Tall & Urban News

A Helmut Jahn-designed skyscraper along South Michigan Avenue is on hold at least until September 2020 and buyers of the luxury units are being offered some of their deposits back, after the project’s lender stopped funding its construction.

The latest delay, resulting from economic concerns tied to the coronavirus pandemic, raises questions about the viability of the biggest condo project to break ground in Chicago in more than a decade.

At 74 stories and an expected cost of $470 million, the 1000M tower would be difficult to pull off even in the best of times.
It would not be the first audacious project in Chicago to succumb to a case of bad economic timing. The most memorable is the 2,000-foot-tall, Santiago Calatrava-designed Chicago Spire, a project that fell apart after breaking ground and became a global cautionary tale about the fickleness of construction cycles.

Construction lender Goldman Sachs has put the 1000M project on hold until it can be reviewed after a 90-day period ending in September 2020 providing more time to assess the impacts of COVID-19 on real estate demand, according to developers Time Equities, JK Equities, and Oak Capitals.

Goldman Sachs is “concerned about economic stability of the market at this particular time due to recent events,” Time Equities chairman and CEO Francis Greenburger said in an email Tuesday.

In recent weeks the virus has rapidly spread in several states, causing concerns about long-term damage to the economy.
The lender could agree to continue funding the project after the three-month wait, and the developer is exploring other ways to finance the project in the meantime, Greenburger said. He declined to say how much construction financing Goldman Sachs had agreed to provide.
 
“We are hopeful that a solution will be found in the months ahead,” he said.

The project, across from Grant Park, was the first prominent high-rise construction project in Chicago to shut down during the pandemic. The 1000M developers in June 2020 said foundation work stopped during the spring to prevent the spread of COVID-19.

The lender covered the cost of the initial phase of the foundation but has not released additional funds, Greenburger said. “We remain hopeful that this graceful iconic structure will one day help define the skyline of Chicago,” he said.

The 832-foot-tall (253-meter-tall) tower designed by Jahn is the biggest high-rise project currently underway in Chicago to begin construction since the last recession. There are contracts to buy 101 of 421 units, and buyers have made 10 percent down payments, Greenburger said.
 
The developers recently informed buyers who had signed contracts that construction was being idled, giving them the option to take back half of their earnest money, Greenburger said.

Many buyers declined to take back the 5 percent, and those who did would need to repay the 5 percent when construction resumes, he said

During stay-at-home orders issued in March 2020 construction was deemed an essential industry by Gov. J.B. Pritzker.

The devastating impact on the economy and the need to take health precautions such as distancing, staggering work shifts and taking workers’ temperatures has made construction projects challenging. Still, many big projects have continued uninterrupted in recent months.

One of the 1000M developers, New York-based JK Equities, took the rare step of starting work last month on a 42-unit luxury condo project on Chicago’s Near West Side.

Large projects delayed by the pandemic include construction of the massive office space Uber leased in The Old Post Office redevelopment and the planned observatory at the Aon Center, which would include adding an exterior elevator tower and creating a thrill ride atop the city’s third-tallest skyscraper.

Developers and construction contractors are closely watching to see how the pandemic will affect a more than decade-long construction boom, at a time when several megadevelopments are in advanced planning stages.

If completed, 1000M would stand among the tallest in the iconic row of skyscrapers on South Michigan Avenue.

It also would be the tallest building designed by German architect Jahn in his adopted hometown. Jahn’s prominent Chicago designs include the James R. Thompson Center and the United Airlines terminal at O’Hare International Airport.

1000M is already years in the making. The developers bought the site in the 1000 block of South Michigan Avenue for US$17.2 million in 2016. That’s the year the city approved the project after Jahn altered the design, including chopping 200 feet (70 meters) from its height.

The Tribune reported in October that 1000M was moving close to the starting line, and later that month the developers held a groundbreaking ceremony.

At the time, Greenburger said the developers were close to finalizing an unspecific amount of financing from Goldman Sachs, with construction expected to take about three years.

For more on this story, go to Chicago Tribune.