NOTABLY ABSENT FROM THE SPATE OF projects being developed on former and current railroad property in Chicago has been the South Loop along the Chicago River, the site of some of the rail companies` largest holdings.
But that appears to be changing. Two major commercial developments have been announced:
– CSX Realty`s Franklin Point mixed-use development, located on former railyards on the northernmost eight-acre chunk of CSX`s 43 acres that stretch along the river (and leapfrog over River City) south to 16th Street.
– Walsh, Higgins & Co.`s as yet unnamed project just to the east of Franklin Point on approximately 30 acres stretching from Congress to Roosevelt Road, straddling rail lines still used by the Metra commuter system.
Some experts, however, wonder how long the projects, latecomers to the
”Super Loop” development scene and arriving at a time of a rapidly deteriorating real estate market, will take to really get on track.
”The city`s past is its potential,” said Louis Masotti, an urbanologist at Northwestern University`s Kellogg Graduate School of Management and a frequent real estate consultant to both government agencies and private developers. ”The fact that we had so many railroads and so many railroad stations surrounding the city, particularly on the South Side, provides us with this wonderful playing field for the 1990s-if the market is there.”
The South Loop is lagging some two decades behind other parts of downtown in turning railyards into developments. Things began to change in the mid-1980s with the still-struggling River City residential development along the east bank of the river between Taylor and Polk Streets. That project is built on abandoned railyards. Later, just east of the yards, came the successful Printers Row and Dearborn Park projects that extend south nearly to 16th Street.
Now come these proposals for major commercial projects.
CSX`s Franklin Point, to be located south of Harrison Street between Wells Street and the Chicago River, has received approval from city planners for 4.5 million square feet of mixed use.
Harris Bank has announced plans to purchase a 1.5-acre portion of Franklin Point from CSX to build a 1.2-million-square-foot service center, which observers see as a boost for the South Loop development concept.
Bill Cromwell, regional director of development for CSX, said his company has not decided on uses for its other nearby riverfront holdings, a six-acre parcel between Taylor Street and Roosevelt Road and a 29-acre parcel between Roosevelt and 16th Street.
”We`re approaching it from the north to south,” Cromwell said. ”In our grand scheme, as we go down the river, we see the densities getting smaller, which will give us a wide product mix.”
The Franklin Point site formerly housed B&O Railroad`s Grand Central Station, which was demolished in the late 1960s. B&O, which later became a part of the Chessie system, had acquired the land in the 1890s, Cromwell said. CSX is a transportation conglomerate formed by the merger in 1980 of the Chessie System and Seaboard Coast Line.
Unlike CSX, Jack Higgins, president of Walsh, Higgins & Co., said he may approach development from the south end with residential and retail uses complementing the Dearborn Park development to the east.
Higgins is faced with the thorny problem of dealing with the existing tracks, which are too wide to span at the north end of his property.
”Anything you do in that part of the property, you would have to do over it,” Higgins said. The company also will have to work around Metra`s LaSalle Street reconstruction project at the property`s north end. Metra has an easement for the rail lines and station.
The Walsh Higgins land formerly was part of joint holdings of the Chicago, Rock Island & Pacific Railroad and the Penn Central Railroad. Rock Island later restructured as Chicago Pacific Co., a diversified holding company. Chicago Pacific and Penn Central agreed to trade interests so that Penn Central became sole owner of land between Roosevelt Road and 18th Street and Chicago Pacific took control of the property from Roosevelt to Congress. Maytag Corp. bought Chicago Pacific in 1988 and sold the property to Walsh Higgins in late 1989.
Higgins said he has divided the property into three rough zones, with one zone between Congress and Polk Streets. Boundaries for the other two zones, between Polk and Roosevelt, are still fuzzy, Higgins said.
Higgins said the project will involve planning with CSX and U.S. Equities Realty, which owns the former Penn Central land south of the Walsh Higgins site.
Thomas Samuels, a senior vice president and partner at Walsh Higgins, said the tracks south of Polk Street narrow to much more manageable proportions. The tracks could be spanned or development built around them at that point, he said.
Both CSX and Walsh Higgins acknowledge they will have to overcome the psychological barrier of building south of Congress Parkway, though both believe the Harris facility will be a big boost.
”(Developers) will see the development and it will take down that psychological barrier,” CSX`s Cromwell said. ”But realistically . . . we expect it to take 10 to 15 years to build out Franklin Point.
”It`s all market-driven. It could go as quickly or slowly as the market permits. Originally, we envisioned a much longer buildout. (The Harris project) could easily accelerate the development of Franklin Point to 7 to 10 years.”
Higgins also is counting on Harris to help move things along.
”That will usually start the marketplace to accept a so-called barrier,” he said. ”Any development in this area is positive and helps to answer questions.”
”Franklin Point is going to be the first large-scale commercial development in the area south of the Loop, west of State Street,” said Dirk Lohan, a Chicago architect whose firm drew up the master development plan for CSX and is working on the building design for Harris Bank. ”It`s going to be a catalyst, hopefully a motor, to pull that area along.
”The Harris Bank operations center is the first project on the Franklin Point development. It will be sizable and it will bring people to it, and I think it will be an important catalyst.”
Lohan said the Harris project also should help River City, which has had trouble attracting tenants from the start, largely because of its isolated location.
”If you have that many people working in a building within one block of it, you would think some people would want to live there,” Lohan said. ”They don`t have to drive. They don`t have to park. They don`t have to use the buses.”
Still, Lohan said, the South Loop projects will have to overcome the negative perceptions of the area.
”River City was really a pioneering effort,” Lohan said. ”It wasn`t very successful because the area was perceived by people to be, shall we say, the backwater of the Loop. That`s changing now.
”One day, the new generation of people won`t see it that way. All this has to do with perception. But everything like this is gradual, and once the Harris project is done and built, I believe other development will occur in the area.”
Masotti agrees that Harris Bank will have a positive effect, but he noted that the Congress ”barrier” will remain a factor.
”Until the Printers Row project and then the Dearborn Park project came along, it was virtually a wall,” Masotti said. ”It was six to eight lanes of traffic and people didn`t see that as anything other than a boundary between the Loop and the South Side.
”It has been crossed psychologically by the Midwest Stock Exchange and, to a certain extent, One Financial Plaza, which has built up against it.
”So there is activity, but there`s still a resistance. It`s only perceived, but perception is reality for those who think that going south of Congress is somehow entering a new world.”
Masotti, who was a consultant for Chicago Pacific when it owned the Walsh Higgins site and later helped Harris Bank during its site selection process, said the properties have good potential for specialty office buildings.
”It provides, in the inner city, the opportunity to build signature office space,” Masotti said. ”That is, smaller buildings that company names could be on.
”They would literally be adjacent to mass transportation systems, highway as well as rail, and it would give a firm a downtown presence. It would allow the city to fill a niche and compete with the suburban office buildings of that type.”
Although Masotti is pessimistic on the market prospects for the next few years, he sees hope for South Loop commercial development.
”The critical mass seems to be in formation right now, so I think the notion of putting some retail down there and some office down there will create a very strong synergy,” he said. ”Once you cross the threshold where it is acceptable in the normal course of events to build south of Congress, I think that area can do very well, assuming the market remains at least marginally strong.”
