The Chicago Plan Commission approved proposals Thursday that could result in the construction of more than 2,700 new downtown apartments by three development teams.
If City Council greenlights the ambitious plans, which include a 620-foot apartment tower on North Des Plaines Street in River West and a separate 9-story tower on the Near North Side, they would join other potentially massive apartment developments either underway nearby or on the cusp of breaking ground.
Advertisement
The momentum comes at a time of growing economic uncertainty, with persistent inflation and interest rate hikes by the Federal Reserve. But even though experts say economic conditions could make it more difficult to secure the financing necessary to start construction, long-term prospects are good for downtown apartment developers who manage to get shovels in the ground. And the interest signals that downtown, battered by the departure of office workers during the pandemic, is still a draw.
“The demand for new apartments has been off the charts, and rents are at an all-time high across the greater downtown and there is very little vacancy,” said Ron DeVries, senior managing director at Integra Realty Resources, a real estate appraisal firm.
Advertisement
The largest plans were put forward by developer Shapack Partners. It wants to build NOMA, a new district with a 620-foot apartment tower with up to 1,110 units on the 500 block of North Des Plaines in River West, as well as another three towers several blocks to the southwest totaling 1,159 units.
Shapack is far from alone in seeing opportunities on the outskirts of downtown. The commission also approved plans from Draper and Kramer for a 9-story, 129-unit tower at 330 W. Chestnut St. on the Near North Side, and a $166 million proposal from partners Golub & Co. and GSP for a 362-unit development at 301 S. Green St. in Fulton Market.
Twenty percent of the units will be reserved as affordable housing to comply with the city’s Affordable Requirements Ordinance.
Other developments nearby already approved by City Council include a proposal by Vancouver, B.C.-based Onni Group for five towers totaling about 2,700 units at 901 N. Halsted St. on the southern end of Goose Island. In addition, JDL Development, the company that completed in 2021 One Chicago, a two-tower, 812-unit complex at 1 W. Chicago Ave., broke ground this year on 920 N. Wells St., the first building for North Union, its new development on the Near North Side that could swell to 2,700 apartments.
Many developers had been unsettled by Cook County Assessor Fritz Kaegi’s push to reform assessment methods, which meant much higher assessed values, and possibly steeper taxes, for many commercial properties, including apartment towers, according to DeVries. But the Cook County Board of Review knocked back many assessments, and that helped restore some confidence that future property taxes will be manageable.
“What we’ve seen is that the Board of Review has been giving significant relief, and that’s encouraging to developers,” DeVries said.
He estimates that developers will next year complete about 2,900 new units in the greater downtown, including neighborhoods such as West Loop, River North, the Gold Coast and South Loop. Activity will increase the following year, with about 4,000 units finished.
Thousands more are in the planning stage, including the massive proposals by Onni and Shapack, but the rise in interest rates means it could take years before residents move in.
Advertisement
“Developers were ready to hit the gas pedal, but some of the details just don’t work with the cost of debt being as high as it is,” DeVries said. “It shows that once developers get one problem solved, another turns up. What everyone is trying to do is keep their projects moving forward and get all their ducks in a row, so when the numbers do make sense, they’ll be ready to break ground.”
Other uncertainty stems from the slow return to the office by many Chicago companies, according to David Schwartz, CEO of investment firm Waterton. That could eventually cut demand for downtown apartments, but the decision of Google to acquire the Thompson Center is just one sign that downtown remains a draw.
“I think the long-term looks good,” Schwartz said. “Companies still need to have a presence and Chicago has the talent and the educated workforce.”
Waterton is still willing to put its money into downtown Chicago, he added. The company late last year bought The Shoreham at Lakeshore East at 400 E. South Water St. and The Tides at Lakeshore East at 360 E. South Water St. in the Lakeshore East neighborhood, a total of 1,156 units. And it just acquired the 496-unit Alta Roosevelt Apartments at 801 S. Financial Place in South Loop.
Fulton Market in particular is an attractive place to build apartments, according to Christine Kolb, senior director of development for Greystar. The neighborhood’s new office buildings are still attracting firms from the suburbs and the Central Loop, and their employees often want to live within 15-minute walks.
Greystar will complete a 223-unit apartment building at 166 N. Aberdeen St. early next year, and Kolb said its location between McDonald’s world headquarters and Google’s Midwest headquarters should ensure a stream of eager renters.
Advertisement
“For us, having 223 units one-half block from McDonalds and one-half block from Google feels like an extremely strong investment thesis,” she said.
Some commission members worried about the scale of change proposed Thursday. Member Sarah Lyons pointed out that the commission received a letter from the community group Neighbors of West Loop, which raised concerns about possible stress put on local infrastructure by the 36-story 301 S. Green St.
City planners said several neighborhood groups supported the Green Street plan, and said they would coordinate with other agencies, including the fire and transportation departments, to ensure the influx of new residents didn’t overwhelm city services. Department of Planning and Development Commissioner Maurice Cox added that a dense neighborhood was the goal, and that more towers could be on the way for Fulton Market.
“The push toward greater height is not a whim on the part of the developer,” he said. “It’s what we would like to see, particularly in this corridor.”
Lyons was the only commission member to vote against Golub’s Green Street proposal.
Shapack’s proposal to fill River West with five new towers will include the renovation of a 131-year-old, six-story building at 509 N. Union Ave., recently occupied by the Salvation Army, into a 141-room boutique hotel. The effort will include preserving its iconic water tower, a well-known site to drivers on the Ohio Street feeder ramp just north of the property.
Advertisement
“It’s a beautiful building, but it needs a lot of repair,” Shapack Partners CEO Jeff Shapack said.
Commission member Carlos Pineiro asked Shapack whether such a massive complex would fit into the neighborhood, and have enough open space, especially considering it’s just north of Fulton Market and immediately west of Bally’s proposed $1.74 billion casino complex, a 30-acre site now occupied by the Chicago Tribune’s Freedom Center printing plant.
Shapack said wide public plazas will crisscross NOMA, and the old industrial neighborhood, once dotted by factories and warehouses, also has extra-wide streets, allowing for sidewalks big enough to handle foot traffic to the casino or the CTA Blue Line stop just 200 feet away at Grand Avenue, Halsted Street and Milwaukee Avenue.
None of the commission members objected to the NOMA proposal. Cox was especially enthusiastic.
“The people who live in the area will have great access to public transit,” he said. “The walkability of the area is going to be greatly enhanced. It feels like the missing link between Fulton Market and the emerging casino district.”
