ENR Midwest's 2011 Owner of the Year: Magellan
Like many Chicago executives, Joel Carlins, an attorney and co-chief executive officer at Magellan Development Group, used to occasionally take a break from work to play a round at Metro Golf Center, a nine-hole recreational oddity shoehorned among office towers lining Chicago’s lakefront.
The question launched a 15-year odyssey to put the parcel to more productive use. The result is Lakeshore East, a $4-billion community comprising parks and high-rises, condominiums, apartments and townhouses, a supermarket, hotel and planned school, all sited along 28 acres most residential developers in the region would have just as soon avoided—and did.
But Carlins and Jim Loewenberg, Magellan’s other co-chief executive officer, aren’t just any developers.
“The formula for most residential developers is to build in Chicago’s River North district or other points west, because the farther east you come the more expensive it gets,” says Carlins. “Our philosophy was the opposite. People like to be near water. They like to be near parks.”
Chicago’s design and construction communities have found just about everything to their liking at Lakeshore East, from its iconic Aqua Tower, whose undulating facade has made waves among architects, to its sheer magnitude, some 14 million sq ft of space that has sustained local trades through good times and, more recently, bad.
“They’re not easily deterred by obstacles,” says Randy Bullard, project manager with Chicago-based general contractor James McHugh Construction Co., a veteran of several Magellan projects, Aqua included. “They have an innate understanding of what the market will bear, and how to execute from initial design concept all the way through to completion.”
One Tower at a Time
True, there have been ebbs, but for the most part capital has continued to flow. “When we undertook Lakeshore East, we knew there would be tough times, so our philosophy was to never overextend ourselves,” says Loewenberg. “We made the decision to take it one building at a time, whether a rental property, a condominium or commercial property. If the market couldn’t absorb a 500-unit building, we’d go as low as 300 to avoid overhangs in rentals or purchases.”
“We continue to sell while holding our pricing,” says Carlins. “Only the velocity has slowed. Researchers tell us we’re a market unto ourselves.”
Residents, he says, are intrigued by the concept of an urban village. Some 5% of them hail from outside the country and 20% from outside the county, including empty nesters eager to return to the city or experience it for the first time.
It’s a potentially pricey proposition, but residents are rewarded with onsite amenities ranging from pools and terraces to running tracks, fire pits and a central six-acre park.
Even the 82-story, 739-unit Aqua, designed by Jeanne Gang, principal of Studio Gang Architects, Chicago, managed to make a splash during the depths of the recession—as much a testament to nimble planning as the tower’s signature curved terraces. Originally intended as a condominium building, Aqua later incorporated rental units as a hedge against prevailing market conditions. The final tally: 476 rentals and 263 condominiums.
“Flexibility is key,” says Carlins. “Unlike other developers of phased projects, we pre-zoned the entire parcel at the outset rather than on a project-by-project basis. During the process we asked ourselves, what if the market for one of our uses slows in five years? The resulting plan was sufficiently flexible to adapt to changing conditions.”
In 2010, as the housing market touched bottom, Magellan broke ground on Village Market, a 150,000-sq-ft shopping center anchored by Milwaukee-based Roundys Supermarkets. In November the developer inked a deal with Minnetonka, Minn.-based Carlson Cos. to co-develop a $125-million Radisson Blu hotel within Aqua.
“We didn’t want to own a hotel,” says Carlins. “Problem is, most hotel chains these days don’t want to either. They’d rather manage. So we’re co-owners.”
Construction of the ultra-upscale Blu started in late 2010. Once completed, Aqua residents will have access to many of the services hotel guests do. With characteristic candor, Loewenberg says, “Condo owners and apartment dwellers don’t like living together, so the hotel will provide a buffer between the two.”
Up next is a 499-unit, all-rental residential tower that could break ground as early as this spring. Although project designer Brininstool, Kerwin and Lynch, Chicago, operates in partnership with Magellan, the developer remains resolute in its recent decision to seek outside design expertise rather than rely solely on affiliate Loewenberg Associates, a Chicago-based architect headed by Magellan’s Jim Loewenberg.