By Brian Louis
Chicago, the birthplace of the skyscraper, has become inhospitable to high-rise construction.
The credit crunch has made even Chicago, birthplace of the skyscraper, inhospitable to high-rise construction.
Just ask high-profile developer Donald Trump. He's been forced to hit up his bankers for extra time to pay back a loan used to finance the 92-storey Trump International Hotel & Tower Chicago. Progress on the world's tallest residential building, the Chicago Spire, has come down to earth as demand slumps for condominiums in the third-largest US city.
Downtown condominium projects are being delayed and pulled as developers find it difficult to lure buyers and obtain loans in Chicago.
Drawing attention to the crisis is the Spire, planned to soar 2000 ft. Construction is being held off except for underground work, its backers said, because of volatile financial markets.
"The market in Chicago is very bad at this moment,'' Trump, 62, said in a telephone interview.
Besides the Sears Tower, Chicago is known in architecture circles for Louis Sullivan's Auditorium building on Michigan Avenue, the Frank Lloyd Wright lobby of the Rookery building on LaSalle Street, and Ludwig Mies van der Rohe's Crown Hall at the Illinois Institute of Technology.
"People in Chicago are very, very attuned to architectural events and the buildings around them,'' said Gregory Dreicer, vice president of exhibitions and programs at the Chicago Architecture Foundation. "There's an incredible history here.''
New architecture faces a tough market. Trump, the billionaire international real estate developer, said in an interview "it's routine'' to get a loan extension.
He said he's sold $600m of the units in the hotel and condominium project. The hotel part of the tower has already opened and the entire building is scheduled to be completed next year.
Contracts signed for homes in downtown Chicago in the first six months of the year plunged 72 percent, according to Appraisal Research Counselors, a Chicago-based real estate valuation firm.
Home sales overall in the city in September fell 16 percent to 1770 from a year earlier and the median price slid 11 percent to $267,750, the Illinois Association of Realtors said in a statement.
"There's definitely a very long list of concerns on the part of buyers and no real urgency to buy right now,'' said Gail Lissner, a vice president of Appraisal Research.
Condominiums in the Trump building are priced from $580,000 to more than $9m. When it opens, the Spire will supplant the 1450-ft Sears Tower across town as the tallest US building and change the skyline of Chicago.
The Spire, being developed by Dublin-based Shelbourne Development Ltd., would make Chicago home to North America's two tallest towers if it is completed.
Local historians and architects have said that could restore some of the swagger the city had from 1974 to 1998, when the Sears Tower was the world's tallest.
The city's high winds and moist soil made Chicago an unlikely home for tall buildings until William LeBaron Jenney, who served as a bridge builder in the Union Army in the Civil War, adapted steel frame bridge-making techniques.
The 10-storey Home Insurance Building he built in 1885 was the world's first skyscraper, according to the Chicago Historical Society. The building, at LaSalle and Monroe streets, foreshadowed Chicago's era of industrial growth that Carl Sandburg alluded to in a 1916 poem when he called Chicago the "city of the big shoulders'.' It was torn down in 1931.
The Spire's penthouse, which was listed at $40m, is being bought by billionaire Ty Warner, 64, the founder of Oak Brook, Illinois-based Ty Inc., the maker of Beanie Babies stuffed toys, according to Shelbourne.
Shelbourne said it has sold more than 30 percent of the apartments in the 1194-unit building.
Trump's 401 North Wabash Venture LLC, the owner of the Chicago project, took out a $640m construction loan in 2005 from a unit of Deutsche Bank, documents filed with the Cook County Recorder of Deeds show.
Trump's company also took out a short-term loan of $130m from Fortress Credit Corp., a subsidiary of Fortress Investment Group LLC, the New-York based private equity and hedge fund manager.
A message left with Lilly Donohue, a spokeswoman for Fortress, was not returned. Deutsche Bank spokesman John Gallagher in New York said the bank's vulnerability to the loan is less than $50m and he declined further comment.
Compounding Trump's difficulties is that some apartment owners are already reselling their condominium units in Trump's tower, competing for buyers with the units Trump is selling, Lissner said.This article is courtesy of Bloomberg.