As with a lot of things in life, time and timing are of the essence. Consider, for example, a real estate development in downtown Skokie that’s been eagerly awaited while being shadowed by bad luck, the latest case of which is tied to our commerce-crushing pandemic.
It’s a project at 8000 N. Lincoln Ave., the northwest corner of Lincoln and Oakton Street in Skokie. The $70 million project of luxury apartments with retail and a parking garage has strong backing from the village, which owns the land, a market seemingly primed for high-end rentals and a design by a well-known local architect, Lucien Lagrange.
Dignitaries broke ground at the site in 2018, and a lot of foundation work went on. Last year, an expensive tower crane went up and residents expected to see progress, but work stopped.
John Dragic of Winnetka-based Greenspire Capital said there were delays during construction season for an environmental cleanup — there used to be a dry cleaner on the property — and for a state permit to close a traffic lane on Lincoln Avenue, part of U.S. 41, to accommodate construction equipment.
Work on the parking garage proceeded, and the plan was to start on the 12-story apartment building around April 1. “That was inelegant timing by us,” Dragic said.
COVID-19 was turning everyone’s world upside down. Lenders became nervous and wouldn’t OK a construction loan for the 153-unit building, which would become the tallest in downtown Skokie. The crane came down. Dragic and investor Norm Hassinger needed help.
They found it in downtown builder John Murphy, chairman of Murphy Development Group, who has been responsible for some of the most interesting local developments in recent years.
Working with Cook County government, he’s wrapping up a renovation that’s putting two Hyatt hotel brands in the old Cook County Hospital. Murphy worked with Lagrange on the posh Lincoln Park 2550 overlooking the lake. In 2015, Murphy finished a well-received renovation of the landmark Chicago Motor Club building at 68 E. Wacker Place, now a Hampton Inn.
The Skokie project “was a fundamentally strong program, but it was challenged for financing,” Murphy said. “They needed balance sheet support and strength to get this done.” He also has background in high-rise construction to mollify suddenly nervous lenders. “He will effectively manage the development,” Dragic said.
Plans call for the parking garage to be done by late summer and for work to start within a couple of months on the apartment building, provided a roughly $45 million loan can be arranged.
Murphy said with a construction schedule of about 15 months, he hopes for a finish in late 2021 or early 2022 that will coincide with a robust recovery. “Hopefully, we can have a big party,” Murphy said.
Skokie officials have backed the project with a $6 million commitment from tax increment financing plus about $10 million in bonds to support building the parking garage, which will include some free public spaces to support other businesses in its downtown. Officials believe the subsidies are justified because the project will provide tax revenue from a half-block site that’s been vacant for years.
The pandemic is an enormous complication, but Murphy said he sees enduring demand for high-end residential. “We’ll see even higher demand for suburban rentals around this crisis,” he said. “Suburban office demand may be picking up, too” if people have less taste for crowded downtown settings.
But the projects that get loans will require investors with substantial equity and experience, Murphy said. Anything else will be “sidelined indefinitely,” he said.
I asked him about the Standard Club at 320 S. Plymouth Court, a 13-story building from the 1920s that’s now on the market. It seems like the kind of project right in his wheelhouse.
Murphy said he has looked the property over but was put off by the high, 20- to 30-foot ceilings on the lower floors. The building can’t be easily converted to residential use, and financing for a hotel will be a problem in the current market, he said.
“It’s going to be years before anyone opens a new hotel in downtown Chicago,” Murphy said, adding the best option for the Standard Club might be a teardown.
Dragic said new retail or office development will be the most difficult to pull off post-pandemic, with residential or warehouse projects perhaps faring better. “The financial markets are sorting themselves out, but I would say the panic has passed,” he said.
These days, that qualifies as unbridled optimism.