The $550,000,000 Mandarin Oriental Tower is a 74 story proposed mixed use project targeted to be the 9th tallest building in Chicago (assuming the Trump and Waterview Towers, both under construction get completed first). The tower is being built by the Hong Kong based Mandarin hotel group, currently operating over 30 hotel groups around the world and are partnering with Solomon Cordwell Buenz as their design consultants.The proposed design is to be 1.2million sq feet and will include 300 condos and 250 hotel-condo units with the unit mix concept defining these hotel-condos as rooms sold as condominiums to private buyers who now allow the hotel to rent out these units when the owners are not using them.
Despite the initial excitement over the addition this building would make to the design infrastructure of the city of Chicago, a Dec 2, 07 article in Crains Chicago Business stated that various parties involved with this project are facing financial issues and construction loans have not been forthcoming. This is in part due to the current real estate slump in the Country and some inside sources have expressed their apprehension that this project might never be built as the groundbreaking initially set for January 08 is still yet to occur.
Unfortunately, this is the same for numerous other projects around the country; the building industry is slowing down and if the situation does not improve soon, many of us in the field of architecture and other related disciplines might not have much work to do.
Image obtained from condohotelcenter.com
1 comment:
Great post. There are a number of items that you raise.
First the lending environment is very weak. Banks that would have given a developer a $200 million dollar loan before will not consider it now. Which is foolish because if you start design today and end construction in 3-years, the property will be very well positioned in the market, especially if it incorporates green design features which are important now and will be even more visible and desired by the public in three years.
Secondly, the hotel/hospitality market is always quite strong especially in a city like Chicago. I was there last year in October for the USGBC GreenBuild convention and almost every room at 3, 4 and 5 star hotels was booked. Hotels break even when they exceed 55% occupancy. 55%! And that comes from tourism and conventions. With the US dollar so weak, tourists are flocking to the states with their fanny packs because their Euros, Yens and Pounds can buy a lot more goods and services than they ever could back home. I know San Francisco supports an amazing number and variety of hotels, the weather is better than Chicago year round, but conventions play a major role in providing business for hotels and City's market themselves shamelessly to attract this convention trade.
Thirdly, SCB Architects are known for their iconic designs and Chicago is their home base. In recent years their profile has shot up. They have very aggressively positioned themselves in a market that is tough to break into. SOM Chicago would have been the go-to architect for this job a few years ago, especially as the developer is out of Asia and SOM has done and is doing a huge amount of work in Asia, but SCB got it. I would love to have been in those client meetings. How do you woo a developer for a $550 million project? I'm sure you don't just show them your 48"x32" portfolio and hand out your card. Speaking of which, has anyone seen the show Mad Men? It contains a number of great scenes where ad executives are trying to sell clients. If you want to see how to pitch and whore your ideas, you should watch it. Check out this link http://www.youtube.com/watch?v=R2bLNkCqpuY . He tells the client what they should want AND they love it. That's marketing right there.
Fourth, the hotel/condo idea is becoming the rage. I worked on the St. Regis Hotel in SF and the concept worked to a tee. All the condo units are sold, including the penthouse which went for a cool $32 million. The idea is that many wealthy parents have gotten their kids into collage and are left with a 6 bedroom house on Wisteria Lane in the high end burbs. They sell the pad to the young forty-something up and comer with a new wife and a kid on the way, and move to the heart of downtown SF, Chicago, LA, Miami, Seattle etc. which is close to all the best restaurants, opera house, tennis clubs, spas etc. and proceed to blow their kids inheritance. The hotels provide security, valet, house-cleaning, laundry, gym, and a host of other services. All you have to do is pay your itemized bill. I think its a cool concept and while we do not know how long it will last, it is certainly going to be viable for the next 15 to 20-years.
Finally, do not worry about architecture and construction. People need buildings but more importantly, financial institutions need a reliable source of investment for their capital. They can't keep their gold in a vault like Aladdin's cave. This is where developers and friends of developers (Architects I'm talking to you) come in. A highrise building is one of the best possible investments you can make with $500 million. Class A offices get rent of $55 to $60 per square foot per month and residential condos/apartments get $1000 and up per sq.ft. at sale. Run the numbers. It's a profit that can't be passed up. Once the fundamentals are there, and they are there for any large metropolis in the US, then it makes sense. Once institutions stabilize their losses, they will still need to generate positive returns and investment is the only way to do that.
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