CHICAGO | Boom rundown - everything over 12 floors. v5

[trvlr70]

Originally Posted by Steely Dan

^ speaking of which, when was the last time a large office/residential mixed-use tower was built in this town? was it 900 N. michigan back in '89? i wonder what happened to kill that project model.

I often wonder about that as well. Personally, I think hotel/residential makes more sense because of shared amenities and common interests. Retail in the building seems to fare better than offices, too.

Look at Water Tower Place...the mold for such ventures. The building is mostly retail, hotel and residential with a tiny amount of offices.

900 N. Michigan has had much of the original office space be redeveloped into residential.

Hancocks office space hasn't fared too well either. There was talk of converting part into a hotel at one point.

One Magnificent Mile has retained its office portion sucessfully over the years. Although, with that location, I bet it is just a matter of years before residential replaces over there as well.

[Alliance]

instead of office space, more commercial/retail developments?

[VivaLFuego]

Originally Posted by Steely Dan

^ speaking of which, when was the last time a large office/residential mixed-use tower was built in this town? was it 900 N. michigan back in '89? i wonder what happened to kill that project model.

My guess is:
1) you need a very large site for these projects to be viable, since you will lose alot of space dealing with the various elevator banks, lobbies, etc. Water Tower, 900N, etc each take up an entire city block.
2) depending on the market it might be making your project much riskier; however if all markets are hot (office, retail, and condo), then it seems alot more doable. I'd say if such a project were already underway it would be viable, but with all the developments in the pipeline it may currently be a little risky
3) again, depending on the market, it might be needlessly diminishing your ROI; i.e. you could make more buck if you simply stuck to a single use for the building because the profit margins for that use in that location are consistently higher than other uses.

[a chicago bearcat]

Originally Posted by Steely Dan

^ speaking of which, when was the last time a large office/residential mixed-use tower was built in this town? was it 900 N. michigan back in '89? i wonder what happened to kill that project model.

Waterview is office at the base
the new offices for teng associates
and obviously hotel and residential above

it's not dead, it just has had limited use in a market that is already being flooded by class A offices space that john buck and hines have been pushing onto the market
it's killing second tier office towers, and pushing much of the conversion that is happening in older landmark class "C" office space, and pressuring the entire Lasalle st corridor, resulting in "da Mayor" proposing a TIF district to revive the office market, as Buck draws people off of lasalle to Wacker

[Norsider]

Originally Posted by Steely Dan

^ speaking of which, when was the last time a large office/residential mixed-use tower was built in this town? was it 900 N. michigan back in '89? i wonder what happened to kill that project model.

To me, the site that makes the most sense for a tall mixed use is Wolf Point. It's prominent, the zoning is there, the views are stunning, but the location just ain't that great for office tenants. I think people would pay lots of money to live and hotel there, though.

[BVictor1]

Originally Posted by VivaLFuego

I know there's a certain level of fecetiousness in the whole conversation, but it's not an accident that office towers today in Chicago are predominantly in the 45-55 story range (111S, Hyatt, 300NLasalle, 151N, etc), why office towers in the late 80s early 90s boom were taller and more in the 55-70 story range (2PRU, 311, 900N, Title/Trust, etc.)....there are prevailing market conditions that basically dictate what sort of project makes financial sense. I'm sure these guys would be more than happy to build an 80 story, 100 story, whatever office tower if the financials worked, but it's a clear pattern that the current market for class A space in the loop is leading to towers in the 45-60 story range in order to maximize their ROI.

The hope for a taller tower on the river site is that such a good location will generate a high enough demand for space (especially seeing as east views will be awesome and unobstructed from any floor, not just the uppers) to warrant building an even taller tower. But with an office tower, it's really just by the numbers.

50 floors of office then 20-30 floors of residential. Problem solved...

[Norsider]

Originally Posted by a chicago bearcat

Waterview is office at the base
the new offices for teng associates
and obviously hotel and residential above

it's not dead, it just has had limited use in a market that is already being flooded by class A offices space that john buck and hines have been pushing onto the market
it's killing second tier office towers, and pushing much of the conversion that is happening in older landmark class "C" office space, and pressuring the entire Lasalle st corridor, resulting in "da Mayor" proposing a TIF district to revive the office market, as Buck draws people off of lasalle to Wacker

There's definitely some concern over what to do with the older office stock, but just in terms of the "health" of the office market, I don't think there's any question that it's a good thing that the average age of Class A in this city goes down every year. Investment in our city is a fundamentally GOOD thing, and we really shouldn't lose sight of that. The challenge will be to find new creative uses for obsolete structures. That will determine what happens to those older buildings. If an inspired mind comes up with an answer, capital will flow into those buildings. If there is no answer, those buildings will be torn down. It's a shame in a way, but such is the way of urban (especially Chicago) real estate.

[BVictor1]

Originally Posted by a chicago bearcat

Waterview is office at the base
the new offices for teng associates
and obviously hotel and residential above

it's not dead, it just has had limited use in a market that is already being flooded by class A offices space that john buck and hines have been pushing onto the market
it's killing second tier office towers, and pushing much of the conversion that is happening in older landmark class "C" office space, and pressuring the entire Lasalle st corridor, resulting in "da Mayor" proposing a TIF district to revive the office market, as Buck draws people off of lasalle to Wacker

WATERVIEW DOES NOT HAVE OFFICE AT THE BASE...

First 12 floors are parking
13-28 is Shangri-La
29 is residential ammenities
30-88 Condominiums

Teng signed a long-term lease to stay where they are.

[Norsider]

Originally Posted by BVictor1

50 floors of office then 20-30 floors of residential. Problem solved...

A deal like this would require a lot of input from the tenant. Unless there's a skyscraper buff I-banker running Blair, I wouldn't think overall height would be much of a concern to them. I think it'd be a deal breaker though to try to propose putting someone's house right over their executive boardroom.

[Norsider]

Originally Posted by BVictor1

WATERVIEW DOES NOT HAVE OFFICE AT THE BASE...

First 12 floors are parking
13-28 is Shangri-La
29 is residential ammenities
30-88 Condominiums

Teng signed a long-term lease to stay where they are.

It is extremely difficult to combine office and residential. I really can't think of an upside to it.

[trvlr70]

Originally Posted by Norsider

It is extremely difficult to combine office and residential. I really can't think of an upside to it.

short commute if you both live and work in the same building

[VivaLFuego]

I think the following is related to Randolph Tower so I'll write it here:

Whatever old buildings to the east of Randolph Tower (so they must be around 170-180 E Randolph) are apparently under demolition. These look to be very old buildings judging by their design and scale; I'd hazard a guess of between 1885-1905. There is scaffolding on the facade, but the only spot from which I've seen the apparent demolition is from the 'L on Lake st. Can anyone shed light on if this is part of the Randolph Tower plan? Are these buildings getting facademized as part of the project (I think I spied some nice terra cotta under the scaffolding)? Demolished completely?

[BVictor1]

Originally Posted by Norsider

A deal like this would require a lot of input from the tenant. Unless there's a skyscraper buff I-banker running Blair, I wouldn't think overall height would be much of a concern to them. I think it'd be a deal breaker though to try to propose putting someone's house right over their executive boardroom.

I don't see the difficulty. There could be some type of common space like a fitness and amenities floor that seperate them.

[SamInTheLoop]

Originally Posted by VivaLFuego

I know there's a certain level of fecetiousness in the whole conversation, but it's not an accident that office towers today in Chicago are predominantly in the 45-55 story range (111S, Hyatt, 300NLasalle, 151N, etc), why office towers in the late 80s early 90s boom were taller and more in the 55-70 story range (2PRU, 311, 900N, Title/Trust, etc.)....there are prevailing market conditions that basically dictate what sort of project makes financial sense. I'm sure these guys would be more than happy to build an 80 story, 100 story, whatever office tower if the financials worked, but it's a clear pattern that the current market for class A space in the loop is leading to towers in the 45-60 story range in order to maximize their ROI.

The hope for a taller tower on the river site is that such a good location will generate a high enough demand for space (especially seeing as east views will be awesome and unobstructed from any floor, not just the uppers) to warrant building an even taller tower. But with an office tower, it's really just by the numbers.

^ Precisely. Trust me - these developers would love to build very tall mixed-use office+residential. There are very rational market realities why this is largely a dead skyscraper programmatic model in Chicago (having to do with issues of complexity, efficiency, image and others), and it just will not be coming back any time soon.....the very best we can realistically hope for in future office towers is mid-60s, story-wise......Obviously my disappointment in this unfortunate market reality is tempered by the fact that we have supertall residential and residential + hotel towers that are feasible...

[SamInTheLoop]

Originally Posted by Mr Roboto

Mr Downtown mentioned on SSC that the Curve was cancelled. Anyone else hear anything? If its true, what a disappointment. I think it was even once mistakenly reported to be U/C too.

That would be a shame - why cancel a rental tower at this point in time? That doesn't make much sense to me - the residential rental market is the one (along with hotel) that needs to really be gearing up right now as far as new construction...

At any rate, I have other news regarding an apparently dead project. I have it from a quality source that the Park Kingsbury high-rise has been scrapped in favor a an adaptive re-use residential loft project instead in the existing building on the site...

[honte]

^ Wow, this one comes as a big surprise. I thought the location was great and the design pretty darn nice.

On the other hand, I'm never sad to see the adaptive reuse of a nice old loft building. And Erie on the Park won't have any direct competition on the skyline, which is a big plus too.

[SamInTheLoop]

Originally Posted by a chicago bearcat

Waterview is office at the base
the new offices for teng associates
and obviously hotel and residential above

it's not dead, it just has had limited use in a market that is already being flooded by class A offices space that john buck and hines have been pushing onto the market
it's killing second tier office towers, and pushing much of the conversion that is happening in older landmark class "C" office space, and pressuring the entire Lasalle st corridor, resulting in "da Mayor" proposing a TIF district to revive the office market, as Buck draws people off of lasalle to Wacker

One thing that should be clear is that these new A+ office towers are completely tenant-driven. The city's best office tenants are demanding the very latest and greatest in their office space. Where's the evidence? Look at all of the towers that have delivered over the past 4 or 5 years - despite having much higher rental rates than older office buildings, tenants continue to flock to these new towers - I think every large tower completed thus far in the decade probably is less than 5% vacant. My point is - it's not that developers are being reckless and continuing to develop buildings the market does not want or need. Quite the opposite - the market is demanding them, but actually does not need (at least in their current use - don't worry I'm not advocating demolition of architecturally significant structures) a lot of the older office inventory. Downtown Chicago actually has a significantly lower percentage of class A office space (out of the overall office stock) than downtown sf, la, ny, dc, even boston. This would seem to support continuing construction of new state-of-the-art office towers (environmentally friendly, quality design, and all that other good stuff, etc) for many years to come...

[honte]

Originally Posted by SamInTheLoop

^ Precisely. Trust me - these developers would love to build very tall mixed-use office+residential. There are very rational market realities why this is largely a dead skyscraper programmatic model in Chicago (having to do with issues of complexity, efficiency, image and others), and it just will not be coming back any time soon.....the very best we can realistically hope for in future office towers is mid-60s, story-wise......Obviously my disappointment in this unfortunate market reality is tempered by the fact that we have supertall residential and residential + hotel towers that are feasible...

I agree with your points.

But on the other hand, we have guys like Smithfield basically putting their residential units on stilts (MoMo) to get the cash from the view units. I think this is a highly compelling reason for a developer to consider putting residential on top of other uses, if they are involved in both aspects of development in the same submarket (which no one seems to be these days ).

I am guessing that part of why this model doesn't function in Chicago any more relates to the present scene's developers being very interested in having assets that are a quick flip. Hines does appear to hold its properties, but they are highly marketable if and whenever they decide to get rid of them.

[a chicago bearcat]

Originally Posted by BVictor1

WATERVIEW DOES NOT HAVE OFFICE AT THE BASE...

First 12 floors are parking
13-28 is Shangri-La
29 is residential ammenities
30-88 Condominiums

Teng signed a long-term lease to stay where they are.

when exactly did that happen?
Did shangri-la absorb that space?

[brian_b]

Most if not all of those mixed residential/office buildings listed are pretty far north along the Michigan Ave corridor.

A mixed residential/office building in the West Loop might work out well considering the huge demand for both residential and office in the area.

Also, last night (Tuesday) I was driving into the city from Indiana and almost got run over by a semi also coming into downtown. It's load was...
Tower crane sections. If you go to the Waterview thread and look at the most recent photos - this truck was carrying two pieces that look exactly like the piece that goes up in the air behind the crane cab. So this truck was delivering pieces for two different cranes. Any ideas on where this truck went?