“Primed for redevelopment”: Cedar Street Cos. leads wave of Uptown luxury projects

Change is coming fast to an area known more for affordable housing and immigrant-owned businesses

TRD CHICAGO /
Jul.July 10, 2018 08:00 AM

Cedar Street rendering of 5050 N. Broadway, over a google maps shot of the neighborhood

With 710 apartments, Cedar Street Companies’ proposed development at Broadway and Argyle Street Uptown stands out, but not just for its size.

The complex — along with similar projects by CRG and Praedium Development — is part of a growing number of luxury apartment mega-projects in a neighborhood previously known more for affordable housing. Their presence is spurring waves of redevelopment along Broadway, with the potential to transform the neighborhood, while also kicking up resistance from some entrenched residents who see it as another gentrification play.

Planned in two phases, Cedar Street’s project on Broadway would deliver as many units as three of Uptown’s next-largest residences in development combined. Those are: 811 West Montrose Avenue, 4601 North Broadway and 975 West Wilson.

Crews for Cedar Street have already begun converting the 12-story husk of a mid-century office building at 5050 North Broadway into 342 luxury apartments with a canopy restaurant and 28,000 square feet of retail. After they’re done, phase two calls for two new seven-story buildings across the street combining for 368 more units.

The 5050 North Broadway building towers over everything in sight of the busy intersection, a gateway into a four-block collection of Southeast Asian shops and restaurants the city has dubbed “Asia on Argyle.”

Such a rapid spike in new housing stock is unprecedented in Uptown, whose population plunged 13 percent between 2000 and 2015. The neighborhood, with more federally subsidized homes than any of Chicago’s 76 other community areas, has traditionally been less of a target for market-rate multi-family housing than surrounding areas in Lakeview and Lincoln Square.

But Cedar Street managing partner Mark Heffron called his company’s project the next natural step in a “nice revival” underway along Argyle. He pointed to a 2016 streetscape revamp that brought Chicago its first “shared street,” merging the street and sidewalk into a single brick-paved surface with no marked boundaries for cars, cyclists or pedestrians.

And two blocks to the south, city leaders and Farpoint Development have announced a $75 million effort to restore the 4,400-seat Uptown Theatre at 4816 North Broadway.

“This is a stretch of Broadway that’s primed for redevelopment,” Heffron said. “The neighborhood has a lot of character, and we’re seeing a lot of people who want to live in a neighborhood that has its own unique culture, not necessarily just Downtown.”

Cedar Street has made Uptown the epicenter of its citywide effort to scoop up vacant or dilapidated buildings and renovate them, often by converting them to tiny upscale apartments. The company was especially active during the early days of the economic recovery, having acquired more than half of its 42-building portfolio between 2008 and 2013.

In 2016, the company sold six of its converted buildings in Uptown to New York-based CLK Properties for a combined $67 million.

Earlier this year, Cedar Street opened a 101-unit micro-apartment complex at the historic former Bush Temple building at 800 North Clark Street, and last month it scored city approval for a 260-unit rehab on the Near West Side.

Now the developer is betting it can lure enough young professionals to fill hundreds of $1,300-a-month studios and $1,500 one-bedroom apartments on Broadway. It will have to compete with a crop of flashy new apartment high-rises that are sprouting near the rebuilt Wilson CTA Red Line station, including the proposals from CRG and Praedium.

Joe Scheck, a multifamily residential broker with Essex Realty Group who deals primarily in Uptown properties, thinks Cedar Street’s prices are about in line with competing projects.

The development has an advantage, Scheck said, because it’s a 10-minute walk from Andersonville, a neighborhood whose “unbelievable rental market” is pushing even older one-bedroom apartments as high as $1,600 per month.

Property owners in pedestrian-dominated Andersonville have capitalized on that neighborhood’s alternating reputation as a Swedish American cultural landmark, restaurant hub and LGBT gathering space, unleashing a dense array of wine bars and fashion boutiques all along Clark Street.

“You’re seeing a lot of renters come up from Lincoln Park and Lakeview who want a more adult type of atmosphere, where they have access to those really nice coffee shops,” Scheck said. “So [5050 North Broadway] is a lot of units, but I think the neighborhood can handle it.”

Uptown’s median apartment rent jumped to $1,835 in May 2018 — up 16 percent from May 2013 — slightly outpacing the citywide median, according to Zillow.

Joe Smazal, a multi-family residential broker with Interra Realty, said Cedar Street has already demonstrated the neighborhood’s appetite for high-end units, including studio apartments, a few blocks away with its redevelopment of the Lawrence House.

Ahead of Cedar Street’s 2015 renovation of the 90-year-old hotel at Lawrence and Kenmore avenues, neighbors questioned who would pay upward of $1,300 a month for living spaces measuring less than 400 square feet. Three years later, just 13 of the building’s 344 units were listed as available.

Smazal said Cedar Street is “taking existing buildings and bringing new luxury rental units to market, and those projects already tell some of the story about absorption and investor appetite in the neighborhood right now.”

Some neighbors fear the potential rush of new residents with expensive tastes could price the area’s small immigrant-owned businesses out. When the Cedar Street project was introduced in 2016 at a public meeting, residents said the new homes would be out of reach to many in the neighborhood, according to coverage in DNAinfo.

The rapid development around Argyle has already invited comparisons to Logan Square, where some residents say rapid gentrification has erased much of the neighborhood’s Mexican-American influence.

Cedar Street sought to appease affordable housing advocates by setting aside 15 percent of the development’s units as affordable, with planned rents between 60 and 80 percent of area median income. That city requires developers set aside 10 percent of the units as affordable new large-scale construction.

And the immigrant and first-generation business owners on Argyle Street are determined to ride the wave of new demand in Uptown, instead of getting swept up in it, according Martin Sorge, director of the business group Uptown United.

Many of the entrepreneurs along Argyle own the properties where they work, and they’ve been shelling out for renovations and new signage in advance of a surge in foot traffic, Sorge said. Since the streetscape renovation finished in 2016, businesses on the four-block stretch have already poured a combined $2 million into facelifts and expansions.

“We know young folks are spending their income on going out to eat, and they don’t necessarily own cars,” Sorge said. “So we want to maintain the area’s existing culture, highlight all those businesses and encourage people from outside the neighborhood to explore and maybe try something they haven’t had before.”

For Cedar Street’s own addition to the retail corridor, the developer is looking for tenants that would match the existing neighborhood and maximize foot traffic, Heffron said.

The company waited two years to sign its last commercial lease at the Lawrence House, for an all-day diner.

“We’re working really hard to find something that would be a good complement to high-programmed living — just putting a random cell phone store in there doesn’t do the building any good,” he added. “We want to have a lounge that people really want to spend time in, not just some stale business center.”


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