Almost a decade into a real estate development boom, commercial property owners face some obstacles that could derail this year’s momentum.
Nationally, there are signs of economic uncertainty, including a wobbly stock market.
Locally there also is political uncertainty, with Chicago Mayor Rahm Emanuel and Illinois Gov. Bruce Rauner on the way out.
Yet the city appears on the verge of having multiple megadevelopments under construction. Those multibillion-dollar projects once again have the potential to alter Chicago’s skyline, particularly along the Chicago River.
In part because of Chicago’s ultimately unsuccessful effort to woo Amazon’s second headquarters, some of the most ambitious developments gained city approval or took significant steps in their planning during 2018.
How the economy holds up, and how many big office tenants commit to new buildings, will determine the viability of many projects in the coming year.
Here are a few important Chicago properties to watch in 2019…
Only days into the new year, Sterling Bay’s development is headed toward sweeping changes that will drastically alter the look and feel of one of the boldest mixed-use projects ever drawn up on the city’s North Side.
After years of buying formerly industrial land on the river along Lincoln Park and Bucktown, Sterling Bay has been seeking city zoning approval to build more than 12 million square feet of office and residential high-rises, retail, a 20,000-seat soccer stadium and other entertainment venues.
On Tuesday, Ald. Brian Hopkins, 2nd, made the bombshell announcement that he’s forcing Sterling Bay to remove plans for the stadium, where a United Soccer League team owned by Cubs owner Tom Ricketts was supposed to play, and several live entertainment venues that Live Nation Entertainment was to run. Hopkins said he rejected those aspects of Sterling Bay’s plan because of neighbors’ concerns about traffic congestion.
Hopkins wants the stadium to be replaced by open recreational space and the entertainment district to be split into restaurants, theaters and other smaller venues.
Before Sterling Bay can break ground on its $5 billion to $6 billion vision for the vacant land between North and Webster avenues, the developer also will need to allay concerns about the project’s impact on nearby businesses, schools, public transportation, roads and bridges. Other remaining points of potential conflict include: the amount of park space Sterling Bay will provide on the site; heights of the tallest buildings, which could rise more than 50 stories; and the proposed use of public funds to create new infrastructure in an already traffic-choked area of the city.
The city is considering creating $800 million in tax increment financing that could be used to help fund a relocated Metra station, new roads and bridges and other infrastructure in and around Lincoln Yards. City officials have argued that the financing — in which Sterling Bay would pay for infrastructure up front, as it’s built in phases, and be reimbursed later — offers a way to build much-needed improvements the city otherwise can’t afford.
Hopkins said he’s pushing the city to include the creation of a 24-acre, $200 million public park along the river near Lincoln Yards — a project also championed by Aldermen Michele Smith and Scott Waguespack, who represent the nearby 43rd and 32nd wards — as part of any public funding package.
Related Midwest was thinking big when it drew up plans for its riverside site connecting the South Loop and Chinatown, and when it named the development — which the developer says will be large enough to become Chicago’s 78th community area.
The 62-acre site gained national attention after the Tribune reported that Amazon officials made a second visit there in August, as the company considered sites for what it called HQ2. It was one of the few sites reported to receive a follow-up visit from Amazon.
Although Chicago lost out on HQ2 — which ultimately was split into large offices in New York and Arlington, Va., rather than an actual second headquarters — Related Midwest gained a seal of approval of sorts. Site selection experts predict other corporations will use Amazon’s already vetted list of potential cities and sites for their own office searches.
Related Midwest is carrying on with plans to build 13 million square feet of office, residential, hotel, retail, restaurant and entertainment space along a half-mile of the Chicago River south of the Loop. The estimated cost is $7 billion. The developer plans to set aside about 3 acres of the site for the planned University of Illinois-led Discovery Partners Institute innovation center.
Related Midwest likely will need a big office tenant to commit before construction will start on one or more of the skyscrapers envisioned on the site.
Zoning was approved by the City Council in December.
The Chicago Tribune moved out of the newspaper’s 93-year home on Michigan Avenue in June, heading south of the river to Prudential Plaza.
Los Angeles-based CIM Group and Chicago’s Golub & Co., which bought Tribune Tower in 2016, unveiled a dramatic plan in April to build a 1,422-foot-tall skyscraper just east of the site. The skyscraper would be part of a two-phase redevelopment that already has begun to convert the historic tower into 163 residential condominiums and retail space.
The thin skyscraper, designed by Adrian Smith + Gordon Gill Architecture, would have a 200-room hotel, 439 rental apartments and 125 condos. The tower would be just 29 feet lower than the city’s tallest, Willis Tower.
Ald. Brendan Reilly, 42nd, has yet to weigh in on the project’s fate. The skyscraper, if approved by the city and built, would take a prominent place on Chicago’s skyline — and command attention near some of the city’s top tourist destinations, including Navy Pier and Millennium Park.
More than a year ago, a group led by Farpoint Development and Draper and Kramer disclosed plans for up to 14 million square feet of residential and office buildings on land near McCormick Place that includes the 49-acre former Michael Reese Hospital site.
The group is working to finalize a development agreement with the city, and to move forward on a project that would fill a gap of unused space along Lake Shore Drive between the city’s massive convention center and South Side neighborhoods.
The developers’ plan continues to evolve, with the focus possibly shifting to making the site a destination for medical labs, offices and research, Farpoint principal Scott Goodman said.
Burnham Lakefront, as the development is now called, could bring a park and pedestrian walkway over Lake Shore Drive, connecting it to the lake. Other infrastructure, including a 31st Street Metra station, also is proposed.
Chicago Spire site
A decade after work stopped on the Chicago Spire, the site’s new owner took the wraps off its vision for the 2.2-acre parcel. Related Midwest in May unveiled plans for residential towers of 1,100 and 850 feet tall,designed by One World Trade Center architect David Childs of Skidmore, Owings & Merrill’s New York office.
Plans for 400 Lake Shore Drive, as it’s now called, renewed hopes for something dramatic on the site.
But in October, Ald. Reilly announced he was rejecting Related Midwest’s proposal. He cited concerns from neighbors about traffic, security along the riverwalk, the height of the podium on which the towers would be built and a proposed hotel in a portion of one of the towers.
In a message to constituents, Reilly said Related Midwest had not adequately addressed “major concerns” about the proposal. Reilly’s move doesn’t end plans for the project, but it sent the developer back to the drawing board.
The zoning setback also puts on hold the long-discussed DuSable Park on a 3.3-acre peninsula just across Lake Shore Drive, as well as riverwalk extensions.
The River District
After years of planning, broadcast company Tribune Media’s plan to build more offices, a hotel and more than 4,000 residential units along the river was approved by the City Council in October.
The 37-acre site runs between Chicago and Grand avenues along the river, and it includes the Freedom Center facility where the Chicago Tribune and other newspapers are printed.
The newspaper’s parent company has said it has a lease for the Freedom Center that runs until 2023, with two options to extend the lease 10 years each, and has no plans to move the printing facility. Tribune Media said it plans development phases north and south of the printing facility early on, and it’s unclear how the broadcast company eventually plans to redevelop the middle portion.
Furthest along is a phase, in a joint venture with Riverside Investment & Development, where offices and apartments are planned on 7 acres on the north end of the site.
The River District includes a path for the city’s planned new public transit route between the North Side and Ogilvie Transportation Center to pass through. The route would help move tens of thousands of new residents and workers that new developments along the river, including the River District and Lincoln Yards, would bring to areas north of the Loop.
Tribune Media’s site is one of several likely to be transformed in a 760-acre formerly industrial corridor along the North Branch of the river. A construction boom has been anticipated since the Emanuel’s administration in 2017 finalized major land-use changes to allow non-manufacturing functions such as apartment towers and hotels to be built in the corridor.
Written by Ryan Ori for Chicago Tribune
Originally posted: January 10, 2019