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July 24, 2014
Inside America's Biggest Medical District
The Illinois Medical District Commission just approved a $300M, 1.2M SF mixed-use development that will reinvigorate the 560-acre medical district, the largest in the country. (It's the fiscal equivalent of Nicolas Cage injecting atropine into his heart in The Rock.)
Assembling The Team
Savills Studley's Eric Feinberg (above right) repped the IMDC and gave us an inside look at the process. The proposed 10-acre IMD Gateway (2020 Ogden) has housing, hotel, parking, medical office, and amenities that IMD stakeholders (Rush, UIC, VA Medical Center, Stroger, etc.) desperately need, Eric says. After an initial plan with Higgins Development Partners fell through, the district issued another RFP in January. It chose IMD Gateway Partners, which includes Higgins, East Lake Development (Elzie Higginbottom), Thomas Samuels Enterprises, and Isiah Real Estate (NBA star Isiah Thomas). Its economic package includes Harrison Street as 90% capital partner.
The development team's plan (above) includes: a 225-room hotel, 92k SF of retail, 200 rentals for young professionals and students, 224k SF of standard multifamily, 100k SF of lab space, 88k SF of MOB, parking, and 40k SF of urban farm greenhouses. The due diligence process will be followed by strategic marketing to lure top tenants, and construction should kick off in spring 2015, Eric says. Leasing shouldn't be an issue, he adds, given the Illinois Medical District's 50,000 daily patients and 30,000 employees, who until now had few options to go out for lunch or have a beer after work.
Creating An Ecosystem
With IMD Gateway's momentum, development should surge in the district, Eric predicts. The CTA is redoing its IMD stop next year, and IMD Gateway should become a connection point from the district to the other side of 290, with Malcolm X College and the United Center's own flurry of groundbreakings, he tells us. (Its parking and dining options will be clutch for Bulls games, above.) Residential development is the key first step to attract destination retail, Eric says, but other fun stuff like the city's first “vertiport” (for private helicopters, or Marine One) is nothing but good news for the hot submarket. Eric is looking forward to visiting his East Coast family later this summer.
Milan Rubenstein, 38, Principal, Windy City RE
Milan Rubenstein came to LA from the former Yugoslavia at age 17 (after his wealthy family lost everything in the war), with nothing but a backpack and a dream. A newspaper ad for an apartment management position soon caught his eye, and after stellar performance RE/MAX Commercial brought him on for a job of 24/7 cold calling. A year later, he got his first bite (and $10k commission).
Milan began syndicating small value-add apartment deals with his commissions. Until the fateful day his soulmate Amy was on the buying end of a deal in 2004. He selected her offer in return for a date, he laughs, and they were engaged five weeks later (happily married with two kids today). The pair turned to single-family flipping after the downturn, making about $100,000/house, until returns started shrinking in 2010 and they decided to move back to Chicago to be with family (Amy's from Deerfield).
Small apartment projects gave way to larger ones, and today Windy City RE has 1,200 units with an estimated value of $200M, a full-time construction staff of 70, and an office of 14.
Together with Amy and her brother Josh (the firm's other principals), Milan is focused on heavy value-add apartment deals where Windy City RE can boost rents at least 40%.
The small foreclosures they were able to pick off in the past are long gone, he says, which means the firm has to be more creative (like turning decent sized studios into one bedrooms) and invest heavily in construction to achieve the same returns. Its investors (generally mom and pops) saw 54% returns last year, and 410% over the last three years, he tells us.
It's looking at more adaptive reuse (office, warehouse, SRO, etc.), and is working on redevelopments of Al Capone's long vacant Cullerton Hotel (above) and the old Studebaker building on Michigan in the South Loop (both apartments and retail).
Milan loves working with his family, though he brings the job home more than most. The firm's office is in the same building as his Gold Coast condo, at 161 E Chicago. (Not always a negative, since his kids can amble down for a quick snack with Dad.)
Outside of the office, you'll find Milan traveling to places like Russia or Israel on charity missions, cycling, reliving his MMA days, doing hot yoga, or sailing with Josh. His family also just bought a weekend house on 88 acres near Woodstock that takes his kids out of their concrete box and straight into a fairy tale, he says. (Think a rowboat in the pond, smelling flowers, getting muddy, and catching a frog that might just be a prince.)
Milan is part of Bisnow's Ascent community of up-and-coming leaders in commercial real estate. (Today's also his birthday!) For more info on Ascent, click here.
JLL and Arden Realty hosted “Broker Feud”, a broker open house last week at 1111 W 22nd St in Oak Brook. More than 50 brokers competed for the $1,000 grand prize. One team, The Over-Negotiators, above: Chicagoland Commercial's Lindsay Borkan, Cawley Commercial Real Estate's Rawly Lantz, Cresa's Matthew Schiffler, Colliers' Dougal Jeppe, and Tenant Advisors' Dave Hamilton. On the right is JLL VP Bruce Renwick channeling his inner Richard Dawson as game show host, emcee, and “king of the one-liners.” Questions ranged from pop culture to real estate (i.e. What are the top ways to ruin a tour?).
The Over-Negotiators emerged victorious. Here's the check presentation, with Bruce and Arden Realty's senior portfolio leasing manager Laura Collins. The Nibblers (NAI's Aubrey Van Reken, CBRE's Bill Elwood, JLL's Kevin Rogers, CBRE's Pete Adamo, and Chicagoland Commercial's Jack Sanders) came in second. JLL's Jeff Shay, Karla Harmon, Bruce, and Matt Hickey are the leasing agents for Arden's 3M SF East-West Corridor office portfolio, which includes 1111 W 22nd, as well as Westbrook Corporate Center, Oakbrook Terrace Tower, Commerce Plaza, and One Lincoln Centre.
Got a Top Dog?
Yoga. Stress balls. Therapy. Exercise. Back rubs. Meditation. Expressive writing. Spa days. Or, get a dog. Here's your Chicago reporter's childhood furry friend, Cookie. (Sweet as can be and a loyal companion, she could also outrun Usain Bolt and had a better vertical than Michael Jordan himself.) How does your puppy make your life easier? Send firstname.lastname@example.org a picture of you and your pooch and tell us what makes your dog special. Here are a few pawesome examples of top dogs in Houston and Dallas-Fort Worth. We'll publish our favorites here!
Don't Miss The Capital Stack: What's Next?
The capital stack is changing fast with innovations like crowdfunding (here's a good crowd: soccer fans in Grant Park) and a new pipeline of investors from Asia. That's why we're pumped to hold a timely, commercial real estate star-studded event, The Capital Stack–What's Next?, on Tuesday, July 29, at the Swissotel. Our panelists, at the forefront, include The Prime Group chairman Mike Reschke and Fundrise co-founder DanielMiller. They'll break down key buyers and their sweet spots, today's deal structures, lending changes, and the next gen of dealmakers. Don't wait, sign up now.
5th Bisnow Video
With Bisnow Education's latest video, Real Estate and Their Asset Classes, we drill down to fine-point dynamics of the industry itself, explaining vital differences among the many opportunities (economic and otherwise) commercial real estate has to offer. Peter Linneman, Wharton's real estate program founder and chairman, continues to share his extensive knowledge of how real estate sectors differ in operating, organizing and providing revenue, including:
Differences among Class-A, B and C properties.
Risks associated with retail hotel types (the differences are significant)
Shifts of demand within multifamily
Strip centers vs. power centers
The Internet challenge
This is our latest video and video No. 5 in our hugely popular educational series, with more to come. This one contains two-and-a-half hours of useful information, but it can be digested in bite-sized, five-minute spoonfuls that go down easy (watch a sample here). It's available to Bisnow readers for only $99, or purchase all five videos for $199. Order yours here, and for training program group licenses, email Will Friend at email@example.com.