Quote:
Originally Posted by KWILLSKYLINE
I'm not friends with any developers but how much does one take in consideration, if successful, to another developer building a tower like this in the same area vs. Another area. Does it motivate them at all or are they usually looking for their "own" thing.
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It's a matter of real estate economics. When a large building goes up in a new part of town a few things happen. First of all, if the project is successful, it provides proof of concept for other developers. This means the next developer who comes along can say to the bank "look the Hancock building is fully leased, surely my 780' tall Water Tower Place project will be a smash hit".
The second thing that happens is land values near the new tower go up. This happens because of the basic formative force that causes cities to exist: economies of agglomeration. This is the concept that human settlements create exponentially value by packing in human beings closer together. This creates opportunities for trade and the sharing of resources and ideas. So when the JHC goes up and brings 1500 new residents and 2000 new workers to the far north end of the Mag Mile, it generates huge new opportunities for trade. It becomes efficient to build large building next to it because, well there are now customers for stores and apartments. Therefore the developer of water tower place says "hey bank, I'm gonna toss several hundred thousand SF of retail in the base of my building".
So finally what happens is lending opens up. The banks see the market and see the plan in real life literally next door and go "sick plan bro, here's money".
This process happens over and over again and compounds on itself. Once Water Tower Place is built, it becomes very easy for developers to sign up investors and banks for similar projects nearby. Once Water Tower Place is up, it's really easy to say "hey I want to build the program of JHC on top of another Water Tower Place mall, I'll call it 900 N Michigan". Before you know it JHC is surrounded by a dozen 650'+ buildings.