After a McCormick Place revamp brings a DePaul University arena to the area, the Near South Side could be as hip a dining and entertainment destination as the Near North Side, Jim Reilly, CEO of the Metropolitan Pier and Exposition Authority told the City Club of Chicago Monday.
Laying out the numbers game behind the McCormick Place Entertainment District — expected to break ground next year and be completed by 2017 — Reilly said McPier has found a winning formula in such public private partnerships, which began five years ago.
That’s when McPier began transforming into an assets manager rather than operator, turning McCormick Place over to trade and convention group SMG and Navy Pier over to the nonprofit Navy Pier, Inc., according to Reilly, who keynoted the monthly newsmakers forum.
“At the time, no one knew for sure that it would work and there were many doubters,” he said.
“Whoever heard of a unit of government giving up anything, especially something as big and valuable as Navy Pier? Turning hundreds of government jobs at McCormick Place over to the private sector? Whoever heard of such a thing? This is Chicago after all.”
But those partnerships, alongside changes in McCormick Place’s cost structure and labor reforms, bred success, he said, noting that over the last three fiscal budgets, SMG exceeded revenue by $12.8 million or 10 percent, and reduced an operating deficit by $10.5 million, or 9 percent.
Navy Pier is self-sufficient and starting construction on Phase 1 of its vision for the pier’s 2016 centennial, which will expand its traditional family-oriented attractions and events while reaching out to a new, young adult demographic, Reilly noted.
McPier has similar expectations for the new district — stretching six blocks from a new Green Line CTA station at Cermak Road eastward to Lake Michigan — and believes it will revitalize both the convention and trade show industry and the Near South Side, Reilly said.
The district includes the DePaul arena, for which the North Side college will pay half the estimated $140 million construction costs, then at or above market rent as tenant.
The project will include private development along Motor Row and Michigan Avenue, a 56-story, 1,200-room headquarters hotel; streetscape, indoor/outdoor restaurants, retail and nightlife.
Reilly said it is expected to generate 7,400 construction jobs, with an economic impact during construction of $1.2 billion; along with 971 full-time equivalent jobs with an annual economic impact of more than $100 million.
“McCormick Place needs more hotel rooms in close proximity to the convention center campus. The hotels, in turn, need restaurants, retail and entertainment venues to be successful,” he said. “And serendipitously, the neighborhood also needs hotels, restaurants, nightlife and retail. A perfect hat trick of need and response.”
Reilly cited the neighborhood’s growth since 1989, when he began working at McCormick Place.
“There were not many people living in our immediate vicinity, and frankly, it could be a bit daunting to walk around the area in the evening. But in just a little over 20 years, it has developed into a vibrant community,” he said, citing its young and diverse demographic.
The neighborhood’s 38,000 residents have an average household income of $83,000, Reilly said.
Reilly categorized 61 percent of those as “metro renters,” young, educated singles just beginning their professional life; 10 percent as “trend setters,” young, diverse and mobile and on the cutting edge of urban lifestyle; and 12 percent as the “Social Security set,” adding that the area is projected to add another 10,000 residents in five years.
“Hopefully, you can see how off base the critics have been who have dismissed this project as a tax payer-funded boondoggle for DePaul,” said Reilly.
“Put aside that DePaul is paying half the construction cost. Put aside that DePaul is paying at or above market rent. Put aside that McCormick Place needs the building for its core business. This is exactly the kind of projects for which we must be using our precious capital resources if Chicago is going to continue to thrive in a very competitive regional and national economy.”