South Works plan boosted
SouthWorks plan boosted
Former steel mill would be new neighborhood on city's Southeast Side
A plan is moving forward to re-energize the city's Southeast Side by transforming a former lakefront steel mill from an industrial scar into a neighborhood.
Two years after agreeing to buy 275 acres of the South Works site, a group led by Chicago-based McCaffery Interests Inc. instead has formed a development joint venture with the land owner, U.S. Steel Corp. It would be the biggest real estate development in the city in many years, with as many as 7,000 housing units, 600,000 square feet of retail, 120 acres of parks and a marina.
If the development team can pull it off, the project would provide a much-needed boost to South Chicago, a working-class neighborhood that has been cut off from Lake Michigan for more than a century.
"This kind of property is just not to be had anywhere else in Chicago because it has this great lake resource," says Daniel McCaffery, president of McCaffery Interests.
Mr. McCaffery and his partners still face challenges, from financing to figuring out how to build on land covered in slag, a rock-like byproduct of the steel-making process. Compounding the difficulty are concrete foundations of buildings that once stood on the site. Some are several feet thick, making the task of building sewers, water mains and other infrastructure complicated and expensive.
ON THE LAKEFRONT
In July 2004 the developer initially agreed to pay $70 million for the property, which lies along the lakefront between 79th and 87th streets. But the uncertainty surrounding the physical challenges proved to be a major sticking point in negotiations with U.S. Steel. So, earlier this month the two sides agreed to become partners instead, with U.S. Steel contributing the land.
Related Industry News Neil Bosanko, executive director of the South Chicago Chamber of Commerce, says the South Works development will be "a boon" to the Southeast Side but worries that it could encourage gentrification. "We really want to make sure this is balanced development, that we don't become a yuppie community," he says.
U.S. Steel once employed 20,000 at South Works, the factory that made the steel used in the John Hancock Center and Sears Tower. The decline of the domestic steel industry in the 1980s led the Pittsburgh-based company to close the mill in 1992.
U.S. Steel agreed in 1999 to sell 118 acres on the southern part of the property to Solo Cup Co., which planned to build a $71-million factory on the site. Solo scuttled that plan last year and is now taking bids from developers for the site. Mr. McCaffery is interested.
South Works would be the biggest development for Mr. McCaffery, who specializes in retail and residential development. His projects include Hotel Burnham in the Loop, Nike Town on North Michigan Avenue and a $650-million mixed-use development in Myrtle Beach, S.C.
Mr. McCaffery's South Works partners are residential developer Westrum Development Co. and private-equity firm Lubert-Adler Real Estate Funds, both of Philadelphia. The group has spent $5 million so far on the project, which could take 15 years to develop. It plans to develop the site in phases, selling some pieces to other developers.
"Nothing's in stone," Mr. McCaffery says. "It's about as conceptual as it can get."
The city has to sign off on the plan. The project would be eligible for tax-increment financing, though a spokeswoman for the Department of Planning and Development says it's too early to say how much the city would provide.
Article taken from: Crain's Chicago Business
posted by Calumetman @ 12:29 PM
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