November 16, 2006

Sky's the Limit for Planned Spire Prices
by David Roeder

The developer of the proposed 124-story spire on the lakefront Wednesday disclosed the firms hired for the project as his Chicago spokesman declared the residential building will be marketed to the world's wealthiest buyers. Chicago attorney Thomas Murphy, spokesman for developer Garrett Kelleher, said the building should command condominium prices far above the Chicago market's upper limits. Kelleher is executive chairman of Shelbourne Development Ltd. in Dublin.

Last July, he took over rights to the project's 2.2-acre site at 400 N. Lake Shore Drive for $64 million. The architect would be renowned Spaniard Santiago Calatrava.

Twisting and skinny, the renamed Chicago Spire is thought by many experts to be prohibitively expensive to build. Murphy said the building must command condominium prices far above the market's upper limits.

Official Site He declined to provide a range, but did not dispute an interviewer's suggestion that the building would aim for sales at $2,000 a square foot. Current high prices in Chicago are just over $1,000 a square foot for residences to about $1,200 a square foot for hotel rooms sold as condos. "We are looking at raising the bar quite a bit," Murphy said, adding that construction should start before June 2007.

The building would top out at 2,000 feet, making it the tallest in Chicago and, for now, the United States.

A Chicago developer experienced with high-rise construction voiced doubt over the enterprise, saying Kelleher needs to achieve prices that are "off the planet." Told of that comment, Murphy replied, "They're not off the planet. They may be off the continent."

Murphy said Chicago prices look astonishingly cheap to European buyers. Kelleher, who lived in Chicago for about 10 years, will market the city as a good place for jet-setters to invest and have a part-time home.

The strategy was underscored by his selection of Savills PLC as the project's marketing firm. It's a London company with 140 offices worldwide. Murphy said it has a great track record overseas and might partner with a Chicago agency to shop for local sales.

Calatrava has agreed to continue as the lead architect after starting work on the building for a previous developer. The Chicago firm Perkins & Will will direct the architecture locally.

Murphy backed away from previous estimates that the building will cost about $1.2 billion. Kelleher is committed to it regardless of the final amount and has selected Toronto-based Altus Helyar as cost consultants, Murphy said.

"A building like this can get the best price points in the market,'' said Ron DeVries, vice president at Appraisal Research Counselors Ltd., a Chicago real estate consultancy. "But it's doubtful they can get $2,000 a square foot."

New York, the most expensive condo market in the United States, has top prices in elite buildif $2,000 to $2,500 a square foot. DeVries said there's a long pattern of New York prices being double those of Chicago.

Other firms that have signed for the spire are structural engineers Thornton-Tomasetti Group Inc., project consultants Buro Happold, engineers Cosentini Associates, geotechnical engineers STS Consultants Ltd. and civil engineers Knight E/A Inc.

The Calatrava design calls for each floor to be rotated about two degrees from the one below it, creating the twisting effect. It also produces challenges in construction and cost.

Murphy said the challenges are manageable and that the units in Calatrava's scheme have flexible layouts, so they can be enlarged or made smaller as the market dictates. Current zoning allows the building to have 300 condos and another 150 hotel rooms.

There are no plans to use the spire for broadcast antennas, Murphy said.