In Time, Investors Will Follow 'Changing Course' of Spire

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BREAKING NEWS
September 26, 2007
Big Projects May be Pulled Back to Earth
High-end residential developments in Chicago and around the country feel the squeeze as lenders turn cautious in global credit crunch

The developer of the proposed Chicago Spire will host a preview and party for the global press Wednesday, but the celebratory mood could be dampened by the worldwide credit crunch and a postponement of the tower's preconstruction sales.

"If I didn't think I could deliver, I'd have a good excuse to pull out, but I'm not doing that," said Garrett Kelleher, who two weeks ago delayed the launch of sales from this week to Jan. 13, citing the complexity of the documents that must be filed with federal regulators. "I'm building an iconic building, using our own resources and doing exactly what I'd said I'd do."

Certainly, people with grand visions often can overcome adversity, but the preview of the $1.5 billion, 150-story building, slated to be the tallest in the U.S. and the highest residential tower in the world, comes at a tough time for high-end residential developments in Chicago and around the country.

U.S. residential developers must grapple with turmoil in their industry and in financial markets. In many places across the country, property sales and prices are falling, homeowner foreclosures and lenders' losses are rising, and deals are falling out of contract.

In response, developers are changing course. Some are delaying the start of sales or construction. Others are selling land, relinquishing development options or investing more equity into projects to meet increasingly stringent financing requirements.

Meanwhile, real estate buyers and investors in Chicago, around the nation and in Europe, where Kelleher plans to sell more than half the Spire units, wonder what property is really worth and if it will appreciate.

"The whole world is spooked," he said. "They're aware of the malaise potentially hanging over the U.S. investment market, but Chicago is steadier than Miami and a huge market." Equally as important for the financial future of the project, he said, is that "the euro has a lot of buying power."

Spire developer Kelleher isn't worried about selling enough units at $750,000 to $10 million to get financing when the time comes.

"There's pent-up demand all over the world," he said.
Chicago Tribune

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In Time, Investors Will Follow 'Changing Course' of Spire

Category: ARCHITECTURE

By: Pete Kendall, September 28, 2007

“THE RACE FOR THE TALLEST SKYSCRAPER
As long as city planners in Asia and the Middle East have the financial wherewithal and vision to keep pushing the limits of construction engineering, the global "edifice complex" seems sure to continue.”
--BusinessWeek, May 3, 2007
History has its warning label for these episodes. It says their completion is invariably marked by a loss of financial wherewithal and ultimately nausea and headaches.
Sociotimes, May 4, 2007

upside down spire
We showed the Chicago Spire in the Sociotimes entry of May 4. Here’s another version turned on its head to symbolize the new direction for the skyscraper trend. It’s been a startling shift from up to down. But skyscraper proponents are clinging to the old trend. We can almost hear them snapping, “This is not Miami!” or “The Europeans will buy it. They’ve got euros!” As subscribers are well aware, however, a dependence on foreign money is not a positive sign. With respect to stocks, The Elliott Wave Financial Forecast has shown how foreigners always seem to find their way into mass positions in distant markets when long uptrends are ending.

Back in January when it was announced that the Chicago Spire was going to surpass the Sears Tower to become the tallest building in North America, EWFF, citing some 80 years of history, called the spire “a 160-story representation of the peak in the U.S. housing and equity markets.” At the time, investors figured 160 stories of residential real estate on top of an already skyrocketing supply was just what the market needed. And even though, “the whole world is spooked,” they’re not backing down now. In fact, if the banks were willing there’d be no stopping many. Where they can still get the financing, some are still laying down big bucks on real estate deals that appear to lie right in the path of any downward spike in prices. The Carlyle Group just bought a building in the meat packing district of Manhattan for $70 million, almost four times what the seller paid last year. This fearlessness is a towering sign that the fall, which invariably follows every major effort to climb above the skyline, has a long, long way to go.

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