'You Need To Be Tracking Those Yesterday': Planning More Critical Than Ever For New Chicago Projects
Time flies when you’re having fun — and it flies even faster when you’re not.
Up against projections that just 3 in 10 announced Chicago projects will go forward in the next two years, developers need to get their ducks in a row and keep them waddling along to succeed amid a tough mix of rising interest rates, declining access to capital, slow permitting and a new city government still feeling its way.
That starts with figuring out where the money is going to come from. But it extends through planning and permitting, and keeping even closer tabs than usual on timelines, panelists said at Bisnow’s Chicago Major Projects Update event, held last month at the Hyatt Centric Chicago Magnificent Mile.
“The development pipeline that's currently in the works, the announced projects, I've heard that probably only 30% of [them] will go forward in the next two years and that's because of several factors that lead to the headwinds, primarily interest rates,” Structured Development founding principal J. Michael Drew said at the event. “Our cost of funds are three times today what they were a year or two, two and a half years ago.”
Lenders are still lending, said Regina Stilp, founding principal of Farpoint Development, which is leading the $4B Bronzeville Lakefront megadevelopment and building a new Chicago Transit Authority control and training center in Garfield Park. But they are being more discriminating and demanding more equity, especially when it comes to Chicago, where borrowers need to tell a story and sell “basis, basis, basis” and “location, location, location.”
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