Chicago Developers Discuss Trends Shaping The Windy City
Chicago condo development may be in a lull, yet the group of design and development leaders who showed up for an evening of drinks and discussion at the brand new BSH Experience and Design Center on May 30 were ready to look on the bright side.
“You can’t be in this industry and not be an optimist,” said Kapil Khanna, CEO of Lamar Johnson Collaborative, who, along with Jonathan W. McCulloch, CEO of developer Belgravia Group, spoke at length about how designers and developers were pivoting to meet the demands of the current market.
“I’ve been told for twenty years by my mentors, the market is always right,”McCulloch said. “If you think you’re smarter than the market, you’re gonna get burned.”
During the panel discussion moderated by TRD Chicago Bureau Chief Sam Lounsberry, Khanna and McCulloch talked about the present state of financing (tight), the current direction of multifamily developments (small), and how their firms are diversifying and leveraging tech across all phases of design and development in order to nimbly meet the needs of a shifting market.
“In the current economy, there really is a sense of haves and have nots in terms of where work is going,” said Khanna, whose firm has benefited from the “robust pipeline” of data center projects while residential development has slowed. “If you’re in the architecture business or the design consulting business, you’re constantly thinking about your current year.”
McCulloch, who describes Belgravia’s luxury resi development strategy as building “Beamers not Bentleys,” told the audience how his firm’s expansion into Scottsdale, Arizona was a stroke of luck that has allowed it to continue building through the downtown Chicago doldrums. “When I look at why there is demand in Scottsdale, who is buying the condo from us, it’s generally the Boomer demographic,” he said. “And that buyer is not coming into the Downtown right now.”
Due to tight financing, the resi buildings going up in Chicago tend to be “50 units in the neighborhoods,” with the rare hybrid condo and rental tower like One Bennett Park standing out as the exception.
“It is a very hard task to finance the hybrid condo apartment building,” said McCulloch. “We have to achieve 30 percent or 40 percent pre-sales before we can get bank financing and break ground before our investors will fund the project.”
These market changes make every project that much more important, and both Khanna and McCulloch laid out how they’re using new technology to help meet client needs.
“We’re doing all of the Obama Center in a gaming engine,” explained Khanna, whose firm has leveraged Unreal to create interactive models that invite partners to participate throughout the design process. “It’s been used really well to explain to the president what it looks and feels like.”
“In our sales process, people can fly around a project,” said McCulloch. “We start to see things in the architecture that look a little different in 3D than it did in 2D.”
Khanna ended the panel with an impassioned call for the audience to go back into the office. “We, as people, were meant to exchange ideas face to face and be in a space together,” he said. And, as the panel ended and attendees hobnobbed over exquisite food and drink from BSH, it was hard to disagree.
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