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Old July 17th, 2005, 04:52 PM   #141
Chi_Coruscant
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In South Loop, it's condo or no-go
Developers face little choice; office would be 'suicide'

July 18, 2005
By H. Lee Murphy (Chicago Crain's)

Amid a wave of new condominium development in the South Loop, developer William Warman is embarking on his second project in a single block after considering — and then rejecting — commercial uses for the parcel. Photo: Andreas Larsson

Like the South Loop buildings he owns, Jerry Karp has gone condo.

The Chicago developer helped spark a condo boom on South Wabash Street in 2000, but only after a previous attempt at apartment development failed on the same spot.

The road to Mr. Karp's conversion begins in 1985, when he and his partners acquired virtually all the property on an entire city block to the east of South State between 8th and 9th streets for about $5 million. They spent $21 million to convert the 2,000-room YMCA on South Wabash into a 292-unit apartment building. But the apartments ultimately failed to generate enough rent to cover Mr. Karp's debt service. In 1999, his lenders foreclosed on the building.

Undaunted, Mr. Karp raised $20 million under a new partnership called Wydoe Development LLC and bought the building again in 2000, this time determined to find the right use. He and his new partners at Wydoe first considered converting it to office space, but a quick glance at the numbers turned him against it.

"Offices would have involved spending another $40 (million) to $50 million to gut the place and make it over again," Mr. Karp says. "We might have gotten office rents of $20 a foot on a net basis, but it would probably have taken two to three years to lease up."

Wydoe wouldn't likely make a profit at that rate. And Mr. Karp didn't think there was enough demand to fill a 400,000-square-foot office building.

"Office would have been suicide for us," he says.

ONE CHOICE: CONDOS

So, Mr. Karp wondered, what about turning the old Y into a hotel? But that, too, was an obvious non-starter. "We would have had to add new walls and plumbing and heating and air-conditioning zones," Mr. Karp says. "Plus, when we were making our decisions in 1999 the hotel market was headed down."

That left one choice: condos. Wydoe set about converting the old rentals into condo units, first offering them to the occupying renters.

A good choice, as it turns out. All 292 units were sold out within 18 months, with a third of the renters buying their units. And while skeptics thought Wydoe would be lucky to get condo buyers to pay $120 a square foot for residential space, the average sale price came in close to $150 a square foot. Four years later those condos are reselling for $250 a square foot. For a building it had bought back at $20 million, Wydoe realized nearly $50 million in condo sales. Take into account remodeling, marketing costs and sales commissions and Mr. Karp figures Wydoe earned a 25% profit on its investment in less than three years.

The successful conversion of that one building set off a condo boom on the block. Later in 2000, Wydoe sold a neighboring parcel, at 8th Street and Wabash Avenue, to developer William Warman, who promptly built condos there as well.

Mr. Warman's project, a 35-story, 220-unit building christened the Tower Residences of 41 E. 8th Street, nearly sold out by the time construction finished in late 2002. But profits didn't match those at the YMCA project, completed roughly a year earlier.

Mr. Warman says land, construction and marketing costs came to about $62 million for the Tower Residences. (Construction alone cost $50 million.) Condo sales totaled a little more than $67 million, leaving Mr. Warman with a profit margin below 10% — a less-than-stellar return on a downtown development.

Mr. Warman, now operating Warman Development & Design Ltd., is now planning another development at 8 E. 9th.

And while he doesn't expect returns to be much better on the new project, to be called Astoria Towers Residences & Spa, Mr. Warman says these days a developer in that part of the South Loop has little choice.

Like Mr. Karp, he considered commercial uses for the parcel. The two developers discussed a retail center for their new residents but quickly surmised that they couldn't compete with Roosevelt Road, three blocks south, where land and parking were more plentiful. Chain stores like Walgreens, Target and Jewel have already built stores on Roosevelt.

"Retailers want vehicle access, and that's harder on a block like ours," Mr. Warman concedes. "You have to choose what people tell you they want on your site."

SLIM MARGINS FOR RENTAL PROJECTS

Real estate watchers say the commercial market isn't likely to catch up with the condo market as long as interest rates stay low.

"Rental projects carry very slim margins in most places these days," says Gail Lissner, a vice-president with Appraisal Research Counselors in Chicago, a consulting firm. "You buy a site for apartments and a site for condos and the costs are the same, but the returns are substantially better for the condo developer."

As for the office option, Ms. Lissner notes that towers in the middle of the Loop are struggling to find tenants. Put an office high-rise eight blocks south of there and "you've probably got a real challenge in finding tenants."

Mr. Karp hopes to replicate the success of the old Y with Wydoe's next project, down the street: One Place Condominiums, at 8th and State.

This multi-use facility will feature a $40-million parking garage for 400 cars flanked by 67,000 square feet of commercial space (most of which will be leased by an X-Sports Fitness Center) and 97 condo units. More than half of the units are already reserved by willing buyers at a price approaching $300,000.
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Old July 18th, 2005, 01:16 AM   #142
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Here is a graphic to go along with the Streeterville article that I posted.

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Old July 18th, 2005, 03:36 AM   #143
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^Thanks for posting the graphic. I think most of the new construction isn't really in "Streeterville." Historic Streetville is more like the area North of Ontario or Huron. It seems to me that the new construction is actually creating a new neighborhood West of Navy Pier. Streeterville was alway residential. This area used to be industrial.
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Old July 18th, 2005, 06:06 AM   #144
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Its hard to judge where Streeterville begins. The residential area north of Chicago, east of Michigan is considered by many to be "Gold Coast".
Then there is the Northwestern Campus, which really isn't part of Streeterville to me. The campus is almost all Northwestern buildings or hospitals-not a neighborhood. I think I would call the land south of Ontario east of Michigan to be Streeterville. To me, River East development is just part of Streeterville. Just like like there are different areas of River North.
North Bridge is a area of River North. So is Kingsbury Park. Hell, I am know hearing about a neighborhood called "Cathedral District" near State and Huron. But its all a part of River North...until you get to Chicago, and it all becomes Gold Coast. Its may sound confusing, but I am sure many people have different opinons.

Its do different than Lower Manhattan having several different neighborhood names. Once these areas of Chicago become more residential and take on a more neighborhood feel, a new neighborhood name will pop up.
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Old July 18th, 2005, 07:54 AM   #145
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Quote:
Originally Posted by LA1
Its hard to judge where Streeterville begins. The residential area north of Chicago, east of Michigan is considered by many to be "Gold Coast".
Then there is the Northwestern Campus, which really isn't part of Streeterville to me. The campus is almost all Northwestern buildings or hospitals-not a neighborhood. I think I would call the land south of Ontario east of Michigan to be Streeterville. To me, River East development is just part of Streeterville. Just like like there are different areas of River North.
North Bridge is a area of River North. So is Kingsbury Park. Hell, I am know hearing about a neighborhood called "Cathedral District" near State and Huron. But its all a part of River North...until you get to Chicago, and it all becomes Gold Coast. Its may sound confusing, but I am sure many people have different opinons.

Its do different than Lower Manhattan having several different neighborhood names. Once these areas of Chicago become more residential and take on a more neighborhood feel, a new neighborhood name will pop up.

To me Streeterville is bounded by Michigan Avenue on the west, Lake Michigan on the east, the Chicago River on the south, to Oak Street on the north.
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Old July 18th, 2005, 06:10 PM   #146
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Quote:
Originally Posted by northsidesoxfan
^Thanks for posting the graphic. I think most of the new construction isn't really in "Streeterville." Historic Streetville is more like the area North of Ontario or Huron. It seems to me that the new construction is actually creating a new neighborhood West of Navy Pier. Streeterville was alway residential. This area used to be industrial.
This view is consistent with the Streeterville Chamber of Commerce map as seen in MapQuest.

Whoops! I just checked out some other Streeterville sites and their maps, and they seem to be all over the ballpark. Perhaps it's a function of the sales pitch?
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Old July 20th, 2005, 06:05 PM   #147
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I have to agree with Butler's description of S'ville. Pretty much everything north of the river and east of Michigan is the 'Ville as far as I'm concerned.
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Old July 20th, 2005, 06:48 PM   #148
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--

---

Last edited by spyguy999; July 22nd, 2005 at 04:31 AM. Reason: posted in chicago discussion board
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Old July 22nd, 2005, 01:26 AM   #149
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MoMo and 600 N. Fairbanks were both approved by the Chicago Plan Commision today. Alderman Nataruas and Stone were quite pleased with the "innovative architecture" presented in front of them today. Also approved was the Klee Building redevelopment and addition in Portage Park, which I spoke in favor of. That project will include the construction of a 5 story mixed-use building with underground parking in addition to the rehab of the art-deco Klee Department Store at six corners.

An interesting note was mentioned durring MoMo's presentation. Smithfield has been in talks with the Chicago Theater which uses the adjacent alleys for trucks containg stage sets, costumes and whatnot, and thus the tower has been designed as a seperate structure from the base. This allows for the staging of construction materials and equipmenton the site itself durring tower construction, with the construction of the base going forward latter. So, we could indeed perhaps watch the tower rise from its 9 story legs before the base surrounding them is constructed. It would be like watching a bridge going up on that lot suspended 90 feet in the air. How cool is that?
Also, Victor was able to get a height figure from one of Jahn's Architects for 600 N. Fairbanks, it will be 451' (~450'-11") tall.
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Old July 22nd, 2005, 01:27 AM   #150
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Oh yeah and here is a shocker, SOAR actually supports the 600 Fairbanks tower, thier only complaint was with the ground level landscaping being too sparse.
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Old July 22nd, 2005, 11:31 AM   #151
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7/20/2005 10:00:00 PM Email this article • Print this article
Mixed reviews for S. Michigan tower
Some fear it compromises South Loop’s character

By HAYDN BUSH, Staff Writer

Photo courtesy of Michael Moran
1355 S. Michigan.

A Central Station plan for a 30-story condo tower at 1355 S. Michigan got a mixed reception during its unveiling in front of the Greater South Loop Association July 16, with some residents wondering if the neighborhood needed another modern high-rise. The building, which would be built on the site of a 90-year-old, terra-cotta-clad building, would have 260 apartment units.

While few spoke out in favor of saving the structure as it is currently composed, GSLA President Jeffery Key said residents were worried about the "loss of character" with the demolition of the existing building and construction of a new high-rise. And several South Loop residents said they were concerned that the moderately scaled neighborhood they moved into would soon be dominated by staid condo towers.

Central Station founder and co-chairman Gerald Fogelson, though, said that while the city is promoting eclectic mix and height in the area south of 14th Street, the area between 14th Street and Roosevelt Road will soon play home to several new high-rises, including a handful developed by Central Station.

"This is consistent with the Central Area Plan," Fogelson said, adding that the city is pushing more moderately scaled development starting with the Chicago Firehouse restaurant on the other side of 14th Street from the proposed tower.

Also at issue is whether the existing building, which currently houses the Strictly Business nightclub, can be preserved. The building was constructed in 1909 by Jenney, Mundie and Jensen, the same firm that designed the now-demolished Home Insurance Building, considered the city’s first modern skyscraper . Preservation Chicago Vice President Mike Moran said the building was originally used as a showroom for the Kenmore automobile company, and was once adjacent to two other automobile showrooms in what he termed "the noncontiguous Motor Row District."

"It’s a no-brainer that the facade should be saved," Moran said.

At first, Central Station President Tim Desmond said, the company had every intention of saving the existing building. After purchasing it more than two years ago, Desmond said, Central Station discussed ways of saving the building with the city Department of Planning and Development, before deciding it wasn’t possible.

"We couldn’t make it work financially," Desmond said. "...We spent all of 2003 with DPD trying to reuse the building."

Desmond said Central Station also hired local architectural consultant Phillip Krone to work with Daniel Bluestone, dean of architecture at the University of Virginia, and review the historical significance of the building. Desmond said the pair discovered that the building was originally in the middle of the block, when 14th Street was narrower. The southern wall includes brick facing that once fronted another building, Desmond said.

"That diminished it as a historic building," Desmond said.

Desmond added that while the building was constructed by Jenney, Mundie and Jensen, firm founder William Le Baron Jenney, considered the father of the American skyscraper, had died three years earlier. And Fogelson said the building was badly dilapidated, and had been nearly condemned by the city before Central Station purchased it.

"This building has been a blight on the neighborhood," Fogelson said.

Moran, though, argued that building had stood for 90 years, and noted that Jenney, Mundie and Jensen built several other significant buildings after Jenney’s death. He said later that the city often uses condemnation proceedings as a ploy against inattentive owners, and that many nearly condemned building are eventually rehabbed.

At least one preservation concept did attract the interest of Desmond and Fogelson. Laughing Iguana owner Marifran Carlson asked the developers if the building’s terra cotta could be used in some form in the building’s interior, an idea they said they would look into.

"Preserving the materials is an excellent idea," Desmond said, adding that he thought the terra cotta facade could be integrated into a doorway over an elevator.

The tower’s condominiums would be sold for roughly $310 per square foot. In addition, 10,000 square feet of retail space would be developed on the ground floor.
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Old July 22nd, 2005, 07:25 PM   #152
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$100M Condo Tower Replaces Streeterville Parking Lot
By Mark Ruda
Last updated: July 21, 2005 09:52pm

(To read more on the multifamily market, click here.)

CHICAGO-Developer Gary Rosenberg will build 227 condominiums on a prime Streeterville site, now used as a parking lot. More than 50 reservations are in, Rosenberg tells GlobeSt.com, for the 41-story building that will rise at 600 N. Fairbanks Ct., a project expected to cost more than $100 million.

The 29,044-sf site has remained relatively fallow after environmental problems were discovered after a gasoline station ceased operations, says 42nd Ward Alderman Burton Natarus. In addition, the design by Murphy/Jahn Architects preserves a three-story retail building on the north end of the site, he adds. “It’s not a landmark building, but they’re saving a significant building,” says Natarus, noting it housed the Chez Paree night club.

The project received an endorsement Thursday from the plan commission, which is recommending the city council allow Rosenberg’s 600 N. Fairbanks LLC build a 378,000-sf tower, 8% more than allowed under current zoning. Rosenberg will get the additional density by making a $580,880 contribution to the city’s affordable housing opportunity fund, according to the department of planning and development.

Prices for the 119 one-bedroom units will be in “the low-300 to mid-400” range, Rosenberg says. The 77 two-bedrooms are tentatively set to sell for prices in the “high 400s” to $600,000, he adds, while the 31 three-bedrooms will range from the “mid-700” to $900,000 range. “We’ve started advertising, and already we’ve had a tremendous response,” Rosenberg tells GlobeSt.com.

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Old July 22nd, 2005, 09:12 PM   #153
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Thats a pretty nice looking building for this area.

Has anyone heard of these two buildings yet? The Boulevard Hotel & Condos? This one looks like it is going up next to 2 pru. Very tall looking and nice.

And also the Legacy @ Millennium park. 60 E monroe. Nice looking building also very tall.
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Old July 22nd, 2005, 09:18 PM   #154
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This is the Mandarin Oriental building, right?

Still look like this:

?

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Old July 23rd, 2005, 02:54 AM   #155
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Quote:
Originally Posted by spyguy999
This is the Mandarin Oriental building, right?

Still look like this:

?
^No, dude--old rendering
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Old July 23rd, 2005, 06:46 AM   #156
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Quote:
Originally Posted by The Urban Politician
^No, dude--old rendering
Yes, that is an old rendering of Boulevard Tower East, but if you go the the Mandarin Oriental website, this the same rendering that they are using for their proposed tower.
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Old July 23rd, 2005, 09:14 AM   #157
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Got Concord Homes' brochure about Library Tower in the mail. I got a huge rendering but I don't have a scanner.

As we all know, it's obviously very conservative and meant to fit into Printer's Row. But it looks like a solid development, and it appears that the entire building will be clad in dark brick.

I like dark brick, they need to use that more than that lighter brick stuff.

Anyway, it will fill in a nice hole in the south State St. streetwall. It should also be a good step in revitalizing the rather vacant Congress Avenue corridor
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Old July 23rd, 2005, 12:23 PM   #158
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My apologies if this has already been posted. Yet ANOTHER hotel condo (conversion), this time in the former Executive House on East Wacker. I was surprised to learn that this building was ORIGINALLY condos. So its condos, then hotel, now hotel-condos. Hah. How often are condo building converted into hotels? I doubt that would ever happen today.

Also, the article references Hotel Blake at 500 South Dearborn. I"m not familiar with this one. This project must involve renovation of an existing building, not new construction, yes? From pictures, I see this building is adjacent to the former Hyatt at Printers Row?


July 20, 2005
Falor opening Hotel 71 units in August
by Katherine Sands
The Falor Companies plans to begin selling hotel condos in August at what is now Hotel 71, a boutique riverfront hotel at 71 E. Wacker Drive, on the edge of the Loop and the Magnificent Mile. The project will be Falor’s third hotel condo development in Chicago, where the new form of hybrid housing has quickly become popular.


Sales at Falor’s two other hotel condo projects, the Aldens and Hotel Blake, both in the South Loop, are on hold during construction, according to Falor Companies CEO Robert Falor.


Milton Schwartz & Associates designed the 40-story Hotel 71 in 1958 as the Executive House, a condominium building with 454 units, which is why guest rooms are large, starting at 400 square feet.


The hotel recently underwent a major renovation and will get another $20 million rehab as part of the conversion, including the addition of an 8,000-square-foot spa. Prices on most units will range from the $300s to about $700,000, according to Falor, and six penthouses will average about $1.3 million. Falor said that with the company of a former Ritz-Carlton CEO running the new hotel, buyers would receive a high level of service and luxury at a reasonable price.


“This is a really neat project because you’re on the river and you’re directly across from Trump (International Hotel & Tower) with half the price point,” Falor said.


Meanwhile, sales at Falor’s first Chicago hotel condo development, Hotel Blake, 500 S. Dearborn St., have been put on hold. The 42 units that are still available have been taken off the market until construction on the 162-unit building has progressed.


The strategy, according to Falor, is to allow buyers to see the quality of the building when construction is further along, before they purchase. Units at Hotel Blake are priced from the $300s to the $570s, and sales are scheduled to resume this fall, with renovation planned for completion in November.


The Aldens, another Falor project, at 202 S. State St., also is suspending sales during construction. About 55 percent of the 98 hotel condo units have been sold, and the remaining suites are priced from the $250s to the $470s. Chicago-based Sudler had been marketing units at Hotel Blake and the Aldens hotel, but at press time, the Falor Companies had not yet announced the sales and marketing agent on any of the three properties.
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Old July 23rd, 2005, 10:05 PM   #159
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That may be an old rendering, but from what I saw in the past couple days that is what the building will look like.
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Old July 23rd, 2005, 11:05 PM   #160
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Looks like the sale of the old Toys R' Us on State has finally been completed. I noticed a new sign today depicting the conversion of the building into an Office Depot and an Urban Outfitters (as was expected from previous articles about the building).

Now Devyn can just go downstairs to get all his sassy new threads

Sorry for the abhorrent quality of the picture, but, just take it as a little proof that the sign does, in fact, exist.

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