Erica Christoffer is a multimedia journalist and contributing editor with REALTOR® Magazine. Connect with her via email: firstname.lastname@example.org.
Finding Success in Redevelopment
A Chicago-based broker who specializes in redevelopment of rental properties offers three tips for successfully launching a major multimillion-dollar project.
January 2, 2014
When Jeff Michael’s father Danny walked into the for-sale North Shore Retirement Hotel last year in the Chicago suburb of Evanston, Ill., memories of celebrating with his wife on their wedding day flooded into his mind. Some forty years prior, the couple had been married in the ballroom, back when the building was a hotel.
As the father-and-son real estate business partners toured the property, Michael said they couldn’t pass up an opportunity to purchase a building that meant so much to their family.
Since the purchase last year, the Michael family company — Horizon Realty Group — renamed the property The North Shore Residence, and quickly started planning for a $5 million renovation to the existing building, along with a $12 million to $14 million eight-story addition being planned at the north end of the property.
The concept is to create a luxury rental community for active seniors. Plans include 200 apartments featuring modern amenities such as hardwood floors, granite countertops, and maple cabinetry; an elegant community dining room with order-off-the-menu, country club-style dining; other dining options, such as a bistro and lounge; and a state-of-the-art theater, fitness center, spa, and more.
It took time for a project of this scale to receive all the appropriate approvals from the city. Horizon Realty worked with city planners and government officials to make sure the proposal was accepted. But Jeff and his father are experienced in redevelopment rental projects in the Chicago area.
Jeff shares his best practices for how brokers can best work with local officials to get a project approved:
- Assemble an expert team. It’s imperative, Michael says, that a developer work with a team of local architects, engineers, and contractors who know how the municipality works, are familiar with the decision makers, and know the nuances of the city code.
- Meet with city planners in advance. Before the public process starts, Jeff recommends meeting with city planners and giving them ample opportunity to ask questions of the project so there are no surprises during the public phase of the project.
- Weigh the pros and cons of renovation vs. new development. If you’re a brokerage that’s traditionally led new development projects, taking on a multiuse renovation comes with very different challenges. The biggest issue is to figure out how you’ll work with existing tenants. It takes special planning and logistical experts to makes sure operations continue during the construction phase. Plan to hire help accordingly, Michael says.
Phase one of the North Shore Residence renovation is currently underway, and Michael expects to break ground on the 8-story expansion this summer.