buildings went up, but none were
ever occupied, in part because of the
economic downturn. The various ownership entities, including Harbor,
Coventry Real Estate Fund LLC and
lender Wells Fargo, are now locked in
legal battles over the property.
Midwest
QuickFacts
Despite the negative image centered on
the shrinking US automotive industry and
the resultant job losses, Chaben is bullish
on the Detroit area. The government,
including new Mayor Dave Bing and
Detroit Schools Superintendent Robert
Bobb, has been working hard to turn around
attitudes and obstacles, he says.
“There’s a great, optimistic vision out
there, and we hope to see progress in the
next 12 months,” Chaben comments. “It
may be baby steps, but Detroit doesn’t have
the overbuilding issues that other cities
have. Once demand returns, we should be
able to turn on a dime quickly.”
*Includes Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota,
Ohio, South Dakota and Wisconsin
Chicago’s Notorious Block Busted
Another project with problems has been
the notorious Block 37 in Chicago, a parcel
bounded by State, Dearborn, Washington
and Randolph streets in the Central Loop.
This prime piece of property has had
numerous failures over the past several
years. In 2005, Mills Corp. proposed a
$500-million mixed-use project for the site
but was later bought out by Golub & Co.
and Blackrock, with Joseph Freed &
Associates signing up for the retail portion.
The plan almost made it. The office
building was completed and the retail portion was under way when the recession hit.
Bank of America foreclosed on Freed’s construction loan and a court battle ensued.
The court appointed a receiver to finish
leasing the 280,000-square-foot retail building, and Freed protested the action.
Freed is currently smarting under a
recent court ruling in the case. The bank
successfully argued earlier this month that
the developer owes the full amount of $146
million for the construction loan default,
rather than a $50-million guarantee the
bank was previously seeking. The bank said
that a loan clause allows it to seek the full
amount if the developer contested or
blocked the receiver.
The total occupancy level of the retail
building, which includes shops in the
underground Pedway, isn’t clear. Tenants
include GNC Live Well, Anthropologie,
Sunglass Hut, Au Bon Pain, Puma, Zara
and Steve Madden. The office building on
the site is almost fully leased, with tenants
such as Morningstar and CBS, but a hotel
and planned CTA station at the site failed
due to a lack of funds.
Michael Watts, a senior vice president
with Chicago-based J.F. McKinney &
Associates, said it might be years before
projects of more than $100 million will be
approved through lenders. “Developers
now have to put a lot more equity into a
deal, or get a group of two to three different banks together. Trying to get a few parties together to help finance one project is
very difficult since you’re basically doing
two to three different deals at once. Then
you have to have the building preleased at
least 60% to 70% just to get the banks to
come to the table,” Watts says.
But Chicago, the major market of the
Midwest, has a way of bouncing back. In
April 2010, a $4-billion plan to redevelop
the former US Steel plant on the South
Side received approval from the Chicago
Plan Commission. The massive, six-phase
project still must go through City Council.
Spearheaded by Chicago Lakeside
Development LLC, a public-private partnership of US Steel Corp. and McCaffery
Interests, the master plan includes more
than 13,500 new homes and 17. 5 million
square feet of retail and other commercial
uses along the shores of Lake Michigan, as
well as about 90 acres of public park. Phase
I, Market Commons, calls for more than
800,000 square feet of retail, restaurants,
entertainment venues and residential units
on 76 acres. If this phase gains full city
approval, construction would start in 2012.
According to McCaffery, the total project will take an estimated 25 to 45 years to
complete and will need about $450 million in new infrastructure. The plan
includes extending existing city streets to
the lakefront, adding new parks, adding a
new high school and rerouting US 41 a few
blocks to the east. A 1,500-slip boat harbor
is also planned.
St. Louis ’Burbs Attract Builds
The main project indicative of this city’s dif-
ficulties with suburban competition and
planning issues has been the continued
postponement of the $650-million Ballpark
Village. The site, across from the new Busch
Stadium for the Cardinals baseball team,
was supposed to hold 250,000 square feet of
shops, restaurants and entertainment ven-
ues, 400 residential units, 450,000 square
feet of office and 2,000 parking spaces.
