Chicago River, State Street, Roosevelt Road and Lake Michigan.
The researchers predict that 10,000 residential units will be added to the area between 2005 and 2014, based on the nearly 3,700 units to be completed over the next three years. The study predicts an average unit price of $560,000, or $400 a square foot.
The study uses two approaches to determine the $1.4 billion impact of the park on residential development. The first approach looks at how the park has increased demand for housing in the area. Of the 10,000 units to be completed by 2014, about 25 percent are assumed to be the result of demand generated by the park, based on interviews conducted during the study.
The second approach looks at prices, assuming that demand for housing is not affected. Based on sales data, prospective home buyers are willing to pay on average $100 a square foot more for a dwelling in the area compared to nearby areas, the study found.
Residential consultant Tracy Cross cautioned against drawing too close a connection between the park and the surrounding development, noting the area's location.
But Millennium Park has contributed more broadly to the residential market in the city's core, said the president of Tracy Cross & Associates Inc. of Schaumburg.
"The park adds a dimension that wasn't there before, an incredible enhancement to what was already a 24/7 living environment," he said.
The study's attendance prediction of 3 million people this year is based on several factors, including last year's results and interviews. The study assumes that park visitors mirror overall visitors to the city, in terms of the nature of the visit and the average amounts spent. But the study assumes only a portion of the spending is prompted by the park.
For example, the study assumes that 70 percent of the spending by day-trip visitors is due to the park.
International visitors, who stay longer and see numerous city attractions, spend only 10 percent of their money because of the park.
An expert in the economic impact of tourism called the attendance forecast a "weak link" in the study, and said the breakdown of visitors required further study.
Increased spending near the park may mean that visitors are not spending at restaurants and hotels elsewhere in Chicago, resulting in "less of a net gain overall to the city," said Daniel Stynes, a professor emeritus at Michigan State University.
But the park has enhanced the city's reputation nationally, he added.
"This reputation yields far greater economic and social dividends than are captured by nearby property values or estimates of visitor spending," he said.
Millennium Park seeds forecast of dollars in bloom
Real estate, hotels, restaurants among likely winners, study suggests
By Thomas A. Corfman
Tribune staff reporter
Published May 12, 2005
Despite cost overruns, construction delays and revenue shortfalls, Millennium Park may unexpectedly prove to be an effective economic development tool.
The 24.5-acre park will spark $1.4 billion in new residential construction in the East Loop over the next 10 years, according to a study commissioned by the city's Department of Planning and Development. Tourist spending is projected to surpass $1.9 billion during the same period.
While the study identifies a trend toward residential development in the East Loop that the city was already encouraging, it also highlights increased use of the lakefront, which could influence future planning, said Planning Commissioner Denise Casalino.
"Not only Millennium Park, but the amount of residents that are going to be lining Grant Park is transforming Grant Park," she said.
Millennium Park attracted slightly less than 1 million visitors last year after its July 15 opening, with popular attractions such as the wading pool with video towers and ice rink. The latest feature, outdoor art galleries, is scheduled to open next month.
The study sheds a new financial perspective on the costly park, which despite its broader economic benefits has had difficulty paying for itself.
The $490 million project was partly paid for with $220 million in donations, largely from corporations. But nearly two-thirds of the remaining cost was financed with bonds to be repaid by revenue from the park's underground garage. But that revenue has fallen substantially short of projections, forcing the city to tap other sources of cash.
Last week city officials said they would rent out the park Sept. 8 for a private meeting of Toyota car dealers for $800,000, a move that has caused some concerns.
And the city is seeking to renegotiate a controversial concession contract for the Park Grill, which they now say was too favorable to the restaurant's politically influential investors.
Despite these questions, visitor spending connected to the park could add more than $180 million in revenue from hotel and other taxes over the next 10 years, according to the report.
But the key to Millennium Park's economic impact is the study's prediction that attendance will triple this year, to 3 million people, and that subsequently the park will grow gradually in popularity.
The park's effect on business is undeniable but difficult to calculate, said the general manager of the Fairmont Hotel, a block away at 200 N. Columbus Drive.
"Can you quantify the room nights for Central Park in New York? No, you can't," said Kevin Frid. "Do we know it's a tremendous attraction, one of the attractions for people to go there? Yes, we do."
The report says restaurants and retailers should also feel some benefit.
"I think it's going to help Wabash Avenue significantly, being the shot in the arm that it needs to revive itself," Casalino said.
Located between State Street and Michigan Avenue and covered by elevated tracks, Wabash has shown scant signs of a rebound.
The $50,000 study was conducted by Goodman Williams Group Inc., a small Chicago real estate research firm, and URS Corp., a large planning and design company based in San Francisco.
The study looked at the area bounded by the Chicago River, State Street, Roosevelt Road and Lake Michigan.
The researchers predict that 10,000 residential units will be added to the area between 2005 and 2014, based on the nearly 3,700 units to be completed over the next three years. The study predicts an average unit price of $560,000, or $400 a square foot.
The study uses two approaches to determine the $1.4 billion impact of the park on residential development. The first approach looks at how the park has increased demand for housing in the area. Of the 10,000 units to be completed by 2014, about 25 percent are assumed to be the result of demand generated by the park, based on interviews conducted during the study.
The second approach looks at prices, assuming that demand for housing is not affected. Based on sales data, prospective home buyers are willing to pay on average $100 a square foot more for a dwelling in the area compared to nearby areas, the study found.
Residential consultant Tracy Cross cautioned against drawing too close a connection between the park and the surrounding development, noting the area's location.
But Millennium Park has contributed more broadly to the residential market in the city's core, said the president of Tracy Cross & Associates Inc. of Schaumburg.
"The park adds a dimension that wasn't there before, an incredible enhancement to what was already a 24/7 living environment," he said.
The study's attendance prediction of 3 million people this year is based on several factors, including last year's results and interviews. The study assumes that park visitors mirror overall visitors to the city, in terms of the nature of the visit and the average amounts spent. But the study assumes only a portion of the spending is prompted by the park.
For example, the study assumes that 70 percent of the spending by day-trip visitors is due to the park.
International visitors, who stay longer and see numerous city attractions, spend only 10 percent of their money because of the park.
An expert in the economic impact of tourism called the attendance forecast a "weak link" in the study, and said the breakdown of visitors required further study.
Increased spending near the park may mean that visitors are not spending at restaurants and hotels elsewhere in Chicago, resulting in "less of a net gain overall to the city," said Daniel Stynes, a professor emeritus at Michigan State University.
But the park has enhanced the city's reputation nationally, he added.
"This reputation yields far greater economic and social dividends than are captured by nearby property values or estimates of visitor spending," he said.