CTBUH Chicago Chapter Co-Chair Shelley Finnegan, Global Technical Sales Engineer and head of Technical Sales & Marketing for ArcelorMittal introduces the panel discussion and explains the structure of the Chapter to the audience.
Lee Golub, Executive Vice President, Golub & Company; CTBUH Chicago Chapter Treasurer Chris Payne and David Bach, Managing Director, Hines, deliver a panel discussion during the Challenges and Opportunities: The Developer’s Perspective event at the Chicago Architecture Center.
Lee Golub, Executive Vice President, Golub & Company; CTBUH Chicago Chapter Treasurer Chris Payne and David Bach, Managing Director, Hines answer panelist questions while Laura Flores, Senior Architect, Epstein and Linda Searl, Principal, Searl Lamaster Howe Architects moderate.
CHICAGO – The Chicago Chapter of the CTBUH hosted a panel discussion on May 22, 2019 featuring some of the city’s leading developers. The event was hosted by Chicago Architecture Center and curated topics included new construction, refurbishment and affordability. The panel was moderated by Chicago Planning Commission members Laura Flores, Senior Architect, Epstein and Linda Searl, Principal, Searl Lamaster Howe Architects.
Panelists included David Bach, Managing Director, Hines; Lee Golub, Executive Vice President, Golub & Company; and CTBUH Chicago Chapter Treasurer Chris Payne, Senior Construction Manager, Riverside Investment & Development. Each panelist’s firm is engaged in a substantial Chicago high-rise project. Hines is currently putting finishing touches on Lincoln Common, a two-tower residential complex in the Lincoln Park neighborhood. Riverside is the developer of the under-construction Bank of America Tower at 110 North Wacker Drive. Golub & Co. is developing the retrofit of the Chicago Tribune Tower and the proposed Tribune East Tower on adjacent property.
The evening kicked off with an introduction by CTBUH Chicago Chapter Co-Chair Shelley Finnigan, Global Technical Sales Engineer and Head of Technical Sales & Marketing for ArcelorMittal. Finnigan outlined the recent and upcoming events in a series in advance of the 10th CTBUH World Congress in Chicago later this year, and explained the structure of the chapter, encouraging those in the audience to get involved. CTBUH Chicago Programming Chair Kate Peavler, Marketing Manager at CannonDesign, then introduced the panelists.
Asked about positive and negative observations on the Chicago development scene, Golub responded that the growth of businesses in the downtown core has allowed his company to maintain good “leasing velocity” in both office and rental residential properties. On the negative side, the uncertainty surrounding the City of Chicago’s and State of Illinois’ unfunded pension liabilities has caused some potential partners to reduce investments or act with greater caution. The largest concern remains the uncertainty around real estate taxes in the city, Golub said.
One of the biggest challenges remains the provision of affordable housing, Bach said, noting that 10 percent of the units in the under-construction Lincoln Common development were set aside for affordable rents, but also that these 54 units were “3 times oversubscribed” on the first day of availability. “It is gratifying to see so much demand, and to be able to meet it, but it is increasingly a challenge to make deals pencil out with respect to the increasingly stringent requirements for affordable housing,” Bach said.
Additionally, construction costs are rising. “The fact that we are busy is great,” Payne said, “But the challenge is that access to skilled labor and materials is limited, and that drives costs up.”
“It’s important to recognize we are not in a vacuum, and we are in constant competition for jobs and talent with other cities coast-to-coast,” Bach added.
On the question of materials, Bach noted that Hines has made some significant progress in the mass timber field, with its T3 “Timber, Talent and Technology” office development in Minneapolis, which was well received by tenants and investors, and is now at 95 percent occupancy. A similar project is also under construction in Atlanta, and others are planned in Denver, Dallas, Raleigh-Durham, and the Chicago suburb of Oak Brook. As more jurisdictions ease regulations on the height of timber structures, developers will be able to make more compelling offers. Currently, it is difficult on a cost basis for a seven-story timber building to compete with a conventionally constructed 10-story steel building on a similar lot, Bach said.
Payne noted that mass-timber office buildings are more successful in high-density areas which are not predominantly zoned for residential use, and in cities where there is limited skill in high-rise steel construction, as timber is cost-competitive to concrete in those conditions. The obstacles to expansion of tall timber and modular construction in markets like Chicago have more to do with regulations and skilled labor than with the technologies themselves, the panelists said.
“We have no idea which union is going to claim jurisdiction over these new materials,” Bach said, noting that modular construction and other time-saving techniques work better in environments that are less unionized. “As we are talking about new ways to build things, the unions need to be a part of that discussion.”
Overall, the developers expressed “cautious optimism” with respect to the future of the local high-rise development market, citing demographics, the increasing embrace of urban living, sustainable materials, and new models of living and working.