Children's Memorial site attracts blue-chip bidders

(Crain's) — Nine development groups, including Chicago-based firms John Buck Co., Golub & Co., and McCaffery Interests Inc., are vying to redevelop the Children's Memorial Hospital site in Lincoln Park, a project that could bring hundreds of new homes and a slew of stores to the well-heeled North Side neighborhood.

Related Midwest, Fifield Cos. and Magellan Development Group LLC also have submitted proposals for the hospital campus, according to a list Children's Memorial provided Crain's on Tuesday. The six-acre property is one of the most desirable in the city because of its size and its location, at the intersection of Halsted Street and Lincoln and Fullerton avenues.

"It's the last great opportunity to work on in Lincoln Park,” says local developer David W. “Buzz” Ruttenberg, who also submitted a proposal. “It's a game-changer for that intersection” because the hospital has been there for so long, dating back to the beginning of the 20th century.

Proposals were due Monday, the beginning of a long selection process that will draw tight scrutiny from Lincoln Park residents, not to mention a new mayor and alderman who will take office next year.

Concerned about traffic congestion, a group of neighborhood residents led a campaign this year to block a residential-and-retail project on the site of the shuttered Lincoln Park Hospital a couple blocks away, eventually persuading outgoing Lincoln Park Alderman Vi Daley (43rd) to take their side.

Though the Plan Commission approved that project last week, the controversy offers a lesson for developers pursuing the Children's Memorial property, which could be an even bigger political minefield.

“Step one is saying: ‘Hey, we're flexible. What would the neighborhood want?'” says David Carlins, president of Chicago-based Magellan Development, which has teamed up with Houston-based Hines Interests L.P. on its bid for the property.

Mindful of the risks, Mr. Ruttenberg, founder of Chicago-based Belgravia Group Ltd., has already created a blog to solicit input from Lincoln Park denizens.

Rounding out the list of groups submitting bids for the site is Toll Bros., a Horsham, Pa.-based homebuilder, and a joint venture of local developers Klutznick Enterprises LLC and Mesa Development LLC. Chicago-based Fifield has teamed up on its proposal with Deerfield-based retail developer CRM Properties Group Ltd.

Most of the teams have proposed a combination of residential and retail on the Children's Memorial site, which the hospital will vacate when it moves downtown in 2012, says Martin Stern, executive vice-president and managing director at Chicago-based U.S. Equities Realty, the hospital's adviser. Mr. Stern and the developers decline to disclose details about the proposals.

The hospital wants to have a short list of proposals by early March and a preliminary agreement with a developer by late spring. Children's Memorial aims to seek zoning approvals for a project by next fall, Mr. Stern says.

The property encompasses a triangular parcel bounded by Lincoln and Fullerton avenues and Orchard Street, most of the properties on the same block on the west side of Lincoln, and a parcel at the northwest corner of Fullerton and Orchard.

Though some neighbors may oppose a project there based on concerns about traffic and density, it's already a very busy place now, says McCaffery Partner Edmund Woodbury. The hospital employs about 4,000 people and is open day and night.

“Any use that goes on that site is going to be a quieter use ultimately,” he says.

(Note: The number of people Children's Memorial employs has been corrected.)