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Green stretches past park
The city estimates that the value of residential development attributable to Millennium Park over the next 10 years will total $1.4 billion
By John Handley
Tribune staff reporter
Published November 4, 2005
Millennium Park is more than a smash hit with visitors to Chicago. It also is an economic engine powering the East Loop, real estate experts say.
"Millennium Park is becoming Chicago's version of New York's Central Park," says Louis D'Angelo, president of Metropolitan Properties, whose company is converting the 1920s-era Straus Building at 310 S. Michigan Ave. into 243 condominiums and renaming it Metropolitan Tower.
And, as with Central Park, homes on the park or near it are commanding premium prices, even as thousands of other condos rise in a downtown building boom.
The park cost a staggering $475 million to build, but new development and rising condo prices promise a hefty property tax dividend. Tourists and locals alike flock to the park and nearby businesses, as affluent home shoppers gather to buy a piece of the view.
It wasn't always so. The 24 1/2 acres at the north end of Grant Park used to be far from beautiful.
"Millennium Park makes a huge difference in the beauty of Chicago's front lawn," said Stephen Friedman, president of S.B. Friedman, a Chicago real estate consulting firm.
"Before, the site ... was an eyesore with railroad tracks and parking lots. Now, it is a premium environment. Values have gone way up for residential around the park, far beyond what lake views alone would be worth."
A city study estimates that the impact of the park will increase the value of residential units by $100 per square foot.
But the future of downtown Chicago's residential boom may also hold the key to the success of development around the park.
The downtown market "will keep moving, but certainly not at the record-level pace it has been in the last nine months," housing analyst Tracy Cross said Thursday, adding that 7,000 units are being sold or absorbed annually, compared with about a 3,200 rate just after Sept. 11.
"You get a double whammy when interest rates rise. The primary buyer is affected on affordability" and investor participation in the downtown market, which has been 20 percent to 25 percent of sales, will move "to 10 to 12 percent over the next five years."
Projects in the Millennium Park area are a disproportionately strong force in the market, Cross said, with 10 of 229 major developments citywide accounting for 47 percent of sales. Views that can't be blocked are responsible, he added.
Redevelopment of the park area was targeted to celebrate the dawning of the new millennium. After delays and cost overruns, Millennium Park finally opened, to rave reviews, on July 16, 2004.
Despite instant popularity, many Chicagoans continued to ask whether the park was worth more than three times the original cost estimate.
Some answers are emerging.
A 2005 economic impact study commissioned by the city's Department of Planning and Development estimates that the value of residential development attributable to Millennium Park over the next 10 years will total $1.4 billion. The study calculates that 25 percent of the 10,000 residential units to be built in that time period will be attributable to the park.
The area influenced by Millennium Park is bounded by State Street, Lake Shore Drive, the Chicago River and Roosevelt Road, according to the study by the Goodman Williams Group and URS Corp.
It estimates that the impact of the park will increase the value of residential units by $100 per square foot. That would mean an average 1,400-square-foot condo would be worth $140,000 more because it's near the park.
The study also said Millennium Park has had a positive effect on retail sales, hotels, restaurants and visitor spending in the area.
"Millennium Park has become a status symbol, a focal point, a magnet for the surrounding neighborhood, making properties around the park extremely desirable," said Gail Lissner, vice president of Appraisal Research Counselors, a Chicago firm that tracks real estate sales.
She noted that recent sales at the Heritage at Millennium Park, a new 57-story condo building overlooking the park, are up 25 percent, to $500 a square foot, since sales began in 2001.
"We built the Heritage because of the park, though we didn't realize how awesome it would become," said Richard Hanson, a principal at Mesa Development, the building's developer. "Millennium Park got the buzz going. It anchors residential uses around it."
Hanson estimates that the Heritage will generate $5 million to $6 million in real estate taxes a year.
"The park entirely exceeded our expectations," said Ann Nash, who moved into a 19th-floor, east-facing unit at the Heritage with her husband, Tom, in March. "When we bought in 2001, it was a leap of faith. But the concept of the park drew us."
The couple moved back downtown after living 20 years in Evanston and raising three daughters. Both lawyers, they work together downtown, a two-block walk.
"My husband is in the park almost every day," she said.
Nash noted that the popularity of the park and new residential construction have enlivened the downtown area south of the river.
"The success of the park has created an explosion of demand," said D'Angelo of Metropolitan Properties. "Clearly, the area has been revitalized into a 24/7 neighborhood. The East Loop is now much more vibrant and inviting than it was 10 years ago.
"Compared to 2002, residential prices have risen $200 a square foot as a direct result of Millennium Park. Now, every owner of an office building on Michigan Avenue overlooking the park is asking if it is feasible to convert to residential," he said. "The city is supportive because residential will result in a net increase in tax revenue."
Cranes at the north end of the park are busy at 340 on the Park. The 62-story glass building is planned for 340 residential units priced from the high $300s to $800 per square foot, said Thomas Weeks, president of LR Development, co-developer of the building at 340 E. Randolph St. with the Magellan Development Group and NNP Residential & Development.
The 340 tower, with unobstructed views south, is part of Lakeshore East, the massive residential project planned for 4,950 residential units that stretches north to East Wacker Drive.
Joel Carlins, president of Magellan Development Group, estimates that the value of Lakeshore East homes has increased 3 percent to 5 percent because of the park.
At the south end of Grant Park, one new project will offer views of Millennium Park from units in a 67-story tower. Called One Museum Park, the 276-unit condo at Roosevelt Road and Lake Shore Drive will be built by The Enterprise Cos.
Ed Uhlir, project director for the park's construction, explained how the park grew both in size and cost.
"The original idea was only 16 acres of green space. Expectations were not high," said Uhlir, who now is executive director of Millennium Park Inc., which raises funds to maintain the park, among other functions. "Then we expanded from modest to spectacular with the help of private donations. The park and its public art took longer to design and build.
"When it opened, I had no idea it would be such a big hit. Attendance is estimated at 2.5 [million] to 3 million a year. People are coming from all over the world. Chicagoans are amazed when friends come from out of town and the first thing they want to do is see Millennium Park."> |
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