Since the 2008 financial crisis, there’s been one question in real estate that just won’t go away: Have we hit bottom yet?
Chicagoans, hoping they could finally answer “yes” to that question, were frustrated to learn in May that numbers released by the Illinois Association of Realtors earlier this year, which showed improvement in median home values, were the result of a “technical error,” according to a statement from the association. The actual data showed an eight percent slump in median home prices, from $265,000 in May 2010 to $243,000 this year.
But any agent will tell you real estate is hyper-local. In Chicago, three neighborhoods are bucking the trend in an otherwise sagging market. The West Loop, Hyde Park, and the area formerly home to the Cabrini-Green projects boast commercial and residential development plans. Change is coming for all three neighborhoods that may lay the groundwork for a citywide real estate recovery.
Residents of the 39-story Skybridge highrise at West Washington Boulevard and Halsted Street live in the tallest building west of the Dan Ryan Expressway. It seems a sign of the times, then, that they’re worried about the potential shadows from a 50-story highrise planned across the street, at One South Halsted Street.
The designers, FitzGerald Associate Architects, declined to comment until the project reaches the Chicago Plan Commission. If developer David Friedman of Skokie-based F&F Realty sees the project through, tenants of the 514 rental units could use room service and other amenities from F&F’s adjacent Crowne Plaza Hotel. The plan also includes about 10,000 square feet for retail along Halsted Street.
“We want to make sure what goes in the West Loop fits in the West Loop,” said Martha Goldstein, executive director of the West Loop Community Group. But what fits in the West Loop is evolving.
Bulls and Blackhawks games draw hoards of visitors to the nearby United Center, and since 2005 the Pitchfork Music Festival has attracted thousands to the neighborhood’s Union Park. But aside from sports bars surrounding the venues, Goldstein said, West Loop businesses don’t benefit much from the come-and-go crowds.
The Chicago Transit Authority plans to open a new Green-Pink Line stop at Lake and Morgan Streets next year, before most of the neighborhood’s new development breaks ground. Goldstein said she hopes the new infrastructure will help make the neighborhood itself a destination, game night or not.
One South Halsted isn’t the only West Loop development trying to drum up more retail dollars with a mixed-use highrise. It isn’t even the only one on Halsted Street. Skokie-based Taxman Corporation’s Gateway rental tower at Halsted Street and Monroe Street is on track to receive $7 million in tax increment financing (TIF) money from the city to build 95,125 square feet of retail space on three floors, 71,000 of which will be devoted to a Mariano’s grocery store. Gateway will also house 228 apartments in a 312-foot tower.
“These are big because we haven’t had anything like this since Skybridge,” Goldstein said. That project was completed in 2002.
“It will bring people to the neighborhood, which is a good thing,” said Alderman Walter Burnett. “The business community is one hundred percent excited about it, but it could also help to stabilize the real estate market in the neighborhood.”
Alderman Burnett’s church, First Baptist Congregational, is involved in a development deal of its own. In a partnership with Heartland Housing, the church is converting the 81-year-old Viceroy Hotel at 1519 West Warren Boulevard into 89 studio apartments, a café, and a community garden. All the units will serve tenants with incomes at or below 60 percent of the area median income. The city has signed off on $3.8 million in TIF dollars for the project.
The art deco building is on the National Register of Historic Places. Heartland’s director of real estate development, Hume An, said they have begun the application process for federal historic tax credits, which could offset project costs $2.5 million to $3 million. “We’re hoping to restore it to its original glory and make it an asset to the community,” An said.
Heartland is working with the Chicago engineering firm dbHMS to make the building more sustainable, retrofitting the Chicago landmark with geothermal heating and cooling, permeable pavement in the parking lot, and a partial green roof.
Target plans to break ground next month on a four-acre plot bordered by Van Buren, Jackson, and Aberdeen Streets about ten blocks from One South Halsted. Goldstein was enthusiastic about the big box department store’s West Loop development. “The great thing about Target is that they don’t disrupt neighborhoods,” she said. The retailer, she believes, blends better into urban contexts than most big box stores.
Former Cabrini-Green Site
Target has fared especially well in the wake of the financial crisis. A Cabrini-Green location, should it pass the rest of its municipal hurdles, will be the store’s twelfth in Chicago. The proposal for the former site of Cabrini’s William Green homes just north of Division Street says a lot about the new face of Near North neighborhood.
Demolition began March 30 on 1230 N. Burling Street, the last of the notorious Cabrini-Green housing projects. Cabrini-Green was once home to more than 15,000 people and became synonymous with gang violence and discontent with urban renewal nationwide. The coveted Near North Side real estate it occupied also became extremely valuable as the nearby Gold Coast, Old Town, and Lincoln Park neighborhoods developed in the 1990s.
At 840 West Blackhawk Street, Adam Berkelhamer and Antunovich Associates’ SoNo East tower is under construction. Move-in dates for the 324 units are still uncertain but the structure is expected to be up and fully enclosed by the end of the year. The building also includes 50,000 square feet of ground floor retail space, although commercial tenants have not been announced.
The SoNo west tower was completed in 2008 by Booth Hansen Associates, where Berkelhamer worked at the time. He has since gone solo and redesigned the eastern tower, which was originally envisioned as a mirror image of the 2008 structure.
“The new design really opens up the space between the towers,” Berkelhamer said. He staggered the units to improve the views for the whole building. Another difference between SoNo’s east tower and its pre-financial collapse kin: its residential units are rentals, while SoNo west has 200 condos.
“This building, along with its neighbor, will help anchor the residential presence
on this side of North and Halsted,” Berkelhamer said. Retail is dynamic in the
nearby neighborhoods, and Cabrini-Green’s absence leaves a residential opening close to downtown that SoNo hopes to help fill.
Coming on the heels of residential development, the expected arrival of Target seems to confirm suspicions that Cabrini’s prime Near North real estate will not languish much longer. “I think Target can be a shot in the arm,” said Alderman Burnett, whose 27th Ward includes the property as well as most of the West Loop. If the deal is approved, Target would hire 75 Chicago Housing Authority (CHA) residents (of a likely 200-employee staff), including some for supervisor or management jobs. To acquire the site at Division and Larrabee Streets, the company would swap 3.6 acres in a land agreement with CHA.
Target representative Molly Snyder confirmed that the Minneapolis-based company is in discussions with the CHA to bring a store to the area but would not confirm a timeline for the project. The Plan Commission approved the project July 21, but it still has to clear the zoning board and city council.
“Hyde Park is very much a company town,” said Peter Cassel, director of community development for Antheus Capital, which owns more property in the neighborhood than anyone except the University of Chicago. “As the University grows, so too does the neighborhood.”
It follows then that as the University announced plans to revitalize commercial activity along its 53rd street corridor in 2008 with a project called Harper Court, Antheus revealed plans for its own 500,000-square-foot mixed-use development, City Hyde Park, at 51st Street and South Harper Avenue.
Both plans drew mixed public comments. While many residents welcome the new retail, “we’ve heard a very strong desire to retain what people currently like and find special about Hyde Park,” Cassel said. “The challenge for us is to maintain that balance.”
Harper Court and Antheus’ City Hyde Park project are the twin hubs of an apparent development boom that also includes University acquisitions of a former Borders Bookstore building as well as the renovation of commercial and theater buildings along 53rd Street. Antheus, for its part, is also converting two historic hotels into apartment buildings and building a new mixed-use project called City Hyde Park with the help of Aqua Tower architects Studio Gang.
Gang’s Hyde Park partnership with Antheus also includes the 26-story residential Solstice on the Park project, which was stalled when the economy sagged. “We’re excited because we think Hyde Park has a lot to offer,” principal Jeanne Gang said.
In September the Del Prado Hotel, located at 53rd and South Hyde Park Boulevard, will open its doors to new renters—23 leases have already been signed, Cassel said. “We’re thrilled to reintroduce one of Hyde Park’s real gems,” he said.
Renovation of the Shoreland Hotel is still ongoing. Gang said the studio is trying to update the interior and landscape design while treading lightly on the 1920s landmark. “You’ll see a new palette show up,” she said.
Whole Foods will be the anchor tenant at Gang’s 110,000-square-foot City Hyde Park, which includes a 22-story tower. Cassel said Antheus is working on securing a second major commercial tenant, but some space will remain for offices and boutique stores. The 179 residential units—it’s still undecided whether they will be condos or rentals—won’t be open until at least 2014. “It’s almost impossible to know what the residential market will look like at that point,” Cassel said.
Gang said the design intends to de-emphasize the car. All of the building’s programming faces out to the street, and Metra riders should be able to see City Hyde Park’s green roof from the 51st/53rd Street Hyde Park stop just two blocks south. “The greenest thing you can do is get people to live near a train station,” Gang said.
The first phase of the University’s Harper Court, which will include 150,000 square feet of office space, a 130-room Hyatt Place hotel, retail offerings, and parking, is scheduled for completion in fall 2013. Sophie Bidek, a principal at project architects Hartshorne Plunkard, said the design promotes pedestrian use with 40,000 square feet of open space. “What we’re trying to do is really create a 24-hour environment,” Bidek said.
Susan Campbell, a University spokesperson, said the University found people were leaving Hyde Park for retail needs. “We’re hoping that our efforts will catalyze the market so that 53rd Street will be a vibrant place to shop as well as a destination for entertainment,” Campbell said. The commercial tenants are still undetermined but expected to include a mix of retailers, restaurants, and casual dining to serve the lunch crowd.
In Hyde Park, the New Jersey-based Antheus Capital and Chicago’s Studio Gang have staged a substantial and thoughtful complement to the University’s ventures. Both Antheus and the University have released a flurry of project plans lately, many of them independent of city assistance. The University alone employs more than 10,000 people and enjoys an endowment of $5.9 billion. Meanwhile, despite its prime location, the pace of development in the Cabrini-Green area lags that in Hyde Park or the West Loop. Nearly all of the neighborhood is still under the purview of the Near North TIF district which won’t expire until 2020. If development is to continue, it will have to be with considerable support from the city.
Development is collaborative and affects neighborhoods both physically and demographically. And while community voices and TIF concerns have helped to fine-tune deals in each area, the new faces of West Loop, Hyde Park, and Cabrini-Green are in large part the result of a few private entities. If the relative success of West Loop and Hyde Park especially heralds anything for the market at large, it’s that major companies are investing in some Chicago neighborhoods long ripe for redevelopment.