What Did Jimmy Buffett Teach The Chicago Cubs About Real Estate Development?
Wrigley Field is home to the defending World Series Champion Chicago Cubs, but it has a long history of being a multipurpose venue. The Chicago Bears used to call the Friendly Confines home before moving to Soldier Field. It hosted boxing, wrestling, rodeos, hockey games and ski jumps and is now a popular outdoor concert venue.
But Cubs ownership did not think of Wrigley Field as a catalyst for real estate development until very recently and they may have singer Jimmy Buffett to thank.
Buffett was the first musician to use Wrigley Field as a concert venue in September 2005. At Bisnow's Ninth Annual Chicago State of the Market event Wednesday at Monroe Plaza, Cubs President of Baseball Operations Crane Kenney remembers what Buffett told him backstage about his musical, and business, philosophy.
"Margaritaville is a chance for three hours for people to retreat from their everyday lives. That's Wrigleyville," Kenney said.
Kenney said many of the ideas for developing the areas outside of the ballpark were inspired by Buffett. Although he has not released a new album in four years, Buffett's business empire now includes restaurants, hotels and resorts, apparel, and food and drink. But the music is still the foundation.
Kenney and the Cubs recognized that to make Wrigleyville a reality, the team needed to be rebuilt to become a perennial championship contender. From there, the Cubs could activate the area around the ballpark into a mixed-use development that serves neighborhood residents, tourists — Wrigley Field is the third-largest tourist destination in Illinois — and baseball fans. And the revenue generated from construction fees and sales taxes on these new businesses will benefit the city long term.
Wrigleyville's facelift is almost complete. The Park at Wrigley opened in April. The Hotel Zachary will be ready to open by Opening Day 2018, and Addison and Clark, the mixed-use development by Bucksbaum Retail Properties and M&R Development, is set to open next August. Bucksbaum Retail Properties CEO John Bucksbaum said Wrigley Field is the main reason people visit the neighborhood, but there need to be reasons for baseball fans to stay after the final strike is called, for weekend revelers to visit during the offseason and for neighborhood residents to enjoy themselves.
"We want to capture as many of these people as possible," Bucksbaum said.
Addison and Clark's retail programming is nearly complete. In addition to already announced tenants Cinemex, Shake Shack, Lucky Strike Lanes and Harley-Davidson Motorcycles (which is opening its first retail showroom in the city at Addison and Clark), Bucksbaum said he is nearing a deal with a fitness group for a 32K SF health club on the site.
Kenney said drawing in as many people as possible was also a driving factor in the team developing the Park at Wrigley and the Hotel Zachary, and bringing in Folkart Restaurant Group chef Matthias Merges was a coup. The Charlie Trotter veteran, best known for his Yusho series of restaurants, cocktail bar Billy Sunday and A-10 Restaurant in Hyde Park, is opening a restaurant inside the Hotel Zachary. Merges said it is a hard time for restaurants, in Chicago and nationally. Restaurants used to be destination-driven, but diners are more educated these days and restaurateurs need unique experiences to fill dining rooms.
Merges believes the Hotel Zachary's restaurant programming will attract residents, tourists and baseball fans alike.
Our developer panelists said they are working to find opportunities in this mature cycle. For Farpoint Development principal Regina Stilp, that means taking an agnostic approach to development. Farpoint hit the ground running after Scott Goodman left Sterling Bay last April. Farpoint's pipeline includes a 14-acre industrial project on 85th Street and LaFayette Avenue on the South Side, a 600K SF office development at Randolph and Racine that is larger than the McDonald's HQ Sterling Bay is building, a building at 1301 North Elston in the North Branch Corridor, renovating the Uptown Theatre and Lawrence Hall in Uptown and the Michael Reese Hospital site.
Stilp said the deal has to make sense financially and be interesting to them personally.
"We really like to get our hands dirty and to put our stamp on a project, whether that's visually or creatively," Stilp said.
But there are some obstacles. Stilp said robust amenity packages are here to stay, as is having an option for workers to leave their environments. But the most important barrier to entry is access to transportation. Stilp said the Morgan Street 'L' station was what enabled Fulton Market to become Chicago's most-talked-about submarket.
McShane Construction Executive Vice President Mat Dougherty said contractors have an obligation to address marketplace trends and need to find a way to address client preferences, regardless of how outlandish they may be. Dougherty recounted a recent experience building a showroom for a German precision tools firm in Hoffman Estates. The firm wanted the showroom to be unobstructed by columns, so McShane found a solution of a truss that spanned the entire ceiling. Then the firm told McShane that it wanted the truss to be made from the company's tools.
"If you can't find the solution, someone else will," Dougherty said.
Construction prices are an ongoing concern and Dougherty said firms need to be creative to address increases. Construction costs increased 4% from a year ago through September. The more concerning part of that increase is that commodity pricing has remained stable the past three years. As rebuilding intensifies in Florida and Texas, post Hurricane Harvey and Irma, that can add to future price increases.