When big office towers rise in a neighborhood, apartment developers aren’t far behind. All those office workers need a place to live, after all.

That’s the thinking behind a 33-story apartment tower Chicago developer Habitat wants to build in the Fulton River District. Habitat plans the 343-unit project at 344 N. Canal St., a couple blocks north of two newer office buildings and across the North Branch of the Chicago River from a planned 60-story high-rise where Salesforce will employ about 1,000 people.

Among all the factors apartment developers consider when sizing up a potential project, job growth is arguably the most important—and the closer the jobs, the better. Being able to provide short commutes to office workers can give a developer a big competitive edge.

That’s what Habitat is going for. Its building wouldn’t be far from the Fulton Market District, which has become a destination for companies like Google, McDonald’s and Mondelez. The site is also down the street from two office towers that opened in the past few years: River Point, at 444 W. Lake St., and 150 N. Riverside Plaza. Salesforce Tower Chicago, on Wolf Point, is expected to open in 2023.

“It’s the perfect point between the West Loop and the Loop,” Habitat President Matt Fiascone said of his proposed building.

Habitat has signed a contract to buy the development site, which is owned by the family behind Cassidy Tire & Service, he said. Cassidy occupies a low-rise brick building on the property that would be torn down to make way for Habitat’s tower, which is being designed by Solomon Cordwell Buenz and would cost $140 million to $150 million.

The site is just south of a parking lot owned by Vornado Realty Trust, the New York-based owner of the Merchandise Mart across the river. Vornado has explored developing a residential project on the site at 527 W. Kinzie St., but has yet to unveil any plans publicly.

Current zoning would allow for a 365-foot-tall building with 228 units there, according to a 2015 letter from a city official to Vornado’s zoning attorney. A Vornado executive did not return an email, and efforts to reach the zoning attorney, Jack George, now of law firm Akerman, were unsuccessful.

Because current zoning for 344 N. Canal does not allow residential, Habitat is seeking a zoning change from the city. The next step in that process is a community meeting hosted by downtown Ald. Brendan Reilly, 42nd, who has the power to block development proposals under the city’s longstanding custom of aldermanic privilege. Fiascone said a public meeting has not yet been scheduled.

The proposed tower would be hemmed by tall buildings to the east and south, limiting its views of the Chicago River. On the plus side, the building is designed to minimize its impact on traffic on Canal Street, a busy thoroughfare, Fiascone said. Delivery trucks would access the building on Clinton Street to the west, and all cars would exit the property on Clinton as well, he said.

Habitat knows the neighborhood well, having developed multiple residential projects nearby, including Hubbard Place, Kingsbury Plaza and Kinzie Park. The company, a longtime Chicago residential landlord and developer, manages more than 22,000 apartments in five states, including two buildings in the South Loop that it acquired in 2017.

The developer is betting the good times in the apartment market will roll on. Strong downtown job growth has fueled the current boom, allowing landlords to hike rents and developers to build more than 20,000 apartments in downtown Chicago over the past eight years.

Demand for apartments has kept up with supply so far, and development appears to be tapering off amid rising construction costs and worries about rising property taxes. What happens to demand by the time Habitat completes its project—two years from now, at the earliest—will depend on the economy.

“Nobody knows what the economy will look like two years from now, but we have pretty good certainty that the new supply will be less,” Fiascone said.

Source: Crain's Chicago Business

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