Posted Sep 12, 2016, 3:56 PM
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BANNED
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Join Date: Sep 2013
Posts: 772
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Quote:
Originally Posted by ardecila
^ You can't apply a New York lens to Chicago. It's a very different market, there is not a bottomless well of demand for highrise living with zero lake views. CMK has been operating here for decades, and in the South Loop specifically.
Let's compare two previous mega-developments in Chicago, Lakeshore East and Central Station. Both are on the lakefront, both are similar size, and both are Loop-adjacent. Central Station embraced a mix of housing types, with highrises alongside townhouse developments and a few midrises thrown in. Lakeshore East went all-in on highrises.
Today, Central Station is pretty much complete while Lakeshore East will not be finished for another decade or two. Each project that Magellan does at Lakeshore East is a whole new battle with community groups, lenders, investors, etc. If a recession hits, you're not gonna build more highrises, period. On the other hand, if your master plan includes some lower-density phases, you might be able to get those off the ground even during lean times and keep your company in business.
Let's say in Chicago there are X number of people looking to buy a highrise condo, Y number of people looking to rent an apartment, and Z people looking to buy a townhouse. If you build only highrises, then your pool of customers is limited to only X+Y. If you mix up the housing types and include townhouses, your pool of customers just increased to include Z as well. Diversifying the housing types (and lowering overall density somewhat) raises your total pool of customers and, to some extent, insulates you against various kinds of risk.
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I agree, they need to build very tall towers here for lake views. Not lowrises 2 blocks from one of the tallest towers in the world.
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