Market Conditions: Liens Filed Against The Spire Developer
Crain’s first reported on Oct 17 that architect Santiago Calatrava filed a lien against Shelbourne Development, the developer of The Spire, on Oct 8 for $11.3 million.
The Tribune also reports that architectural design firm Perkins+Will Inc. filed a lien for about $4.85 million.
From the Tribune:
A spokeswoman for Irish developer Garrett Kelleher said the firm knew that the liens were coming and continued to have dialogues with the companies. However, Shelbourne disagrees with the amount the firms say they are due.
“These guys have been paid well,” said spokeswoman Kim Metcalfe. “It’s clearly a four-year project. The project payment and delivery is over that four years. The amounts are under dispute.”
People on various skyscraper chatboards have noted that construction at the site seemed to have stopped some time ago. The Tribune appears to confirm this.
Currently the site is simply a circular hole, 76 feet deep and 110 feet across, that is surrounded by caissons to support the skyscraper’s concrete core. The East Water Place Townhome Association, which had been conducting weekly meetings with the developer about the project adjacent to its building, told residents earlier this month the meetings had been discontinued because the Spire’s construction had been halted.
The Spire’s PR team continues to say that everything is fine.
Just 21/2 weeks ago Shelbourne sought to inject a bit of optimism into the beleaguered project by announcing that Beanie Babies magnate Ty Warner had signed a contract to buy the two-level penthouse, a unit that was listed for sale at $40 million.
To date, 395 of the building’s 1,194 units have been sold.
“The sales are going very well,” Metcalfe said. “This is the normal course of business for companies to protect themselves, and the market is obviously the 800-pound gorilla in the room.”
Spire pay dispute spurs doubt [Chicago Tribune, Oct 18, 2008]
It looks like the consultants are SCREWED! Get it. LOL
The invisible payments to P+W was a big conversation subject at the bar at a recent design forum held in the Park Hyatt. I still do not understand why the developer did not try to get a major upscale hotel to become a partner to help occupy the massive building.
Has anyone heard if the Mandarin Oriental Tower will ever break ground?
AND for that matter, what about the Waterview Tower which has now become “the most watched non construction site” in the city. The recent period of a rapidly changing skyline is now drawing to a close.
I pray this tower comes to fruition. Normally I get some yuks out of ill-timed projects but Chicago needs and deserves the Spire.
This tower has about the same chances of being built as the Cubs do to win the World Series next year.
Let me know if the prices come down- This is a very cool building
Personally, I would have liked to have seen the Spire added to the Chicago skyline. As it is, it’s really quite doubtful that it will be completed.
The rapidly-crashing crude prices, currency-jolts and stock-market panics across three continents over the last 2 weeks seems to indicate that we’re no longer dealing with merely a few subprime borrowers filing for B/K, that maybe we’re looking at a “global recession”: I suspect that there isn’t a bank or investment fund anywhere in the world loopy enough to finance this project at any price now (even the oil money’s panicking….!).
Too bad we can’t swap this interesting building for the rather regrettable Trump tower….!
I think simply because of the magnitude and profile of this project it will be completed, but as for the mandarin and waterview the market frankly cannot support the glut that is the chicago condo market.
I thought it was suspicious that the builder supposedly had financing from an Irish bank all along, but gave virtually no details about it. This is not common on large projects. I’ve suspected all along that this project was merely a pipe dream.
The sunk costs on Waterview though are significant. Having half a building skeleton completed means that it might be bought at a bargain by someone else when Teng goes BK. I really hope it doesn’t remain the concrete sarcophagus on the river. This is Chicago not Pyongyang.
I’m rooting against the spire. It’s too tall and looks like a big drill bit (or as some have said, vibrator). Not to mention the prices were so offensive, they made Trump look modest. Hopefully they will fill its hole with water and put up a really tall diving board.
I am mistaken about the height. thought it was going to be twice the sears tower, but it is 2000, not 3000 feet.
I was at cityscape in dubai last week and there was a small marketing effort still underway at the convention. Based on market conditions this project has little to no chance of ever getting built.
from Shelbourne:
“It’s clearly a four-year project. The project payment and delivery is over that four years. ”
I’m sorry, this is just arrogant. While architects do get paid throughout the project, most of that fee s before you have a big hole in the ground. Most architectural firms stay involved throughout the construction project, especially on projects such as the spire but this is not where their chunk of income is from.
Many Chicago architecture firms are willing to work for real estate developers with understanding that they will be NOT paid until the developer receives construction financing approval and the first “draw” pay-out is actually made by that construction lender.
This is a very unfortunate practice that takes advantage of architectural firms eager for these high-profile projects. Architects are working for fee totals less than the real estate brokerage commissions, despite significant liability exposure. They are willing to gamble that the developer will eventually pay their accumulating delinquent bills. Many firms front-fund the developer’s architectural fee costs for months or even years until project gets that financing commitment. As a result, some firms have had to lien projects, or worse, never get paid at all. For instance, the original developer of 7 South Dearborn, (not Hines, Scott Toberman (sp?)) never paid SOM’s substantial $1 million+ front-funded architectural/engineering fees for the original office tower’s full-developed designwork.
I heard this weekend that the project is dead.
I have a good friend who is a planner for the state and he said this spring that this would be a hole in the ground, he was so right.
Jason:
I heard the same thing.