Client Relations is Lendlease's Foundation
Lendlease has built a reputation across the region for being able to complete the toughest projects that other contractors simply won’t take. This year that can-do attitude culminated in the Chicago office completing $953.2 million dollars of regional work in 2017, nearly doubling its prior year revenue of $578.51 million.
“I think it speaks a lot to nurturing the relationships we have had with clients and developers through the downturn and into the upswing that we’re in,” says Bert Brandt, Lendlease vice president and general manager in charge of the company’s Chicago office, which has responsibility for the whole Midwest region. “We’ve spent a lot of time and effort with our clients and developers and construction crews working to get the pipeline to where it is today, and now I think we’re seeing the result of that.”
Eighty percent of Lendlease’s work in the Chicago market is repeat client work.
Inheriting a Contractor
One story about the long-term work Lendlease has put in with one client literally goes back 20 years. In 1998, LR Development, now Related Midwest, got a call from Oak Brook Bank. The bank wound up with a half-finished project, the apartment and condo tower 60 West Erie, after the original developer failed.
“They asked, ‘Would you guys have any interest in stepping in here and, on behalf of the bank, help us to get this project finished?’” recalls Don Biernacki, senior vice president of Related Midwest. There were liens on the property from the original developer, and its general contractor, then known as Bovis Lendlease, hadn’t been paid.
“It was my job to kind of sit across the table from Jeff Arfsten, [Lendlease’s managing director and chief operations officer] who, at the time, had a role in charge of the Chicago office, and say, ‘Okay, we’re these new guys in town, but, by the way, we need to try to strike a deal, we need to try to work through these issues,’” Biernacki explained.
Biernacki says that conversation was one of the most transparent and best he has ever had with a contractor. It began a relationship that has seen both companies change the Chicago skyline and its neighborhoods.
“We didn’t get the chance to go through a normal process of vetting, potentially, a new contractor and all of those kinds of things,” Biernacki says. “It just kind of happened on a necessity and out of opportunity. ”
Today, Related and Lendlease are in the process of transforming Chicago’s Lathrop Homes Chicago Housing Authority complex into a mixed-use campus with 1,116 residential units built over three phases as well as retail storefronts, a revamped riverwalk and new landscaping. It’s another project that other contractors had attempted for 20 years that never got off the ground until Lendlease applied its expertise.
The complex has been in disrepair for more than a decade, and many of its buildings sit empty due to deferred maintenance. The Related Midwest/Lendlease plan worked where others failed, thanks to a legal agreement the developer entered with the city wherein CHA would provide 525 replacement public housing units that will be built on the North Side, including 420 family units and 105 senior housing units, plus an additional 105 new public housing units, bringing the total number of public housing units to 630.
“We looked at it as an opportunity to diversify our portfolio,” says Brandt, who is a 20-year veteran of Lendlease’s Chicago office. “I think it’s a project that is good for Chicago, I think it’s good for the humanity and it’s important to us as a business to give back in the communities where we work.”
Most of Lendlease’s work in the market is for the office and residential markets. The $500-million, 730-ft-tall, 1,050,000-sq-ft River Point Tower, completed in 2016, was a project that not only had the normal challenges associated with the local market, but also a challenging site that had exposed railroad tracks and a surface parking lot. Working for developer Hines and with construction JV partner Clark Construction, Lendlease delivered the project and saw engineer Magnusson Klemencic Associates’ vision for a 52-story tower on the bank of the Chicago River realized. Since completion of River Point, river development has taken off.
Further along the Chicago River, Lendlease and Related Midwest performed another project rescue on 111 W. Wacker Drive, also known as OneEleven. When the developer of what was originally going to be called the Waterview Tower failed during the 2008 recession, the project was left half-finished.
In 2012, Related Midwest took over the project after it sat vacant for years and brought in a new design by architect Gary Handel of Handel Architects.
Engineering and architectural challenges involved retaining enough of the completed parking and hotel floors’ structure to build a condominium tower design on top of it. There were myriad challenges in terms of constructibility. On top of that, one of the reasons the project took so long to restart was because it had well over $100 million in liens on it, including many filed by subcontractors. Lendlease, as the new construction manager, sat down with subcontractors from the original project and brought them onto the newly revived job.
OneEleven was completed at a total cost of $180 million and also paid back its subcontractors. Related sold the apartment tower for $333 million in late 2014 shortly after Lendlease completed construction.
Related Midwest and Lendlease’s developer-contractor partnership has become so strong that the two companies have hosted a charity golf tournament together for 15 years.
“[Lendlease has] been a terrific partner for us,” says Curt Bailey, president of Related Midwest. “They have lived up to their promises, and if things didn’t go exactly as we’d always planned, they were good partners in that they would sit down with us and figure out how to get to where we all wanted to be. I think that’s the true measure of a partnership, is when you know you have the ability to sit down and work through things when they don’t go exactly as planned.”