CHICAGO | General Developments

[Nowhereman1280]

Not sure of the specific addresses off the top of my head, but there are dozens of similar buildings that have been converted to apts or lofts along Milwaukee (and other streets) in Wicker Park. Many of these buildings extend to the alley and have no light ports.

There really aren't a whole ton of buildings in this size range that extend all the way to the alley and have no light ports though. Usually they aren't quite as deep or have at least one side cut.

[aic4ever]

Originally Posted by Mr Downtown

^I just couldn't understand the point you were making. It seemed like saying "I'd rather look at a bookcase than a lawnmower." They're designed for completely different purposes and hard to convert.

This building was designed for belt-driven manufacturing in the walking-city era. It's 120 feet front to back, with no windows at all on the sides. I want to see it preserved, too, but it's really hard to convert to anything except loft office and there's only so much market for that in most neighborhoods.

It appears to be 48 feet (two lots) wide. Sorry, I had guessed 72. So the floorplates are only 5,760 sq. ft. Still, that's a very tough residential layout to do with only 16 windows.

I did a pro-forma for a residential conversion on this building a few years back and the numbers were impossible. Lot line walls on the sides require a 4-hour rating per code, so you could not put windows in, which limited you to either two huge condos per floor, or four if you used the light shafts. It was also lot line to lot line going front to back, so there was nowhere to put parking, except inside the building, which was extremely tricky to do as well.

There were even drawings done by somebody at one point, though they didn't maximize the usage of the space, and after everything was said and done, the numbers to do the construction work alone far outpaced what it would have been possible to sell the space for, even at the very peak of the condo market.

There's a reason that building sat there for years with a sign advertising a renovation to condos that never happened.

Loft office, which is what it is now, is one of the only things it could be.

[Nowhereman1280]

^^^ Do the residential parking minimums apply to existing buildings that converted and not just new construction?

[aic4ever]

Originally Posted by Nowhereman1280

^^^ Do the residential parking minimums apply to existing buildings that converted and not just new construction?

I'm trying to remember if it was a minimum requirement to have the parking or if it was just that there was no way to maximize the $/SF to sell the units at without localized parking. I don't really remember which it was though, as this is maybe four or five years ago, now.

I do recall that putting it in the basement required a huge fire rating of the basement ceiling (3 or 4 hours) and sprinklers besides.

[ardecila]

Originally Posted by aic4ever

There's a reason that building sat there for years with a sign advertising a renovation to condos that never happened.

Loft office, which is what it is now, is one of the only things it could be.

Yeah - light wells, if they are cut large enough to be desirable, take a huge chunk out of your floor area. That's fine if the building is priced at rock-bottom in some crappy neighborhood, but not in the heavily-speculative West Loop. If you don't use all your floor area, you have to pursue unrealistic price/SF levels to break even after construction costs.

[Nowhereman1280]

Originally Posted by ardecila

Yeah - light wells, if they are cut large enough to be desirable, take a huge chunk out of your floor area. That's fine if the building is priced at rock-bottom in some crappy neighborhood, but not in the heavily-speculative West Loop. If you don't use all your floor area, you have to pursue unrealistic price/SF levels to break even after construction costs.

Yes, but also remember that if the highest and best use of the land is residential and it's not cost effective to convert to residential unless you have light courts because of huge floor plates, then it doesn't matter that you are blowing out floor area since you can't achieve the peak value of the property without doing so. If you've ever seen some higher level multi family analysis you'll notice that a lot of times the price/SF is not nearly as relevant as the price/unit. Contrast this with office where the rent/SF is really what matters. So for residential if you can blow out SF you might attain a much higher price/unit which completely makes up for the lost SF. It's tough to quantify exactly where the balance lies with something like this.

Really it comes down to a complex balance of how to attain the maximum $/SF that has so many variables that it will make your head spin. For example, a developer might have choosen to do residential instead of office a few years ago even if the long term return renting it as office is slightly higher because they could do residential and sell it as condos and get their profit upfront instead of taking the NPV of the office rents over time. But in this market the balance is probably shifted heavily in the favor of an office use since condos are pretty much unfeasible now. I've run some numbers on huge old industrial sites around the world (Ithaca, NY and Lyon, France among others) and the story is different in every market for every type of building. Sometimes it's downright impossible to know for certain what the best use is and that's why developers make the big $$$. They take a huge risk because, no matter how many pro formas you run, you can never know exactly how the market will react and you've got a long lead product when it comes to RE.

This is the kind of stuff that I find completely fascinating.

[Mr Downtown]

In this case, the only way I see to get upward of $350 per foot as residential would be to take the middle 40 feet out of the building to produce a real courtyard. That gives you a 40 x 48 building fronting Madison that you can divide into two 900 sq ft units per floor, and then you'd either preserve (if it's nice wood mill construction) or construct new a back building the same size, which could conceivably have 12 tandem parking spots underneath. Each unit gets four windows front and back.

Thing is, that's awfully close to a façadectomy. So as a preservationist, I'm less than enthusiastic.

[lawfin]

Must every building include parking? Must every rehab seemingly be focused on the condo market versus rental? Noted that your description does not explicitly reference the units as condo but your description seems to indicate that as the focus.

This building is what 1500 ft to the new Morgan station on the green line and offers nearly direct access to the Madison street bus

[lawfin]

Originally Posted by Hayward

I believe that wasn't a building specific comment. It was in regard to the architectural style...which is applied to buildings of all shapes and sizes during that time.

Many of these have been torn down.

Some of these have been torn down for the type of development on either side of this building.

Precisely. Thank you.

[aic4ever]

Originally Posted by Mr Downtown

In this case, the only way I see to get upward of $350 per foot as residential would be to take the middle 40 feet out of the building to produce a real courtyard. That gives you a 40 x 48 building fronting Madison that you can divide into two 900 sq ft units per floor, and then you'd either preserve (if it's nice wood mill construction) or construct new a back building the same size, which could conceivably have 12 tandem parking spots underneath. Each unit gets four windows front and back.

Thing is, that's awfully close to a façadectomy. So as a preservationist, I'm less than enthusiastic.

The numbers we ran on the revenue side as far as the condos really had nothing to do with $/SF per se at the time. We were right at what I'd call the backside of the peak of the boom then, so we were still comparing to boom-level pricing. I think at a max after toying with layouts, we were able to squeeze in four units per floor at what would have been a high price of $300K per unit even then, and that was being pretty generous. So that would have yielded about $3.6 million assuming you could sell them all at that. Retail in the neighborhood at the time was like $25/sf/year, and after chopping the first floor down to around 4,000 square feet, that was $100K/year in revenue. The building renovation was going to be roughly $4.5 million, so you're starting out almost a million in the hole before you factor in any debt service. It just didn't work.

[Mr Downtown]

Originally Posted by lawfin

Must every building include parking? Must every rehab seemingly be focused on the condo market versus rental?

Much tougher to sell a condo without some parking available. I'm not sure what nearby transit has to do with that. Much tougher to do high-priced rentals (necessitated by the renovation costs) without parking, views, or on-site management.

[george]

3-1

Burberry

[lawfin]

Originally Posted by Mr Downtown

Much tougher to sell a condo without some parking available. I'm not sure what nearby transit has to do with that. Much tougher to do high-priced rentals (necessitated by the renovation costs) without parking, views, or on-site management.

I think I'd leave it up to the developer to make that determination. And access to transit clearly makes not living with an auto a much more viable option. Many of the more transit accessible neighborhoods in Chicago have automobile ownership rates under 50%.Not everyone buying a condo or renting an apt has / needs a car. A surprisingly high number do not especially in areas where access to transit make it much easier to commute without one.

[ardecila]

Living car-free has just as much to do with the businesses within walking range as it does with the accessibility of transit. You might deal with the Madison bus to get to work, but not to go grocery shopping or to grab a bite.

Retail and services in the West Loop has lagged pretty substantially. Some new things have opened up but not very much considering the density. Partially, this is because retailers wanted a critical mass of population, but it's also partially because getting to the West Loop from other parts of the city is a pain in the ass. If you live anywhere on the North Side, you have to transfer, and even if you take the Green Line or Blue Line, those run along the very edges of the neighborhood, and anything you might want to visit is 5-8 blocks from the station.

Only at night, when people are willing to spring for a cab, is the West Loop busy.

[Rizzo]

Dang, the New Starbucks flagship construction site has fallen silent for maybe the 4th week now. The fencing keeps falling down, though someone has been propping it back up. I though this was going to be a fast project. Last week I received a public notice slip for liquor license along with several other establishments...though I highly doubt this has anything to do with a 3/4 demolished building. Clear the site already!

Also that two story structure on Maple hasn't seen work in over a month either.

[emathias]

Originally Posted by lawfin

I think I'd leave it up to the developer to make that determination. And access to transit clearly makes not living with an auto a much more viable option. Many of the more transit accessible neighborhoods in Chicago have automobile ownership rates under 50%.Not everyone buying a condo or renting an apt has / needs a car. A surprisingly high number do not especially in areas where access to transit make it much easier to commute without one.

I don't have car and I own my home in River North. Most of my neighbors do have cars, but not all of them by any means. Out of 14 units in my association, only 6 have parking.

[aic4ever]

Originally Posted by lawfin

I think I'd leave it up to the developer to make that determination. And access to transit clearly makes not living with an auto a much more viable option. Many of the more transit accessible neighborhoods in Chicago have automobile ownership rates under 50%.Not everyone buying a condo or renting an apt has / needs a car. A surprisingly high number do not especially in areas where access to transit make it much easier to commute without one.

In the condo market at the time it was difficult to maximize pricing on the condo without there being parking on site. I want to say condo units without on-site parking were going for something like 20% less than condo units with on-site parking.

I can't speak to whether or not this has continued as a trend of the market, though I can't imagine why it would have changed much.

As much as so many of you are urban density freaks on this board, most people much prefer the convenience of having a car to the inconvenience of not having one.

[aic4ever]

Originally Posted by ChiPhi

So when they say open, does that mean empty or that it is open as hotel rooms and they will renovate these rooms and break them into smaller ones?

21 is offices and storage, and 22 is empty...gutted

[VivaLFuego]

Of course it varies by building and can become hyperlocal, but in general, your standard "upper-middle" bracket anywhere in or near the denser parts of town only end up needing about 0.6 parking spaces per bedroom; a bit higher for condos, a bit less for rentals, but thereabouts.

Any parking spaces provided above that ratio end up simply being a way for the developer to make an end-run around the various zoning and permitting requirements for non-accessory parking, allowing them to label a de facto public non-accessory parking garage as accessory parking.

Of all the residential highrises downtown (esp River North, Streeterville, River West) with parking podium blobs, the vast majority reach their peak occupancy not overnight with residents' cars, but during the day when handling work commuters.

[Mr Downtown]

Originally Posted by lawfin

Not everyone buying a condo or renting an apt has / needs a car. A surprisingly high number do not especially in areas where access to transit make it much easier to commute without one.

Journey to work is only 18% of auto trips. And most development is done by people who want to actually sell or lease the units, not make a statement. If you want to sell to the upper half of the market—as you'll have to with these kinds of renovation costs—you give some of them a place to store the car.

I live in a 250-unit highrise built in 1980 with no parking at all because of the great location and transit. It was a noble experiment, but I don't think anyone would make that same decision today.