In case the limestone security lobby and grand staircase don’t get the message across, One Bennett Park is packed with subtle cues to remind residents why they’re paying to live in some of the most opulent rental homes ever built in Chicago.
Tiled elevator floors, brass closet door handles and terrazzo showers were included to create “moments” that convince visitors who tour the 70-story tower that its apartments are worth the more than $3,400 per month they cost to rent, Related Midwest President Curt Bailey said inside the building Monday.
Dozens of tenants have already moved into the 279-unit rental side of the building since it opened late last month, out of the 50 units that have been leased so far. Work is still underway on One Bennett Park’s 69 condos, which are expected to begin selling early next year.
The Robert A.M. Stern-designed tower will be a crucial showpiece for Related as the developer tries to win support for its proposal to build an even bigger condo-apartment hybrid nearby at 400 North Lake Shore Drive. Bailey discussed that plan, in addition to the company’s 62-acre “The 78” mega-project, in part one of his interview with The Real Deal last month.
In part two, Bailey talked about how to design “timeless” homes that defy trends and exude luxury without coming across as over-the-top, in part by taking lessons from Related’s nearby building at 500 North Lake Shore Drive.
He also offered an explanation for the city’s tepid pace of new condo construction, and why banks and investors may begin to finance more condominiums after a decade of extreme caution.
Finally, he walked through some of his company’s efforts to recruit employees and subcontractors as diverse as the thousands of tenants Related leases to across the city.
Related has drawn a lot of attention to Robert A. M. Stern’s exterior design of One Bennett Park. How does that apply to the experience of living here?
It’s timeless. You look at the materiality and the colors, and it’s something we think will look as beautiful and as timely 10 years from today as it does today. When you look around, from the flooring to the countertops, all these things will look just as beautiful 10 years from now as they do today. We wanted to have a tall ceiling with big windows so we can have that sense of air and light, but with places to hang art, and columns between the windows so it feels more like a home than if it were just all glass. We don’t try to hit the trend, try to hit the materiality and design for beauty that we think will maintain.
How do you do that? Is it intangible? It seems like a tough proposition to intentionally resist trends without seeming out of step.
Part of it is intangible. It’s not going in too far in one direction or another, it’s thinking about what looked great 20 years ago that still looks good today. Stern says it best — you have to look backward to go forward. And we try to do that on the exterior building, but also the interior. You build buildings differently if you’re going to own them for 20 years than if you’re going to flip them the second you get leased up, and that shows up everywhere. It shows up in the units, it shows up in the hallways, it shows up in the common areas. We’re trying to create a place that feels and acts differently from everything else out there.
So the vision is to maintain ownership in the long term.
Yeah. We’ll own this, we’ll own 500 Lake Shore Drive, we’ll hopefully own what we build at 400 Lake Shore Drive, and this part of the city will be an important component of what Related looks like over the next 20 years.
These apartments are going to be marketed to some of the wealthiest people in the city. It’s such a small cohort, how do you know how to design to their preferences? How do you know what they want?
It’s a collaboration of a lot of talented people. It runs from the people on the architecture and design side of Related Midwest who have been doing this for 25 or 30 years, and one of the things that we try to do is to learn from each building and take those lessons and apply it to the next one. Then you have the marketing side and all the lessons they’ve learned, so they have a lot of history learning what people want. Then there’s construction, and how we meld the construction side of it with the architecture and design side with what’s important, i.e. how do you get really beautiful buildings that you can actually afford to build? And the fourth piece of that is this incredible architect and designer we have as our partner [Stern], who’s designed many of the most iconic and valuable buildings in the world. So when you get those four teams together, you should come out with some really good ideas.
So what lessons were applied from those other buildings? Specifically, how do you strike that balance where you’re showing off the highest of high-end without it coming across as gaudy or excessive?
We’re constantly looking to monitor what we’re doing, and whether it will translate to rent or sales price. So we’re constantly doing that math and thinking, “Will that actually translate into a renter saying ‘I really want to live in that building, and I’ll pay X amount of rent to live there.’” That test gets applied all the time. I think we’ve certainly found in buildings that there can be some spaces that don’t get used as much. Specifically when you look at some of our earlier buildings, we think we could have made the workout facilities either larger or more involved. When you look at 500 Lake Shore Drive, there are TVs in all the common areas. But today, people watch TVs on their computers. Here we have TVs in a few very specific areas where you actually watch TV or play video games, but we don’t have them in spaces where 10 years ago you’d put a TV. And that applies to all the rooms we have here. What size closet really works? What size bedroom do you really need to have enough space to get around the bed?
So it’s about keeping a focus on practicality and utility?
Yeah, absolutely. We’re trying to match everything up to who the renter is, what they care about, what they’re looking for in a building. And we really try to match that up with families, and try to include what a family wants most in a rental building. So when children want to get out of the unit, what do they want to do? Do they want to get outside? We’ll have the best playground in Chicago. We’ll have two swimming pools — a great indoor pool and a great outdoor pool. They need a space to move around a little more than they can in a unit, so we have the play areas downstairs.
Streeterville isn’t known to have as much of a unifying culture or character as other Chicago neighborhoods. How much was the surrounding area a part of the planning for One Bennett Park, and how much is that manifest in the design?
What you’ve seen over the last seven or eight years since we finished 500 Lake Shore Drive is that this area continues to get better and better. You have the natural piece that you’re on the lakefront. So if you’re a biker, a runner or a boater, it’s an incredible place to be. What you’ve seen grow up over the last seven or eight years are all these great restaurants and places to go shop. You have a Whole Foods right there with a mini-Target and a Starbucks. You have Cupitol, which I think is the best coffee place in Chicago right across the street. You have Kanela right across the street. You have Yolk, which is so jammed you can’t even get in on the weekends. So you have this new energy being created by a lot more residents living down here.
This is one of Chicago’s next great neighborhoods. Even though it’s been here for a long time, it was not as built up. And with the last pieces being delivered here, you’re going to have thousands more residents, which is going to create much more action and great places to be. If you go to Cupitol right now, it’s going to be jammed with people. It feels very different than it did a few years ago, and I think people who come here are surprised by it. One Bennett Park is a big component of that, as well as being a beneficiary. The creation of Chicago’s best small park in the entire city right here will be another enormous transformative moment for all of Streeterville, and I think it’ll make a huge difference in where everyone wants to be.
A lot of people will look at someone spending $3,400 a month on an apartment and ask why, if they have that much money, they don’t just buy. Why is there now such a great demand for high-end rentals like this?
This building will largely be renter by choice. These clearly are people who can afford to buy if they so choose, but there is a level of service in this building that is fairly unmatched, and there is with renting an ability to have the freedom to move if you so desire that many people are embracing today. And we want to take advantage of that. At the same time, we believe there are going to be a lot of people on the rental side who will want to live here for a very long time, and who will put up wall coverings and paint the units.
So why do you think it is that the overwhelming majority of multi-family construction in the city has been on rentals instead of condos? Has that shift gone too far?
Well, I don’t know if it’s gone too far, but I think it’s symptomatic of the country, and that you have seen many, many more rental units built over the last eight years than you have for sale. And that was a demographic shift of younger people generally wanting to rent and not own. It may have had a lot to do with the downturn, and the view of real estate being a fairly illiquid asset that may not appreciate as much. I think you’re going to start to see that change, and you’ll see more condo product being developed, but it has also been markedly more difficult to finance condo product than it has been for apartments. If you take a piece of land where you’re deciding whether to do 200 apartments or 100 condos — because condos are bigger — you’re going to have to put more money out sooner for the condos. And you’re going to have to do pre-sales, and all those things. So it’s been inherently easier to build apartments over the past eight years.
So it’s that much easier to get financing for apartments?
Easier to get financing, and easier to get your renters in place. But when you see how expensive the price-per-square-foot is in Chicago compared to markets like New York, San Francisco and Boston, I think we have some runway in the condo market in Chicago.
Do you think the price and pacing of condo sales in One Bennett Park will help make that case to banks and investors?
Sure. There’s not a lot going on in terms of delivered condo units. There are very few, if any, newly-built condos that aren’t sold right now in Chicago. You can count the buildings on one hand, whereas in New York there are thousands [of units]. So there isn’t a lot of empirical evidence. And a lot of thinking about what can be financed looks backwards and says, “We should be doing these, because look, they leased up.” They’re not saying, “We should be doing this product type because it hasn’t gotten done yet.” We think there’s a place to go there.
One question TRD has covered a lot and posed as a question to C-suite leaders is what the industry can do to promote more diversity in its ranks, particularly at senior levels. Related has made a visible goal of serving people all over the city, so what is it doing to make its staff reflect the faces of the people it serves?
I think we’re doing an incredible job on the construction side of that. We have an enormous program regarding diversity in employment, and driving that forward in the projects we’re doing not only out in the neighborhoods of Chicago, but in our high-rises and the big projects we’re doing on Lake Shore Drive and in the West Loop. And I think we need to continue to press on how we do that in the senior ranks of our companies. We made a huge push at Related starting years ago of having women at the top of our organization. We’ve done a great job with that, and primarily the leadership positions at my company are filled by females, and we want to continue that. At the same time, we can do much better on the minority hiring, and it is an enormous focus for us. It’s also about mentorship and having opportunities. We do a big program every year where we bring people in and they work at Related for the summer, from high schools all the way up to MBA programs.
Like an internship?
Yeah. And primarily if you look back at the past few years there, we have huge minority participation, and we’ve really tried to push to hire some of those folks. It’s a huge piece of how we move forward, and it is a key to how we have participation on these large transformative buildings and developments from all the neighborhoods in Chicago. It’s a huge piece of what we’re trying to do. I think we’re on the leading edge of that, and we want other developers to join us. We have fostered, hired, and mentored 15 minority-owned companies now, and we’re working with those companies now on how they can grow we can introduce them to our competitors, so that they can do even bigger things and hire even more people from the neighborhoods who can be gainfully employed and grow in their careers.