CHICAGO | General Developments

[moorhosj]

Also, no, rent control does not work for NYC or SF. Do you see rents falling there? Rent Control only works for the lucky f'ers who get their hands on the limited supply of those apartments. Everyone else pays for their lifestyles.

I haven't seen anyone in these comments supporting rent control. My point was that this is simply a form of pandering just as Rauner is doing on income taxes. The difference is that the Governor has power over the income taxes, while the city controls it's own policy on rent control.

Pritzker is promising something bad that he can't actually deliver/sign while Rauner is promising something bad that he could actually deliver/sign.

[Stunnies23]

Apple just announced it will build a second corporate headquarters as it brings back $250 billion in overseas profits and pays $38 billion in corporate income taxes. It will select a location later this year and create 20k jobs over the next 5 years.
Well if we don’t get amazon maybe we can land Apple :)

http://www.chicagotribune.com/business/ct-biz-apple-second-campus-20180117-story.html

[Stunnies23]

I haven't seen anyone in these comments supporting rent control. My point was that this is simply a form of pandering just as Rauner is doing on income taxes. The difference is that the Governor has power over the income taxes, while the city controls it's own policy on rent control.

Pritzker is promising something bad that he can't actually deliver/sign while Rauner is promising something bad that he could actually deliver/sign.

The state of Illinois passed a law a couple decades back that prohibits all rent control. And for good reason as rent control is a train wreck for higher rents as seen in NYC and SF. I’m a happy renter and even I oppose this.

http://chicagoeviction.com/2017/03/landlords-control-coming/
Yes, I realize the source, but I wanted to show a law already exists.

[JK47]

The current Governor is claiming he will lower your income taxes to 3% if you give him one more shot. It's just as unrealistic and pandering as Pritzker.


Now if he were talking about replacing the income tax with a (fully deductible) payroll tax then we'd have something to talk about.

[Khantilever]

Rent control is one of those awful ideas that just won’t die despite overwhelming evidence of its awfulness.

That said, it doesn’t look like these guys are aiming for traditional rent control, but likely some rent stabilization measures that prevent rapid increases in rent. Still a terrible idea that might actually lead to overall higher rents, but not as bad - especially if such a measure would reduce opposition to new development in gentrifying areas.

[Bonsai Tree]

Apple just announced it will build a second corporate headquarters as it brings back $250 billion in overseas profits and pays $38 billion in corporate income taxes. It will select a location later this year and create 20k jobs over the next 5 years.
Well if we don’t get amazon maybe we can land Apple :)

http://www.chicagotribune.com/business/ct-biz-apple-second-campus-20180117-story.html

I don't know what's happening anymore!:shrug:

Next thing you know the US government is looking for a second capital!

[Kngkyle]

The old McDonald's campus would be a great fit for Apple's suburban-mindedness. Plenty of room for another 10,000 spot parking lot.

I'll be pleasantly surprised if Apple actually go for an urban campus.

[Steely Dan]

* posts deleted *

please keep all discussion about presidential politics out of this thread.

we already have a dedicated place for all of that stupid crap on this forum: http://forum.skyscraperpage.com/forumdisplay.php?forumid=14

[moorhosj]

Now if he were talking about replacing the income tax with a (fully deductible) payroll tax then we'd have something to talk about.

This is the move to watch. Maryland, New York and California are all working on different loopholes to avoid the SALT deduction cap.

Some states looking for ways around federal tax law (https://capitolfax.com/2018/01/17/some-states-looking-for-ways-around-federal-tax-law/)

[J_M_Tungsten]

Just went by the new Moody Bible addition on Wells, and wow is that thing bad. Like a suburban warehouse that was put up quickly...

[jc5680]

The old McDonald's campus would be a great fit for Apple's suburban-mindedness. Plenty of room for another 10,000 spot parking lot.

I'll be pleasantly surprised if Apple actually go for an urban campus.

That approach is more a product of history and how companies operate in the valley—not necessarily some sort of intrinsic company approach. Even with their new headquarters, they still operate facilities a couple minutes away in San Jose and to a lesser extent in San Francisco.

I think the kind of approach google has taken would be more likely. Large suburban campus in the valley as the hub, but more urban satellite offices where needed.(Even if Apple has fewer, but larger, of these offices)

[marothisu]

That approach is more a product of history and how companies operate in the valley—not necessarily some sort of intrinsic company approach. Even with their new headquarters, they still operate facilities a couple minutes away in San Jose and to a lesser extent in San Francisco.

I think the kind of approach google has taken would be more likely. Large suburban campus in the valley as the hub, but more urban satellite offices where needed.(Even if Apple has fewer, but larger, of these offices)

I'm hoping you're right, but you can also look at their campus in Austin which is also very suburban. I'm thinking they're going more for a suburban type of thing, and I'd be surprised if they didn't go for that - but wouldn't be upset if they wanted something with more urbanity.

[jc5680]

I'm hoping you're right, but you can also look at their campus in Austin which is also very suburban. I'm thinking they're going more for a suburban type of thing, and I'd be surprised if they didn't go for that - but wouldn't be upset if they wanted something with more urbanity.

I mean, Austin is better than a lot of Texas from an urbanity perspective… but it is still Texas.

The roles needed will be a factor. My understanding is Austin is largely support related. A good chunk of their HR is there too. For lack of a more nuanced description they are kind of suburban jobs.

If they are expecting to compete for engineering and design talent at this new location the likelihood of it being in an urban location skyrockets.

[marothisu]

I mean, Austin is better than a lot of Texas from an urbanity perspective… but it is still Texas.


Sure, but their campus is still suburban:
https://media.bizj.us/view/img/2423251/applecampusair32014*1200xx5760-3240-0-300.jpg



The roles needed will be a factor. My understanding is Austin is largely support related. A good chunk of their HR is there too. For lack of a more nuanced description they are kind of suburban jobs.

If they are expecting to compete for engineering and design talent at this new location the likelihood of it being in an urban location skyrockets.

True, but then again that didn't stop them in Cupertino from building what they did. But I am hoping they want similar things that Amazon wants as far as urbanity goes so it bodes well for a place like Chicago.

[jc5680]

Not to beat a dead horse, but all that I am saying is that offices in suburban locations in Austin and Cupertino are fairly typical for those geographies. I don't necessarily see it as a preference.

Where they are at in Austin is hardly the valley, but they are spitting distance from IBM's largish campus and among a number of other tech orientated corporate parks. Not unlike Cupertino which is down the road from Mountain View and next to Sunny Vale, etc.

I don't know how typical that sort of consolidation of tech business is in the suburbs of more traditionally urban markets. In Chicago in particular I can't think of anything outside of the city that fits this mold.

[SolarWind]

January 16, 2018

https://i.imgur.com/ExySaOe.jpg

[SolarWind]

January 16, 2018

https://i.imgur.com/lVejQiY.jpg

[SolarWind]

January 16, 2018

https://i.imgur.com/G8fTIhl.jpg

[SolarWind]

January 16, 2018

https://i.imgur.com/YRh9CmE.jpg

https://i.imgur.com/ZGRW6Zd.jpg

[SolarWind]

January 16, 2018

https://i.imgur.com/xoSq84v.jpg

https://i.imgur.com/6YeZdh4.jpg

[SolarWind]

January 16, 2018

https://imgur.com/IFohNjc.jpg

https://imgur.com/D1qSvJQ.jpg

https://i.imgur.com/AcQCp8D.jpg

[Steely Dan]

all amazon HQ2 discussion has been moved to the chicago economic development thread: http://forum.skyscraperpage.com/showthread.php?t=225033

[the urban politician]

Was the Father-Son Plaza highrise on the agenda? Approved?

[ithakas]

Sounds like Palmer Printer building (739 S. Clark) and the adjacent parking lot were sold to CMK, per Crain's:

http://www.chicagobusiness.com/realestate/20180118/CRED03/180119901/palmer-printing-the-last-printer-on-printers-row-sells-to-chicago

A good sign for their confidence in Printers Row.

[k1052]

Was the Father-Son Plaza highrise on the agenda? Approved?

yes and yes

[Jim in Chicago]

Sounds like Palmer Printer building (739 S. Clark) and the adjacent parking lot were sold to CMK, per Crain's:

http://www.chicagobusiness.com/realestate/20180118/CRED03/180119901/palmer-printing-the-last-printer-on-printers-row-sells-to-chicago

A good sign for their confidence in Printers Row.

Interesting. That block is a motley set of buildings, going North to South you have:

The very unfortunate 5/3 Bank and their suburban-style parking lot.
A small parking lot associated with Digital Realty (server farm)
A fitness club occupying an old building - caps out at 3-4 floors.
First Draft occupying the first floor of a 3-4 story building, the upper floors look abandoned.
The parking lot just sold.
Palmer Printing just sold.
Half Sour (formerly Blackies) on the corner of Polk. Renovation just finished. The building has 3-4 floors of housing as well.

I'd been told in the past the the combination of shallow lots and a very narrow alley (not wide enough for garage access) make this a very difficult block to build anything major on, but I have no idea what the options actually might be.

[Vlajos]

yes and yes

Good, I hate that hellish suburban strip mall.

[ithakas]

Interesting. That block is a motley set of buildings, going North to South you have:

The very unfortunate 5/3 Bank and their suburban-style parking lot.
A small parking lot associated with Digital Realty (server farm)
A fitness club occupying an old building - caps out at 3-4 floors.
First Draft occupying the first floor of a 3-4 story building, the upper floors look abandoned.
The parking lot just sold.
Palmer Printing just sold.
Half Sour (formerly Blackies) on the corner of Polk. Renovation just finished. The building has 3-4 floors of housing as well.

I'd been told in the past the the combination of shallow lots and a very narrow alley (not wide enough for garage access) make this a very difficult block to build anything major on, but I have no idea what the options actually might be.

Yeah, I think the street has a lot of potential, and hopefully it results in a fine-grained, varied streetscape (can't wait to see Fifth Third go!). It's kind of developed into a restaurant center for the neighborhood.

There was a LOT of developable land immediately to the SW that's been all but spoken for just in the past 5 years or so. It would make sense that development's on the table for this block now.

Having lived within a couple blocks from it for many years, I can speak to how transit-rich this location is. Every El line (save yellow) is accessible within a couple blocks. Maybe developers feel more confident going parking-light on this street now.

[ardecila]

The floors above First Draft are big loft apartments, I went to a party up there once. At the time (around 2009) I remember the rents being surprisingly low for what was a huge and really cool space.

[Jim in Chicago]

The floors above First Draft are big loft apartments, I went to a party up there once. At the time (around 2009) I remember the rents being surprisingly low for what was a huge and really cool space.

I doubt this is still the case. The stairway (onto Clark) is closed off and the windows are (badly) boarded up. At one point they were the home for some very iffy looking parties, you'd see seemingly hundreds of young people streaming in and out, but it now looks abandoned. FWIW, that building is or was owned by Cacciatore. (The name is emblazoned on the threshold.)

[Zerton]

The floors above First Draft are big loft apartments, I went to a party up there once. At the time (around 2009) I remember the rents being surprisingly low for what was a huge and really cool space.

Are you sure you aren't thinking about the big loft student housing directly across the street? I got stuck in an elevator in there once for 2 hours. They were never cheap though.

[the urban politician]

For the past 1-2 years I’ve noticed that Chicago, one of America’s most photogenic cities, rarely appears on the My City Photos page. You see a lot of NY, LA, SF but no Chicago.

Any Idea why there has been such a fall off lately?

[Suburban Shadow]

Does anybody else think the new affordable housing program will slow residential construction on the Near West Side and Milwaukee corridor?

Seems like timing is bad. Already lots of new construction filling the neighborhoods. The program will make developers move new construction to less restrictive areas until the program ends.

Maybe good news for the Near South Side, Douglas and the West Side area south of the Ike outside the program boundaries? :shrug:

[west-town-brad]

Does anybody else think the new affordable housing program will slow residential construction on the Near West Side and Milwaukee corridor?

Seems like timing is bad. Already lots of new construction filling the neighborhoods. The program will make developers move new construction to less restrictive areas until the program ends.

Maybe good news for the Near South Side, Douglas and the West Side area south of the Ike outside the program boundaries? :shrug:

If that's the downside, I will take it. Though it does not appear to have slowed anything down and honestly it looks like it has increased density overall since projects now must get bigger to accommodate the affordable units.

[Khantilever]

If that's the downside, I will take it. Though it does not appear to have slowed anything down and honestly it looks like it has increased density overall since projects now must get bigger to accommodate the affordable units.

In some sense you may be right, but the more direct effect of the program should be to dissuade development. Not to be pedantic, but essentially the program is reducing the return on investment - which leads to less, not more, investment. But you’re right in that we might end up seeing on average
larger (but fewer) developments, since now a given parcel needs to achieve a much higher level of potential (i.e., prices need to be higher) to be worth developing.

[MayorOfChicago]

Just an FYI that the building on the southeast corner of Sheridan and Broadway (with the other 8 story building going up across the street) is definitely not stalled. Went by yesterday and the crane is up and there were an army of trucks and people continuing on with foundation work.

[OrdoSeclorum]

In some sense you may be right, but the more direct effect of the program should be to dissuade development. Not to be pedantic, but essentially the program is reducing the return on investment - which leads to less, not more, investment. But you’re right in that we might end up seeing on average
larger (but fewer) developments, since now a given parcel needs to achieve a much higher level of potential (i.e., prices need to be higher) to be worth developing.

There are multiple square miles of land in West Town and Logan Square that have restrictive zoning on them, disallowing just about any reasonable multifamily development. With this as a backdrop, the affordable housing program is a drop in the bucket--there is a huge, unmet demand for smaller, affordable units that can't be met due to political reasons and NIMBYs. The affordable housing plan will be a small drag on development costs, but should increase the appeal of the neighborhoods overall, by making it more affordable and increasing the number of people who live there, leading to an increase in amenities and leveraging legacy infrastructure, making development more appealing and profitable in the long term.

[LouisVanDerWright]

Does anybody else think the new affordable housing program will slow residential construction on the Near West Side and Milwaukee corridor?

Seems like timing is bad. Already lots of new construction filling the neighborhoods. The program will make developers move new construction to less restrictive areas until the program ends.

Maybe good news for the Near South Side, Douglas and the West Side area south of the Ike outside the program boundaries? :shrug:

This is one of the studiest laws in recent memory in Chicago. First of all, it's not going to slow anything down, it's just going to discourage upzoning and increase the rate at which actual affordable housing (i.e. 2-6 unit buildings that haven't been rehabbed) is destroyed in favor of single family deconversions or luxury apartments.

And no, it's not increasing density, it's doing quite the opposite. For example, a 33 unit building was proposed for the Polish Matress Store site in Avondale. It would have been an upzoning, but only to get a higher unit count, they had the desired FAR already. As soon as that law was passed the developers changed from 33 rental units with 3 of those affordable under the ARO to 17 large condos with zero affordable units. Why? Because going from 3 to 5 affordable units killed their business model. I was told this directly by the developer after a meeting that was supposed to be about the zoning change and ended up just being a presentation to the community about what they were building as of right. How did that make Avondale more affordable? Anyone?

It doesn't, it literally just halved the supply of new units, eliminated 3 affordable units, and changed the business model from smaller 2 bed rentals to large 3+ bed condos. Now there's another 16 units of demand that will be filled elsewhere which basically means 5 to 6 more 3 flats in the area will now have to be gutted to make up that supply. That means 16 more families that will be pushed out because aldermen in Chicago are a bunch of drooling neaderthals that have zero knowledge of urban planning and can only comprenhend how to best jerk off their favorite special interst group (who also have zero understanding of economics and urban planning).

I totally oppose this law because of exactly what I described above. As a citizen of Chicago I don't want this kind of backassward policy. I feel for my neighbors who have lived here longer than me and are being uprooted because the "affordable housing advocates" are total idiots.

I totally love it as a businessman because it's driving the value of my already zoned land and existing 2-6 unit buildings through the roof. From this perspecitve I'm laughing all the way to the bank as gentrifcation rolls through my neighborhood like fire through the Loop in 1871...

[left of center]

It doesn't, it literally just halved the supply of new units, eliminated 3 affordable units, and changed the business model from smaller 2 bed rentals to large 3+ bed condos. Now there's another 16 units of demand that will be filled elsewhere which basically means 5 to 6 more 3 flats in the area will now have to be gutted to make up that supply. That means 16 more families that will be pushed out because aldermen in Chicago are a bunch of drooling neaderthals that have zero knowledge of urban planning and can only comprenhend how to best jerk off their favorite special interst group (who also have zero understanding of economics and urban planning).


Sounds to me like they are only hastening the loss of their voter base, and thus bringing about the end of their political careers that much quicker (Looking at you Ramirez-Rosa). Hopefully, whoever replaces them ends up removing this backwards zoning legislation from their respective wards.

[SDJackson]

In some sense you may be right, but the more direct effect of the program should be to dissuade development. Not to be pedantic, but essentially the program is reducing the return on investment - which leads to less, not more, investment. But you’re right in that we might end up seeing on average
larger (but fewer) developments, since now a given parcel needs to achieve a much higher level of potential (i.e., prices need to be higher) to be worth developing.

Or to put it another way, land owners in those areas had their land values reduced with the program. Developer return requirements surely didn't change, so now they have to get the land for a better price or walk.

[OhioGuy]

Just an FYI that the building on the southeast corner of Sheridan and Broadway (with the other 8 story building going up across the street) is definitely not stalled. Went by yesterday and the crane is up and there were an army of trucks and people continuing on with foundation work.

That’s good. Thanks! :tup:

[Stunnies23]

This is one of the studiest laws in recent memory in Chicago. First of all, it's not going to slow anything down, it's just going to discourage upzoning and increase the rate at which actual affordable housing (i.e. 2-6 unit buildings that haven't been rehabbed) is destroyed in favor of single family deconversions or luxury apartments.

And no, it's not increasing density, it's doing quite the opposite. For example, a 33 unit building was proposed for the Polish Matress Store site in Avondale. It would have been an upzoning, but only to get a higher unit count, they had the desired FAR already. As soon as that law was passed the developers changed from 33 rental units with 3 of those affordable under the ARO to 17 large condos with zero affordable units. Why? Because going from 3 to 5 affordable units killed their business model. I was told this directly by the developer after a meeting that was supposed to be about the zoning change and ended up just being a presentation to the community about what they were building as of right. How did that make Avondale more affordable? Anyone?

It doesn't, it literally just halved the supply of new units, eliminated 3 affordable units, and changed the business model from smaller 2 bed rentals to large 3+ bed condos. Now there's another 16 units of demand that will be filled elsewhere which basically means 5 to 6 more 3 flats in the area will now have to be gutted to make up that supply. That means 16 more families that will be pushed out because aldermen in Chicago are a bunch of drooling neaderthals that have zero knowledge of urban planning and can only comprenhend how to best jerk off their favorite special interst group (who also have zero understanding of economics and urban planning).

I totally oppose this law because of exactly what I described above. As a citizen of Chicago I don't want this kind of backassward policy. I feel for my neighbors who have lived here longer than me and are being uprooted because the "affordable housing advocates" are total idiots.

I totally love it as a businessman because it's driving the value of my already zoned land and existing 2-6 unit buildings through the roof. From this perspecitve I'm laughing all the way to the bank as gentrifcation rolls through my neighborhood like fire through the Loop in 1871...

Best post ever on this forum?!?!

This is quite possibly the most detailed, economically sound post that has ever been written on this forum. Thank you for explaining the negative impacts of “affordable housing”. May I suggest running against Ramirez Rosa in the 2019 aldermanic election? I would certainly help volunteer for your campaign!

[west-town-brad]

Or to put it another way, land owners in those areas had their land values reduced with the program. Developer return requirements surely didn't change, so now they have to get the land for a better price or walk.

Or, it's easier to just get another floor of units out of the Alderman. Every new building seems to get at least one story higher on the Milwaukee corridor.... With the new clusters at Grand, Chicago, Division all easily at 7-15 stories and further north is easily 4-8 stories...

land owners have done pretty well in this corridor over the past few years, specially due to ordinances that have increased density. So you can't say the mean old alderman is hurting me as a poor land owner right after the same stroke of an alderman's pen just gave you a 5x return with the TOD ordinance.

[LouisVanDerWright]

^^^ No one is entitled to a zoning change. Thus no one is being screwed by this. What is happening is that people with already existing zoning are benefiting as upzonings become unfeasible.

This law doesn't affect anyone who is already entitled. What it does do is discourage zoning increases and it's not as simple as just adding a floor. Every unit you add increases the ultimate affordable housing requirements. So it's not just an incremental increase, but a sliding scale across the whole spectrum of development. It permanently shifts the financials of all development with a zoning change by whatever the cost of 5% more affordable housing is. That means the other 85% of the units in any development must be correspondingly more expensive to make up for it.

[emathias]

January 16, 2018

https://i.imgur.com/xoSq84v.jpg

https://i.imgur.com/6YeZdh4.jpg

I'm glad they're glazing this now because I use the windows to see if there's someone at the front door of my building without having to open my window and stare down at the entrance, lol :)

[emathias]

For the past 1-2 years I’ve noticed that Chicago, one of America’s most photogenic cities, rarely appears on the My City Photos page. You see a lot of NY, LA, SF but no Chicago.

Any Idea why there has been such a fall off lately?

It might just be that the hometown photographers in Chicago snap so many pics for other parts of the forum that they don't see the point of creating specific posts about it. Chicagoans seem to be some of the most active forumers in the construction sections.

[ardecila]

Are you sure you aren't thinking about the big loft student housing directly across the street? I got stuck in an elevator in there once for 2 hours. They were never cheap though.

Yes, I am sure it was the First Draft building. The apartment was on the third floor and had an unofficial roof deck on the neighboring two-story building (to the north).

It’s a shame those units are empty, they were really cool raw spaces. Not sure if they were 100% code-compliant, though.

[the urban politician]

The person who started this thread, ChicagoBruce, last posted on SSP in July 2007. Nearly 11 years ago!

Yet his name remains there in perpetuity. He’s now a legend.

[spyguy]

Photo of a model of the new Rush Facility (posted on the Rush website)
https://s14.postimg.org/a4jkyadq9/Screen_Shot_2018-01-20_at_8.28.00_AM.jpg

[left of center]

^ Very cool! Looks like it will tie in with the design of the main hospital.

Those recently demolished low rises scattered amongst parking lots will definitely not be missed! Anyone have any idea on groundbreaking?

[ardecila]

Wow, that looks seriously awesome.

Conveniently just out of frame: the giant steaming turd of a parking garage that Rush will squeeze out at Harrison/Loomis...

[aphedox]

It's kind of hard to tell from the rendering; but, does anyone know if the east side of this is going to leave an easement for possible rebuilding of Laflin St? The southwestern part of the west loop has a major problem with blocks being too big. Very pedestrian hostile.

[TimeAgain]

Looks nice, but 500K sq ft? I originally this thing was going to be the largest outpatient center in the state, but this barely bigger than UChicago's DCAM, which is 20 years old. Either way, looks great, and looks like a minor update on the model that I saw last year. Fits in well. Hope they start soon.

[Jim in Chicago]

Yes, I am sure it was the First Draft building. The apartment was on the third floor and had an unofficial roof deck on the neighboring two-story building (to the north).

It’s a shame those units are empty, they were really cool raw spaces. Not sure if they were 100% code-compliant, though.

That would indeed be it. I actually look down on that roof area, and there was a period where there were chairs out there, some planters and IIRC a little sort of kiddie sized pool. All long gone, and the building is a wreck - windows boarded up on both the North and South elevations and the walls are shedding stucco (over brickword). Really an eyesore.

[Lakeviewguy]

I hate to change the topic. This morning on the bus I went by the "Rock'n Roll" McDonalds, which is being demolished. Can someone please try to explain to me how it could make financial sense to simply build a one story McDonald's on that lot? Aren't the taxes alone enough to kill a deal like this? I just don't get it.

[Stunnies23]

I hate to change the topic. This morning on the bus I went by the "Rock'n Roll" McDonalds, which is being demolished. Can someone please try to explain to me how it could make financial sense to simply build a one story McDonald's on that lot? Aren't the taxes alone enough to kill a deal like this? I just don't get it.

You must have not lived in Cook County for very long. Either county assessor Berrios will under value the land or Madigan / Cullerton law firm will appeal its value and get the taxes reduced.

[Mr Downtown]

Property taxes are on the improvements to real estate, not on its theoretical value.

Henry George proposed doing it the other way around (http://www.econlib.org/library/Enc/bios/George.html) back in the 19th century, but only Pittsburgh gave it much of a try, and have now backed away.

[jc5680]

nvm

[harryc]

Jan 22

https://farm5.staticflickr.com/4763/39847379421_4303e964dc_h.jpg

[marothisu]

I hate to change the topic. This morning on the bus I went by the "Rock'n Roll" McDonalds, which is being demolished. Can someone please try to explain to me how it could make financial sense to simply build a one story McDonald's on that lot? Aren't the taxes alone enough to kill a deal like this? I just don't get it.

McDonald's owns the property which is worth way more. At the end of the day though I think it would be better for them to sell than do these changes. They'll make way more money by selling in the next few years than they will by flipping burgers for even the next 20 years.

[harryc]

Jan 22

https://farm5.staticflickr.com/4609/24977649827_c35e3c6640_h.jpg

https://farm5.staticflickr.com/4704/39138151984_4610b4e7b9_h.jpg

https://farm5.staticflickr.com/4677/39815910732_20392196aa_h.jpg

https://farm5.staticflickr.com/4658/39138152704_c77b384e86_h.jpg

[PKDickman]

McDonald's owns the property which is worth way more. At the end of the day though I think it would be better for them to sell than do these changes. They'll make way more money by selling in the next few years than they will by flipping burgers for even the next 20 years.

This is just wishful thinking and is a fundimental misunderstanding of the nature of land investments.
As long as the land is appreciating in value, selling burgers is just gravy.
They have no impetus to sell until the value of the land starts falling by an amount larger than the hamburger income.

[JK47]

And no, it's not increasing density, it's doing quite the opposite. For example, a 33 unit building was proposed for the Polish Matress Store site in Avondale. It would have been an upzoning, but only to get a higher unit count, they had the desired FAR already. As soon as that law was passed the developers changed from 33 rental units with 3 of those affordable under the ARO to 17 large condos with zero affordable units. Why? Because going from 3 to 5 affordable units killed their business model. I was told this directly by the developer after a meeting that was supposed to be about the zoning change and ended up just being a presentation to the community about what they were building as of right. How did that make Avondale more affordable? Anyone?

It doesn't, it literally just halved the supply of new units, eliminated 3 affordable units, and changed the business model from smaller 2 bed rentals to large 3+ bed condos.


And it didn't sound odd to you that going from 30 market rate units to 28 market rate units had such a dramatic impact on profitability? So much so that instead of developing a rental property which has a continuing income component they'd prefer to develop condominiums for sale?

I think it was less the law that's to blame here than the developer's terrible financing and cost structure. If that developer was already that close to the edge of profitability I would shudder to think what other cost cutting measures had already been taken and how they'd impact the quality of the rental units.

[marothisu]

This is just wishful thinking and is a fundimental misunderstanding of the nature of land investments.
As long as the land is appreciating in value, selling burgers is just gravy.
They have no impetus to sell until the value of the land starts falling by an amount larger than the hamburger income.

I agree with most of what you say, but there is a point where it's not worth it even when it's gravy. If that land was worth $100M and your revenue at the store was aound $1M/yr, would you personally say "okay now is the time to sell" and just keep it?

[wchicity]

Jan 22

https://farm5.staticflickr.com/4763/39847379421_4303e964dc_h.jpg

Anyone know what project this is?

[Domer2019]

This is just wishful thinking and is a fundimental misunderstanding of the nature of land investments.
As long as the land is appreciating in value, selling burgers is just gravy.
They have no impetus to sell until the value of the land starts falling by an amount larger than the hamburger income.

Also time value of money and alternative investment opportunity (costs) matter.

[Rocket49]

I agree with most of what you say, but there is a point where it's not worth it even when it's gravy. If that land was worth $100M and your revenue at the store was aound $1M/yr, would you personally say "okay now is the time to sell" and just keep it?
Is the McDonald's block worth around $100 million?

I would have guessed it was worth a fair amount less.

[emathias]

Have there been any pics of what replaces the demolished McD's?

[Bonsai Tree]

Is the McDonald's block worth around $100 million?

I would have guessed it was worth a fair amount less.

No, that seems pretty accurate. The Holy Name parking lot sold for 110 million, so 100 million could even be on the low spectrum.

[the urban politician]

I agree with most of what you say, but there is a point where it's not worth it even when it's gravy. If that land was worth $100M and your revenue at the store was aound $1M/yr, would you personally say "okay now is the time to sell" and just keep it?

If I’m able bodied and not 80 years old, hell yes I’d sit on $1MM per year. Why not? Every year I wait, the value of that lot goes up and up.

[Steely Dan]

this might have been mentioned already, but that TOD project just east of the morse red line stop in rogers park now has a caisson rig on site drilling away.

[the urban politician]

this might have been mentioned already, but that TOD project just east of the morse red line stop in rogers park now has a caisson rig on site drilling away.

Can't remember that one. Can anyone post a rendering for my lazy ass? :D

[Steely Dan]

^ i believe this is it.

pretty damn fugly.

the only silver lining here is that it's replacing and even fuglier old strip mall.

https://cdn.vox-cdn.com/thumbor/0sIGMAm_JTzRn_kbUjc-mqBWVDI=/170x0:2093x1442/1200x800/filters:focal(170x0:2093x1442)/cdn.vox-cdn.com/uploads/chorus_image/image/47892809/Screen_20Shot_202015-08-03_20at_209.56.08_20AM.0.png
source: https://chicago.curbed.com/2017/12/7/16745834/rogers-park-pritzker-apartment-development-morse

[IrishIllini]

The only thing I'd change about the Morse TOD are the projecting balconies. The centered balconies can stay. Otherwise it's a fairly inoffensive design IMO. Looks like it'll age well if they don't cut corners on materials.

[LouisVanDerWright]

And it didn't sound odd to you that going from 30 market rate units to 28 market rate units had such a dramatic impact on profitability? So much so that instead of developing a rental property which has a continuing income component they'd prefer to develop condominiums for sale?

I think it was less the law that's to blame here than the developer's terrible financing and cost structure. If that developer was already that close to the edge of profitability I would shudder to think what other cost cutting measures had already been taken and how they'd impact the quality of the rental units.

Lol, that's not how real estate development works. The cost of the building remains the same no matter how many units you have. You still need to get X rental income each month to cover those costs. If you drop below that income level then the banks won't finance you. Conversely, if you take two market rate units out of a 30 unit development, that's a 6.66% change, not insignificant. But the percentage isn't the problem, the problem is now having to make up for that dead weight by increasing the rents on all the other units in the building. If you surpass what the bank deems to be a reasonable rent for the area on the remainder of the units, then they won't finance you either.

Given this building was proposed for the outer edge of where new construction is feasible (i.e. exactly where we should be building to get the most affordable new construction possible) it makes total sense that such a change would destroy their proforma. They probably had to spread $2000 a month or something over the rest of the units after the change bumping the average rent by close to $100 and freaking the bank out. Even a loss of $1400 of rent a month means everyone else in the building needs to pay $50 a month more (is that really helping affordability??). Then look at the aggregate effects of the ARO on this proforma. 5 units, let's say they all rent for $700 a month less. That's $3500/mo. That means everyone else is now paying close to $150/mo more for their apartments so someone else can get the same brand new apartments for less. If it's $1000/mo less that's $5000 a month or about $200/mo more.

You have to remember you aren't asking the developer to simply add another affordable unit, you are asking them to remove a market rate unit that could help subsidize the affordable units and add an affordable one. That means the higher the ARO requirement, the exponentially more expensive the remaining units will become. So yeah, a bank starts to get nervous when more and more of a project is affordable pushing the necessary rents on the remaining units closer and closer to an unrealistic price for the area.

[Steely Dan]

^^ i think the most "offensive" part stems from the godawful parking podium in what's purported to be a TOD.

and it's also just pretty damn ugly.

[harryc]

The only thing I'd change about the Morse TOD are the projecting balconies. The centered balconies can stay. Otherwise it's a fairly inoffensive design IMO. Looks like it'll age well if they don't cut corners on materials.

I find the lack of windows or visibility on the ground floor to be a real determent to the neighborhood.

[LouisVanDerWright]

The only thing I'd change about the Morse TOD are the projecting balconies. The centered balconies can stay. Otherwise it's a fairly inoffensive design IMO. Looks like it'll age well if they don't cut corners on materials.

I would change the fact that 2 out of 6 floors appear to be a giant parking garage. TOD my ass.

[emathias]

^^ i think the most "offensive" part stems from the godawful parking podium in what's purported to be a TOD.

and it's also just pretty damn ugly.

I don't think it's ugly, but it needs to lose (at least most of) the parking. I also think it should have double the number of units, and should seriously consider retail in the corner. If it wasn't a block from the Red Line it probably wouldn't need retail, but it's a block from the Red Line and if it added 100 units to local supply it should have retail since ideally retail would be clustered around transit stations.

[Busy Bee]

https://cdn.vox-cdn.com/thumbor/0sIGMAm_JTzRn_kbUjc-mqBWVDI=/170x0:2093x1442/1200x800/filters:focal(170x0:2093x1442)/cdn.vox-cdn.com/uploads/chorus_image/image/47892809/Screen_20Shot_202015-08-03_20at_209.56.08_20AM.0.png
source: https://chicago.curbed.com/2017/12/7/16745834/rogers-park-pritzker-apartment-development-morse

Holymotherofgod...

Why in the hell is tacky passe stuff like this still being built in 2018??? And that's not even getting into the parking bullshit.

[JK47]

Lol, that's not how real estate development works.


There's nothing about this that's peculiar to real estate development. I work at an insurance brokerage and the basic concept is the same. There is a certain amount of costs that must be carried by the underlying income stream in order to support the deal.


The cost of the building remains the same no matter how many units you have.


Well yes and no. There is a certain amount of fixed costs associated with construction but there are variable costs as square footage is added or subtracted depending on unit count. There is also the costs associated with finishing units which can vary depending on whether you're talking about a market rate unit or an affordable unit.


You still need to get X rental income each month to cover those costs. If you drop below that income level then the banks won't finance you. Conversely, if you take two market rate units out of a 30 unit development, that's a 6.66% change, not insignificant.


If the expected return from one of our deals was completely negated by a 6 percent or 7 percent reduction in income then we'd have to question whether our strategy was reasonable to begin with. Furthermore, that reduction actually could be greatly minimized considering that the affordability component is focused on unit count and not unit type. The income lost to switching two market units to affordable units can be minimized if you are talking about studios and not, for instance, two bedroom units.


But the percentage isn't the problem, the problem is now having to make up for that dead weight by increasing the rents on all the other units in the building. If you surpass what the bank deems to be a reasonable rent for the area on the remainder of the units, then they won't finance you either.

Given this building was proposed for the outer edge of where new construction is feasible (i.e. exactly where we should be building to get the most affordable new construction possible) it makes total sense that such a change would destroy their proforma.


The problem here is that there really is no margin for error. The underlying assumption here is that rents will remain the same or rise. A change in demand forcing reductions in either occupancy or market rates would have easily led to the same outcome.


They probably had to spread $2000 a month or something over the rest of the units after the change bumping the average rent by close to $100 and freaking the bank out. Even a loss of $1400 of rent a month means everyone else in the building needs to pay $50 a month more (is that really helping affordability??). Then look at the aggregate effects of the ARO on this proforma. 5 units, let's say they all rent for $700 a month less. That's $3500/mo. That means everyone else is now paying close to $150/mo more for their apartments so someone else can get the same brand new apartments for less. If it's $1000/mo less that's $5000 a month or about $200/mo more.


Except that is utterly false. The market rate units will sell for whatever the developer or management company can get in order to maintain occupancy. The shared cost for affordable units located on the property will reduce the margin for each market rate rental unit. If, as was the case here, the margins are so thin that they can't bear the shared cost of affordable units then the investment case evaporates and a new strategy is formulated.

Asserting that everyone else will pay more implies that but for those affordable units the market rate tenants would be paying less rent which is utter hogwash.


You have to remember you aren't asking the developer to simply add another affordable unit, you are asking them to remove a market rate unit that could help subsidize the affordable units and add an affordable one. That means the higher the ARO requirement, the exponentially more expensive the remaining units will become. So yeah, a bank starts to get nervous when more and more of a project is affordable pushing the necessary rents on the remaining units closer and closer to an unrealistic price for the area.


Hopefully the bank understands the difference between 'marginally' more expensive, as was the case here, and 'exponentially' more expensive which isn't the case at all. Rents did not increase by a power of 2, 3 or more.

A weak hand and a shaky investment got forced out due to a marginal change in the cost structure that could easily have been replicated by changes in occupancy or market rates.

If you're going to argue about the negative side effects of the ARO this isn't the hill you should choose to die on because developments like this SHOULD die. This is the kind of trend-chasing development where fundamentals were stretched and the investment case relied on best-case outcomes that led the market to disaster ten years ago.

[IrishIllini]

What's the address on Morse? There's a lot going on north of Uptown away from the lake these days.

[Steely Dan]

What's the address on Morse?

SE corner of morse & wayne, directly across the street from JB alberto's.

it's a block east of the morse red line stop.

here's the crappy old strip mall that used to be there: https://www.google.com/maps/@42.0079501,-87.6647137,3a,75y,176.83h,96.28t/data=!3m7!1e1!3m5!1sbgWqPJ7HoZwxL54Ajs_s7A!2e0!5s20140801T000000!7i13312!8i6656

[10023]

Jan 22

https://farm5.staticflickr.com/4609/24977649827_c35e3c6640_h.jpg

https://farm5.staticflickr.com/4704/39138151984_4610b4e7b9_h.jpg

https://farm5.staticflickr.com/4677/39815910732_20392196aa_h.jpg

https://farm5.staticflickr.com/4658/39138152704_c77b384e86_h.jpg
This makes me happy.

I know they're just land-banking that property, but I still like seeing a wrecking ball laying into a McDonald's.

[Via Chicago]

well, i mean, theyre building another McDonalds...

[Rocket49]

This makes me happy.

I know they're just land-banking that property, but I still like seeing a wrecking ball laying into a McDonald's.

I might be in the minority, but I liked the retro look of that particular McDonald's.

I've always liked the colorful, futuristic in a Jetsons kinda way, 1950's architecture of SoCal and Route 66.

[Via Chicago]

i still cant say i fully understand the point of this whole exercise.

[KWillChicago]

i still cant say i fully understand the point of this whole exercise.

Agreed. Unless they were going to "the worldest largest" or a massive mcdonalds world museum i dont get the point of a rebuild either. But they could have done this with a tower on top of it kind of like the wrigley re-do. The only thing I could think of is making the land more desirable for a future sale.

[J_M_Tungsten]

Isn’t it going to be the “McDonald’s of the Future” model? Temporary future concept until the lot goes to the highest bidder? I’m surprised they don’t have anyone chomping at the bit to get that lot. The must not want to sell.

[marothisu]

Permit issued for new construction of a 4 story, 57 unit building with ground floor retail at Fairfield and Armitage in Logan Square. Unfortunate amount of parking with 73 spaces, though at least it says it's basement parking. More official address is 2701 W Armitage


https://www.google.com/maps/place/1957+N+Fairfield+Ave,+Chicago,+IL+60647/@41.917449,-87.6959437,3a,75y,128.6h,100.18t/data=!3m6!1e1!3m4!1sBxid-KXNFWg7m_nQ6RO0Xw!2e0!7i13312!8i6656!4m5!3m4!1s0x880fd29f89754091:0x8a60c94b9495bc3d!8m2!3d41.9169527!4d-87.6959302



Here are the plans. Pretty horrible...better than what's there now, but still terrible.
https://cdn.vox-cdn.com/thumbor/r9IpAw8m-3DYJvaLWhBVDXAQ9y4=/142x0:857x536/1220x813/filters:focal(142x0:857x536):format(webp)/cdn.vox-cdn.com/uploads/chorus_image/image/47862441/armitage_front__3_.0.jpg

[the urban politician]

^ Second link doesn't work

[marothisu]

^ Second link doesn't work

Try this:
https://assets.dnainfo.com/generated/chicago_photo/2015/11/2701-w-armitage-ave-1446836978.jpg/extralarge.jpg

It's like - if I had a choice between this and the crap building that's there now, I'd pick this. If I had a choice between this and a really good renovation of the crap building there, I'd pick the renovation. I guess on the positive side it's a nice increase of density but still...garbage design.

[nomarandlee]

Try this:
https://assets.dnainfo.com/generated/chicago_photo/2015/11/2701-w-armitage-ave-1446836978.jpg/extralarge.jpg

It's like - if I had a choice between this and the crap building that's there now, I'd pick this. If I had a choice between this and a really good renovation of the crap building there, I'd pick the renovation. I guess on the positive side it's a nice increase of density but still...garbage design.

Cripes that is horrible junk. Hoped we were well beyond those days of such schlock. Especially in high demand neighborhoods.

[the urban politician]

I don't know, I don't think it's that bad

[Fvn]

"How many different shades of brick can we use on this one"

[PKDickman]

Try this:
https://assets.dnainfo.com/generated/chicago_photo/2015/11/2701-w-armitage-ave-1446836978.jpg/extralarge.jpg

It's like - if I had a choice between this and the crap building that's there now, I'd pick this. If I had a choice between this and a really good renovation of the crap building there, I'd pick the renovation. I guess on the positive side it's a nice increase of density but still...garbage design.


Let me guess the developer.

Wilmot Properties

[marothisu]

Let me guess the developer.

Wilmot Properties

Well actually it was Eco Development tied to the image I shared. However, yes it's Wilmot now LOL. It probably looks the same...very boring suburban garbage. But at least the density is nice?

[ardecila]

Well, the only reason they're able to do underground parking at Armitage/Fairfield is because the old building already has an extensive basement.

--------

1950 West Division (Division and Damen, former Shell site)

http://i64.tinypic.com/20u5tp0.jpg

http://i66.tinypic.com/2ed7gwp.jpg

A little stumpy for such a significant corner, but at least it's an elegant design and continues the retail streetscape.

[left of center]

^ Yeah, its a bit underwhelming considering how busy that area is. I'm surprised the developer isn't going bigger or taller.

Design is nice otherwise. Very contemporary. I like the dark brick.

I still get bummed when I think of what originally occupied that decades years ago. What a shame.

[the urban politician]

^ Well I’m celebrating. We’ve gone from a sad post-war deteriorated urban corner with gas stations and lots to a fully enclosed urban corner. Even the bank on the NW part of the intersection, while not ideal, properly encloses the corner.

If we saw more of his happening all over the city that would be a reason to be pleased.