Archive for July, 2016

Start Your Engines

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Everyone is always seeking the next great thing.  The first person brave enough to take a risk in a new environment is often the one who stands to profit the most.  There is no industry where this is more true than real estate.

Much like the stock market, the idea is to buy low and sell high, ideally in the next gentrifying neighborhood.  Over the past few decades in Chicago, there have been numerous dramatic neighborhood transformations that paid off for those willing to bet on them.  For example, River North went from skid row to the one of the most sought-after office markets ever, not to mention the city’s premier entertainment destination.  The West Loop and more recently, the Fulton Market district, experienced a remarkable renaissance from primarily food storage buildings to an exploding area occupied by Google, numerous restaurants and retail establishments and coming soon, McDonald’s corporate headquarters.  The South Loop also deserves a mention for its robust residential growth. What neighborhood is next, you ask?  My money is on Motor Row.

Located in the near south side of Chicago and proximate to McCormick Place, it is easy to see that this area oozes potential. As it currently stands, the neighborhood is relatively quiet with sporadic yet definitive signs of activity.  The streets are lined with classic terra cotta architectural gems that once housed some of the largest and most prestigious automobile sales centers in Chicago.  After time, the area lost its luster and has since struggled to reclaim its prominence in the city’s landscape. In recent years, however, there has been a renewed push to reinvent this neighborhood as an entertainment quarter that will service convention goers as well as South Loop residents.

Mayor Rahm Emanuel sees the Motor Row vision, too. He is intent on building up the area through tax increment financing. Approximately $65 million worth of public infrastructure projects are planned for streetscape improvements, mass transit upgrades, and an expansion of the southern end of Grant Park.

Just a couple years ago, Mayor Emanuel’s vision seemed to be coming together nicely, as some of Chicago’s most prominent restaurateurs signed letters of intent to acquire space.  Hall of Fame rock band Cheap Trick intended to build a music venue and museum at 2245 South Michigan and Pressure Point Recording Studios planned a live music hall two doors down.  The owner of the famed Pfister Hotel in Milwaukee entered into to letter of intent to do a boutique hotel and Teatro Zin Zanni, a Cirque du Soleil-type dinner theater company, did the same at 132 East 23rd Street.  Finally, Broad Shoulders Brewing took a hard look at establishing a microbrewery and tasting room at 2337 South Michigan.  Unfortunately, one by one, each of these plans have fizzled.

Even with the loss of those opportunities, though, the development patterns of River North, West Loop and South Loop offer valuable insights:  Each area thrived at one time, then fell into a dilapidated state, but still maintained easily accessible locations and some desirable buildings from both an architectural and adaptive reuse standpoint.  The neighborhoods benefited from being proximate to other thriving districts and as those continued to grow, developers started expanding boundaries.  Shortly thereafter, property values and traffic increased substantially.

New projects have already trickled into the Motor Row area and are setting the scene for future growth. For example, the CTA’s striking new Cermak Green Line station which opened in 2015 provides easy access to the area. The hope is that the station will help the surrounding neighborhood grow rapidly, similar to the effect the Morgan Station had in the West Loop/Fulton Market neighborhood.

Additional projects under construction include a 1,200 room Marriott Marquis hotel and the McCormick Place Events Center, which will become the new home of DePaul basketball.  Numerous buildings up and down Michigan Avenue are also being renovated in preparation for anticipated leasing activity.

In spite of the grand potential and recent upgrades, Motor Row is still, in some people’s minds, a pipe dream. It is very much a work in progress but with continued economic growth, a vibrant entertainment district nearby (perhaps enhanced by the much-anticipated Chicago casino?), additional residential development in the South Loop, strong convention business and neighborhood investment by the City of Chicago, the vision will start to become reality. Once the first couple of entrepreneurs roll the dice and have some success, it might just get the motors running again.