|Developing a $400M office tower on spec may seem risky. But the leader of Hines' development operations in Chicago, Greg Van Schaack, sees it as an opportunity. We spoke with him about this bold move and the Hines/Kennedy family plan for the $1B Wolf Point development.|
Bisnow: Why would Hines do a spec office here in such economically uncertain times?
Greg: The development team—Hines, Larry Levy, and Ivanhoe` Cambridge— is confident that Chicago’s amazing job growth, a reflection of Mayor Emanuel’s efforts to recruit firms, will continue. Also, as we track expiration of tenant leases, we see more than 1M SF of demand in ’16 and ’17. If you look at the best new buildings of the last 10 years, they’re all 95% leased, or better, and they remain full. So we’re aiming at the select market segment that wants to be in one of those buildings.
Bisnow: Who’s providing the financing?
Greg: It makes a big difference that there’s no debt. The partners are providing the equity; 85% from Ivanhoé Cambridge and 15% from Hines/Levy.
Bisnow: Have you set a construction schedule?Greg: We’ll select a GC in a few weeks, start construction in December, and complete it in 2016.
Bisnow: What type of tenants do you think will be drawn to 444 W. Lake (above) and why?
Greg: It’s a great corporate headquarters location. It fronts the Chicago River and will have a 1.5-acre park and 450 linear feet of River Walk. It’s really an urban campus, a rarity. Also, the location across the street from Ogilvy Transportation Center will attract financial and professional service firms. I know it will attract private equity and VC firms.
Bisnow: Tell us about the building itself.Greg: The design by Pickard Chilton calls for 900k SF, 45 stories and 650-feet tall. The floors are 25k SF. The building has a gentle radius curve for a sculpted look from the outside and sweeping views inside. Of course, we’ll have every amenity tenants want: fitness center, food service, conference center, 24-hour security, sundry store, coffee café, and a 1.5 acre park along the Chicago River.
Bisnow: What led Hines to do the Wolf Point development (above) with the Kennedy family?
Greg: We’re very bullish on well-designed, well-located apartments downtown. There are eight or nine multifamily rental buildings slated to start this year, but we think that this location on the river, with Chicago views, walking distance to the Loop without being in the Loop, gives us an edge. With the job growth, this is where and how young professionals want to live.
Bisnow: Will there be debt for this project?Greg: Yes, and we’re now finalizing the financing with a bank. The entire $1B complex will be three buildings, 3M SF. We’ll start construction on the first $150M, 45 story building—The Residences at Wolf Point with 500 luxury rental apartments— late this year for completion in Q3 ’14. Two office towers are planned for future phases.