July 20, 2006

Spire project changes hands Dublin developer replaces Carley
By Susan Diesenhouse and Blair Kamin



Move over, Sears Tower.

For those who thought that the country's new tallest building, a 2,000-foot-high twisting residential spire designed by Santiago Calatrava, would never materialize along the banks of the Chicago River, its new developer says it's on the way.

The big change announced Wednesday is that the much-heralded condominium-hotel project, which now has a price tag of $1.2 billion, will be built by a Dublin-based developer, Garrett Kelleher, executive chairman of Shelbourne Development Ltd. and the Shelbourne Group.

Stepping aside is the Chicago developer who initiated the 124-story project, Christopher T. Carley, chief executive of Chicago-based Fordham Co.

Shelbourne acquired the site for $64 million from Chicago-based LR Development Co., said Shelbourne's general counsel, Thomas J. Murphy.

Kelleher is providing all of the equity for the project, while the Anglo Irish Bank will provide the financing for site acquisition and construction. Murphy declined to state exactly how much of the cost is being assumed by each party.

Carley did not return a call seeking comment.

Kelleher must still negotiate to buy the striking tower design. "He loves it," said Murphy, his spokesman.

The Irish-born developer, who worked in the Chicago real estate market from 1986 to 1996, said in a statement, "I'm excited to have an opportunity to contribute to the Chicago skyline."

The tower at 400 N. Lake Shore Drive at the intersection of North Water Street, which was announced almost a year ago and would surpass the 1,450-foot Sears Tower, already has city planning and zoning approvals for a 150-room hotel and about 300 condos priced from about $600,000 to $5 million.

So far, "not a large number" of condos have been reserved by buyers, and the hotel operator must still be chosen, Murphy said.

Although thousands of new downtown condos are slated for delivery over the next few years, Kelleher thinks his project will succeed financially.

Donald Trump, who is building a 1,000-foot-plus tower in Chicago, thinks otherwise.

"It's a Grade C location and not financially feasible because the total condominium sellout couldn't be more than $900 million," said Trump, who added that Kelleher "may do a smaller building on that site unless he wants to throw out a few hundred million dollars."

Despite the paucity of condo sales, "the next step is to get the development team under contract, finalize the design plans and start construction," Murphy said.

Assembling the design/development team is of critical importance because it includes Calatrava, a world-renowned architect whose design has been much admired by architectural experts. The Spanish architect's Chicago associate is DeStefano + Partners Ltd.

The financial settlement between Fordham and its development team is still to be resolved.

"After today's closing, there will be negotiations with all the parties that have brought the project to where it now is," Murphy said.

So far the design is still in the early schematic phase. Construction, meanwhile, is scheduled to start next spring and be completed in 2010, Murphy said.

It is uncertain whether Kelleher will be able make good on his promise to start construction early next year.

Architect James DeStefano, who served as Calatrava's associate on the tower, said Kelleher could submit documents for a foundation permit this fall and might be able to start foundation work in early 2007.

But DeStefano added that only preliminary concept sketches have been done for the skyscraper. No working drawings, from which contractors actually build the design, have been completed, he said, and neither have design development drawings, which take the initial sketches beyond the concept stage.

"If there's a concerted effort, it would take six to eight months [to complete all the drawings]," DeStefano said, adding that he did not know if he would remain on the development team.

Architecture critics in Chicago and around the country have praised the thin, twisting shape of Calatrava's tower, which represents a marked departure from the boxy norm that has long reigned in Chicago.

Each floor of the stainless steel and glass tower would rotate slightly from the floor below it, allowing the skyscraper to make a full 360-degree turn from the ground to its summit. The result would be a sculptural icon that soars above nearby Navy Pier.

The design, which has been compared to a giant drill bit, represents a major change in the evolution of the skyscraper. For years, almost all were tall office buildings, though there were exceptions, such as Chicago's John Hancock Center, which mixes high-rise apartments, shops and offices.

Increasingly, however, skyscrapers are as much places to live as they are places to work. And Chicago, where the skyscraper was born, epitomizes that change.

If Calatrava's design moves forward as expected, the city will have three residential towers taller than 1,000 feet under construction, and all of them will be along the river, where uninterrupted views are a major lure to buyers.