Dearborn Village

Builders coming home to city downtown residence demand open up unusual areas

Chicago Tribune
July 1, 1997
By J. Linn Allen; Jack Handley

Developers on the fringes of Chicago's Loop are choosing sites for new homes that would have been scorned only a year or two ago as demand for housing from lovers of the big city shows no signs of cooling down. The properties may be adjacent to public housing, overlooking noisome expressways or hard by rattling railroad tracks.

"Everybody's dying for a site," said Michael Lerner, a developer with several projects under way in the central area. "They just can't buy anything, so the core (of building) gets pushed out further and further."

One development announced Monday is Dearborn Village, a $35 million project of 200 row houses to be built on seven acres around 18th and State Streets on the Near South Side, only a short distance from the Hilliard Homes, a public housing complex.

Another is Gotham Lofts, four century-old buildings that will be converted to 187 condominiums along the north side of the Eisenhower Expressway just west of the old Post Office.

And the City Council is expected on Wednesday to approve a $67 million plan for Kinzie Station, a development of 381 townhouses and condominiums to be built along the heavily traveled Metra tracks north of downtown's Union Station.

Building in what some people might think are awkward spots is not exactly a new phenomenon in Chicago. In the last two years, sumptuous housing has sprouted near the Cabrini-Green public housing project and overlooking the Kennedy Expressway as well. But those developments were pioneering, and the real estate community shook its head in amazement and held its breath over prospects for success. Now, building in unlikely spots has almost become routine.

The reason is the surge of the market and the eagerness of developers to satisfy it. For many years until the mid-1990s, new housing in the city was being built at the rate of only a few hundred units each year. But in 1995, almost 4,000 units of single-family and multifamily housing were built in the city. Last year, the total was over 2,500, and this year the pace is at least as high, according to Bell Federal Bank's building survey.

Much of that is coming in the central area. Tracy Cross, president of the Schaumburg-based real estate research firm that bears his name, said new construction in the central area totaled 1,284 units last year and is expected to hit almost 2,200 units this year.

"The tracks may not make a difference," said Cross, referring to the Kinzie Station project. "Chicago has the strongest residential market (among cities) in the country."

Steven Fifield, president of Fifield Realty Corp., who is developing the Gotham Lofts project, said buyers come from the hundreds of thousands of people who work downtown plus young college graduates who want to live downtown for the lifestyle.

Fifield said many of the young buyers who comprise the deepest part of the downtown fringe market are making $40,000 to $60,000 a year, and can afford prices between $100,000 and $150,000, but not the $250,000-$500,000 tabs common on the Near North Side, Lincoln Park and De Paul.

That pushes them to areas like Wicker Park, Bucktown and, increasingly, the north, west and south fringes of downtown, he said. The more offbeat the location, the lower the price, and that's why the developers of the new projects think they will do well.

Fifield said he was originally going to rehab the commercial buildings for industrial use--which he is doing with 11 buildings on the south side of the Eisenhower-- but was persuaded that there was a residential market at the right price for four buildings on the north side. The condos are starting out in the $90,000-to-$180,000 range.

Kinzie Station, which is being developed by CMC Heartland Partners--the real estate arm of the old Milwaukee Road railroad company--has prices of $99,500 to $289,000 for condos and townhouses.

The Dearborn Village project, whose developer is Snitzer Homes Inc., of Arlington Heights, will start with prices ranging from about $125,000 to $180,000 for two- and three-bedroom stacked flats designed to look like row houses. (A new police station set to be built right next door won't hurt sales either, developer Thomas Snitzer said.)

The low land costs that enable the developers to keep their prices down may not long survive the law of supply and demand, though.

Lerner said land prices have doubled in the West Loop in the last 18 months. Near South Side real estate broker Keith Giles, who helped assemble the land for Dearborn Village, said the land there is probably worth at least 25 percent more than when the developer bought it a year ago.

Lerner said he's kicked himself for losing deals on the downtown fringe by being outbid. "It happens often. They pay more than we think it's worth, but seven months later, it looks like a pretty good buy.

"Something we wouldn't look at 12 months ago we're back looking at now," Lerner said. "It's incredible."