Market Conditions: Are Super Tower Proposals a Sign of the Luxury Condo Market Top?
Artist’s rendering of a new high-rise development proposed in River North at the site of the current parking lot for Holy Name Cathedral. | Image courtesy of Hartshorne Plunkard Architecture per the Sun-Times
2018 is starting off with a bang as far as new high rise condos as plans for two super towers were reported on by the press for two prime downtown sites.
In 2017, we chattered about the sale of the parking lot across from Holy Name Cathedral in River North bordering Chicago Avenue.
JDL Development released an updated version of its plan for the site, now called One Chicago Square.
It was signed off by the Chicago Plan Commission but will have to continue to get approval as the project continues for its various phases.
There will be two buildings with 869 residential units with a combined price tag of $500 million.
The tallest building would be 76 stories. It would rise 1,011 feet and would be the 6th tallest in Chicago.
The second building would be a mere 49 stories.
From the Sun-Times:
Both towers will rise from a nine-story commercial base.
Roughly 225 of the development’s 1,090 parking spaces – none of which would be visible from the street – would be reserved for use by Holy Name parishioners.
Instead of building affordable units on site, JDL Development will make a $6.1 million payment that will bankroll construction of 22 affordable units at the Lawson House SRO development across the street.
JDL will satisfy the remainder of its city mandate by making the largest payment ever made to Chicago’s Affordable Housing Opportunity fund: $11.3 million.
That’s on top of a $13.2 million contribution – the second-largest bonus ever paid – to the so-called “Neighborhood Opportunity Bonus Fund.”
The share the wealth fund was created by Mayor Rahm Emanuel to rebuild neighborhood commercial corridors with contributions from developers allowed to build bigger and taller downtown projects.
Planning and Development Commissioner David Reifman credited JDL with devising a “great creative approach” to Chicago’s affordable housing mandate.
“They’re not doing affordable housing on-site, but it works well for us because the Lawson YMCA…is a very important SRO. We’re looking for sources of funding to make sure that project can work. So, it’s a great synergy. The location is ideal. It’s right down the block,” he said.
Not to be outdone, at the southern end of Michigan Avenue, plans for the development of the Tribune Tower site have leaked so these aren’t written in stone, by any means.
According to the Tribune, the Tribune Tower will be redeveloped into 165 condos.
Rising to the east would be a 1,388 foot tower, which would put it at just a foot shorter than Trump Tower.
For comparison, the Willis Tower is 1,451 feet.
From the Tribune:
In 2016, CIM Group and Golub & Co. bought the Tribune property from Tribune Media, a broadcasting concern, for $240 million. In addition to Tribune Tower, the property consists of three low-rise structures — a former printing plant, the four-story WGN Radio building and the 11-story WGN TV building — that connect to the iconic skyscraper.
Most of Tribune Tower’s exterior and its main lobby — a hushed, churchlike space whose travertine marble walls are inscribed with quotations about freedom of the press and courage in battle — are protected by the city landmark status that was granted to the building in 1989.
Although the other buildings in the Tribune complex do not have protected status, their facades are likely to be preserved under the redevelopment plan, Reilly and a source confirmed.
The new tower would apparently be 220 hotel rooms and 158 condos.
There will be retail and restaurants in the bases of both projects.
No renderings were leaked for the Tribune development.
But it can be guaranteed that with this kind of height, the design of both of these towers will be heavily scrutinized.
If you recall, Trump Tower went through several renderings before the city council signed off on the design.
Another concern, with the Tribune Tower super tower, is the proximity to the historic Tribune Tower.
But, some of you may recall, the same concern was present about the proximity of Trump Tower to the Wrigley Building. The worries were that somehow it would dwarf it or over shadow it.
Those fears didn’t become a reality with the final project.
At a time when the Wanda Group is looking to sell its stake in the Vista Tower, the super tower of condos and a hotel already under construction across the river, for $900 million, are the developers jumping in at the peak of the luxury condo market in this real estate cycle?
Will either one of these actually get built?
Approval doesn’t mean there is financing.
New skyscraper rivaling Trump’s in height could rise could rise behind a redeveloped Tribune Tower [Chicago Tribune, by Bill Ruthhart and Blair Kamin, January 25, 2018]
Holy Name, North Branch projects win Plan Commission Approval [Chicago Sun-Times, by Fran Spielman, January 18, 2018]
To me, that no huge tower(s) are being built on the Rock ‘n Roll McDonalds block looks like one piece of evidence supporting a market top. With all the towers that have been, or are being, built in River North right around it, I’d have thought for sure that one or two towers of some sort would be built there, but apparently not.
I THINK WE SHOULD PETITION FOR A JAN TERRI OLD STYLE TOWER.
LETS DO IT LOLZ!!!!!!!!
GO EAGLES!!!!
I haven’t commented at all since the last bear market was ending, but I think things are going to get interesting… Smells like we’re already at the top (at least for the high end market) and the decline is starting. Too much supply for rental and condo. Prices have risen too fast. Rising rates. Equity markets starting to turn. And then we get these behemoths?! I’m not even sure they can sell out the high end condos that are coming online soon like Vista, Bennett Park, etc..
One Chicago Square has to have a lot go right for it to work. Filling 9 floors of commercial property is going to be challenging but its a good idea to deal with the parking issues. Spending just under $30MM so the poors cant live there is a pretty big financial hurdle.
There have been WAY too many luxury rentals built in River North over the last couple years (we are talking 4500 new units / year!). Sure you might be able to get a month or so off, but rents have oddly been increasing slightly–this is mostly due to Chicago still being a ‘deal’ compared to the coasts. The condo market has also be going a bit wild, but these are not for the poors (almost all the new units are like $1M).
Those that make say six figures plus and want to buy and avoid more $2500/mo rental bills have limited options. They cannot afford the $1M new constructions and the other buildings might be very old. I finally sealed a 1BR in RN at a decent price to get out of the rental game. I will not make out like a bandit with it, but feel comfortable amortizing my fees over 5 years, etc. and coming out a bit better than friends stuck in the rental loop (cheers to saving a bit for a deposit!). Plus there’s the intangible costs of saying you ‘own’ which I value.
“Spending just under $30MM so the poors cant live there is a pretty big financial hurdle.”
If you are building luxury rentals or condos, its definitely worth the $30MM to not have the poors live there. Nobody (including liberals) actually want to live next to poor ppl and all the negative effects they bring.
I for one am glad that there won’t be any more “poors” in the new buildings.
It is shameful to me to be subsidizing housing for people in luxury units with top of the line amentities and community spaces. If the middle class could only dream of living there, then we shouldn’t be subsidizing housing so that politicians can give their family members and political volunteers one bedroom luxury units for $400 a month, while the taxpayer foots the other $3500. Im thrilled were using the $30 million in a more responsible way.
“If you are building luxury rentals or condos, its definitely worth the $30MM to not have the poors live there”
Too bad the YMCA across the street is stuffed full of them. How would you like dropping $2 million and having a couple hundred winos crapping on the sidewalk outside your front door every night?
The developer, JDL, is the one who is building 9 W Walton. All but two of that building’s units have sold, so financing should be relatively easy with the success of that one.
I wish they would get rid of the YMCA building and other SRO’s. seriously, whey do welfare recipients need to live in prime downtown chicago real estate? It’s not like they need to go to “work” downtown.
a 71 unit building is a completely different beast than an 869 unit building
“If you are building luxury rentals or condos, its definitely worth the $30MM to not have the poors live there.”
Definitely agree. So glad my high-rise doesn’t allow that. Remember that guy on the treadmill in what K2 or Alta that got shot in the back of the head?
“Too bad the YMCA across the street is stuffed full of them.”
Big difference between living and sharing amenities with the pobre & just having to look past them on the street though.
“It is shameful to me to be subsidizing housing for people in luxury units with top of the line amentities and community spaces.”
They have even had ‘super-vouchers’ for Aqua. I understand the general concept of providing housing closer to job opportunities, but it does NOT have to be luxury & it does not have to be walkable distance to banking jobs (a 30 minute train ride is still under the national average for commuting).
“I wish they would get rid of the YMCA building and other SRO’s. seriously, whey do welfare recipients need to live in prime downtown chicago real estate?”
Also agreed. You can live 1-2 miles away and let the free market dictate who pays for the land and ultimately the condos. It blows my mind that people would even consider to live in mix-income housing when they are on the side that pays full price. The concept is quite one-sided imo as the ‘rich’ are influencing the ‘poor’ in a more positive way than vice versa. I see the importance of understanding the plight of those in poverty and have seen it all across the world; however, full time living and forced subsidies simply mask the underlying problems which can cause the poverty in the first place…
Garfield Park is perfect for the poors. It’s an easy commute downtown. You don’t need a car. Houses are very cheap. There is no reason to put them in nice neighborhoods and have the city lose out on the property taxes for those units.
We really should go back to putting the poors in specific neighborhoods. Spreading them out is causing crime in nice areas.
“Garfield Park is perfect for the poors. It’s an easy commute downtown.”
Garfield Park? That area is going to gentrify big-time in the next 10 years. In fact, East Garfield Park already is.
“Garfield Park? That area is going to gentrify big-time in the next 10 years. In fact, East Garfield Park already is.”
My friends moved there recently and got a huge place with a great city view for next to nothing. I still don’t feel that comfortable there and there aren’t a lot of establishments catering to the middle class. We have never gone to dinner in their neighborhood for example.
“My friends moved there recently and got a huge place with a great city view for next to nothing.”
@ Jenny – May I ask where exactly? We’ve been curious as well about getting a large house and yard within a 2 mile commute to the Loop, it seems like Garfield and / or Bronzeville are contenders,we are past the “scene” age and looking for more comfortable living space. We can always drive or Uber to whatever trendy new strip pops up if we want to go out.
Marko, it’s right near California and Jackson. They are really happy there.
@Jenny – it’s pretty dicey over there but not as bad as it used to be. There’s some great old buildings in need of work but you can buy them for nothing. I think Sabrina is correct that in 10 years it will be a new neighborhood, there’s just too much price pressure to not push buyers there.
My wife and I discussed buying in Bronzeville since there’s no way it doesn’t gentrify soon. The problem is “soon” could be 10-20 years and you have to live with the shittiness until then. We are not interested in being urban pioneers, even with the pot of gold at the end of the rainbow.
I almost bought in North Kenwood back in 2000. It still really hasn’t gentrified. Bronzeville was supposed to be gentrifying then too…
Out of curiosity, I looked up a condo in a new development we were considering and it is listed for basically what it sold for new in 2000.
“My friends moved there recently and got a huge place with a great city view for next to nothing. I still don’t feel that comfortable there and there aren’t a lot of establishments catering to the middle class. We have never gone to dinner in their neighborhood for example.”
Yeah- I never said I would do it but others will.
I had friends who bought in Wicker Park near Damen in the early 1990s. They got a big greystone for next to nothing but heard gunshots every other night in the neighborhood. The gang activity was also bad for nearly 10 years. They stayed. Fixed up the house and just sold it for $2 million (moved to California, actually.)
And good for them. But the neighborhood sucked for years and there was no guarantee it would work out as it did (not to mention the threats to their personal safety.)
Garfield Park has some great architecture and it’s location, with subway stops and proximity to the loop, means its likely to gentrify sooner, rather than, later.
But right now, you’re still a pioneer.
“We are not interested in being urban pioneers” What does this even mean? I find myself in Bronzeville quite often, it’s completely safe, mostly middle and upper middle class, quiet and clean. The only thing it lacks really is a trendy strip of bars, restaurants and boutiques. Does being a pioneer mean moving somewhere without a narrowly defined upper middle class offering of retail options or living with crack dens and gang shoot outs? Because the latter definitely doesnt describe Bronzeville, maybe East Garfield could still be considered but I mean really, anyone who grew up in Chicago and can remember how bad it was in the 80s and 90s would laugh that someone moving to East Garfield is some sort of pioneer out on the Oregon Trail surviving attacks from the natives and struggling to survive another day. I feel like in the Real Estate world our world view is extremly narrow and anything outside of that view is extreme.
The stats for Chicago 2017 are about 3,000 shot and wounded, and about 625 shot and killed. Stats for Garfield Park for 2017 was 36 killed, 224 wounded. And there are many thousands of shootings were nobody is either shot or killed. Many thousands of gunshots are never recorded.
I once found a bullet embedded in the side of my home. I dug it out and could still read “357” stamped on the butt. Damn right I was an urban pioneer.
“there’s no way it doesn’t gentrify soon”
People were saying that about Logan Square 20 years before it became mostly true. As Sabrina noted, it was a long time coming in Wicker Park, too.
So, if 15-20 years is “soon”, then, sure, I agree.