The New Neighborhood: Magellan Development Group
The undulating balconies of Aqua are the newest landmark on the Chicago skyline, and the building has cemented Studio Gang’s reputation as one of the city’s leading high-design firms. It has also signaled the ambitions of the project’s developer, Magellan Development Group, as one of the most innovative and design-minded in Chicago.
As impressive as Aqua’s profile in the skyline may be, it is only one piece of the Lakeshore East development, the large mixed-use area just north of Millennium Park developed entirely by Magellan, which has helped infuse downtown with residents and activity. When it is complete, Lakeshore East will have approximately 5,000 units of housing—3,000 of which have been built—along with 1,500 hotel rooms, 2.2 million square feet of commercial space, and a 6-acre park. Built on 28 acres of a former golf course, Lakeshore East is one of the largest developments within a central business district anywhere in the United States. “This site was in front of all of our eyes,” said James Loewenberg, co-CEO of Magellan. “Timing and luck are the most important things. And the timing was right for Lakeshore East.”
Based on a masterplan by SOM and built around a park designed by the Office of James Burnett with Site Design Group, the project includes buildings designed by DeStefano + Partners, Solomon Cordwell Buenz, Steinberg Architects, and Studio Gang, all within walking distance of the Loop and the lakefront. Aqua is only the latest amenity in this quickly evolving neighborhood. “Aqua is a one-of-a-kind building, and it’s definitely got a lot of cachet in the architecture community,” Loewenberg said. “From the beginning, we wanted buildings by different architects with different points of view. We think variety is a really good thing, as long as we maintain high quality.”
According to Loewenberg, the build-out of Lakeshore East is on schedule, with eight of the 13 major buildings completed. Though the most recent buildings are smaller scale, such as the Studio Gang–designed townhouses known as the Parkhomes at Aqua, the market is picking up again. “There has been a dramatic turnaround in the last 60 to 90 days,” he said. A new building, likely rentals, is in the works, designed by Brininstool, Kerwin and Lynch (BKL), a firm in which Magellan is an investor. “The condo market is still fractured, but rentals have improved dramatically here,” he said. A condominium building by Arquitectonica is on hold until more financing can be secured. “It will come back,” Loewenberg said of the project.
Loewenberg believes that the location of Lakeshore East has made it a durable investment even during the downturn: Aqua is 85 percent sold, and the other buildings are performing just as well. And, the developer adds, Lakeshore East’s prospects look strong to banks. “There’s a lot of lending interest out there,” he said.
Even as the firm works to complete Lakeshore East, Magellan is looking for new opportunities in the Chicago area and beyond. Through working on a proposal for the athletes’ village for Chicago’s Olympic bid, Loewenberg formed a relationship with Thomas Kerwin, who was then working for SOM. When Kerwin decided to join David Brininstool and Brad Lynch in starting a new firm, Loewenberg sensed there was an opportunity for further collaborations. An architect by training and a principal of Loewenberg Architects—also affiliated with Magellan—Loewenberg believes the company’s relationship with BKL will allow it to pursue development opportunities abroad (Kerwin has extensive experience on large-scale projects in Asia from his time at SOM). “It’s a part of the natural evolution of things. They’ll go after a project on their own, and we’ll pursue things together when it’s appropriate,” he said.
Back at home, Magellan is working on a proposal for a grocery store, retail center, and parking garage to be built on a surface lot in the Ravenswood neighborhood. Smaller projects like these are part of Magellan’s pragmatic strategy. The company has a strong relationship with the owners of Roundy’s Supermarkets, and realized that the site, close to transit lines and a compact residential neighborhood, was ideal for a grocery tenant. The company is waiting for approval for tax increment financing funds from the city. “We’re always looking for opportunities,” he said.
Loewenberg credits the company’s success to following the market, along with a large measure of good luck. At Lakeshore East, good planning, innovative design, and an incredible central location might also have played a role. “My love has always been designing and developing highrises,” he said. “I knew that was a niche we could fill.”
Selling High Design: CMK Companies
With 1,977 units and $1.1 billion in construction under their belt, CMK Companies can hardly be called an emerging development firm. Founded in 1995 with a few single- and multi-family projects, the company quickly gained the confidence of lenders, allowing them to move up to larger projects. A commitment to contemporary design runs through all their work, which quickly and steadily began to attract buyers.
“Our projects have a more modern feeling, with clean lines that stand apart in the marketplace,” CMK founder and president Colin Kihnke said. “A lot of buyers can tell it’s one of our projects just looking at the building. You enter the unit and you can sense it.”
Scott Osterhaus, principal of Osterhaus McCarthy, who worked on a number of smaller and mid-scale projects for CMK in the late 1990s as well as more recently, said Kihnke was a good client from the start. “He was looking for something that was interesting and more modern than was the norm in the speculative market. He’s always been a bit of an architecture buff,” Osterhaus said. He believes Kihnke not only connected with buyers but also helped to push residential design forward in the city.
Ralph Johnson, design director of Perkins + Will in Chicago, agrees. “For a long time the city was pushing really retro stuff. That was what you needed to get approved. Colin really worked to resist that,” he said. “It’s been a breath of fresh air for Chicago. He’s done a lot to bring modern residential architecture back, and he’s put himself on the line to sell it.”
Johnson first worked with CMK on the Contemporaine, a highly sculptural, 28-unit condominium building in River North. The building went on to receive critical raves, and sold so well that CMK asked Johnson to design a much larger, moderately priced project, the recently completed 235 Van Buren. “He said he wanted to do something for more of an entry-level buyer,” Johnson said. “I thought it was a good challenge.” The 714-unit building has a glazed south facade with concrete balconies that appear to float. As Kihnke said, “Unique architecture has value.”
Aside from Johnson at Perkins + Will, CMK has worked with Brininstool and Lynch (now Brininstool, Kerwin and Lynch) on large projects including 1620 and 1720 Michigan Avenue in the South Loop, both of which are sold out, and John Ronan on the renovation of the company’s offices. Ronan has also worked on a project in the Turks and Caicos in the Caribbean that has yet to break ground.
Kihnke believes that though the market still has a lot of excess inventory, especially in condominiums, there is activity. “If your project has momentum, you can still do well,” he said, noting that 235 Van Buren has ten to 12 closings per month. For the near future, he plans to focus on smaller projects, more along the lines of those he started in the beginning. “I live and breathe real estate development,” he said. “I get as much pleasure out of developing a 50-unit building as I do a 500-unit building.”
Osterhaus added, “As an architect, you wish there were a lot more Colins out there.”
The Placemakers: Friedman Properties
With its restaurants and showrooms, lovingly converted old buildings, and busy new hotels, it’s easy to forget that River North wasn’t always a nice place to live, work, or go out at night. “Fifteen years ago, this place was blighted. People thought we were crazy,” said Robert Lopatin, chief operating officer of Friedman Properties, one of the principal forces behind the area’s renaissance. “Now it’s the hottest area in the city.” The company manages more than 50 properties, many in River North, with a total of more than 4 million square feet of holdings.
Through historic preservation projects—like the conversion of Reid Murdoch Center from a warehouse into a combination of office, retail, and restaurant spaces—and new construction, Friedman has been a leader in turning the area into a vibrant, and highly sought after, mixed-use neighborhood. With many buildings converted to retail and restaurants with office space above, River North has also extended Chicago’s central business district beyond the Loop.
“Albert Friedman has been truly innovative. He started buying up properties in River North in the ‘70s, and began creating value out of classic old buildings,” said Todd Halamka, design director of HOK Chicago, referring to the firm’s president and founder. “He has a good eye for design, and a commitment to well-crafted buildings, and he understands the importance of human, street-level scale.” HOK has worked with Friedman on a number of projects, including the recently completed Greenway Garage.
The sustainably designed garage shows the company’s commitment to adding contemporary new construction to its extensive portfolio of rehabilitated properties, as well as its continued belief in mixing uses and adding urban amenities. Built on the site of a former surface parking lot, the garage has ground-floor retail and a multi-story corkscrew wind turbine at the corner, which will generate enough electricity to power the garage and even supply a couple of electric car–charging stations. Cisterns collect rainwater, and the building will have a green roof that will be accessible to a new 40-story residential tower next door, developed by AMLI with Friedman.
According to Lopatin, vacancy rates are very low and new businesses, especially restaurants, continue to open in the neighborhood, even in the slow market. “Younger people are living in the city again,” he said. “They want the amenities close by.” With these demographic trends and the company’s long view, Friedman’s commitment to River North looks like a good investment that will continue to grow over time.