Oct. 02, 2009
No Games, more pain
(Crain’s) — So much for an Olympics bounce.
Chicago contractors, architects, real estate developers, hoteliers and commercial property owners who hoped the 2016 Olympics would hasten the recovery of their moribund businesses were left cold Friday by the city’s snub from the International Olympic Committee.
The Olympics loss also comes as a blow to some South Side neighborhoods that anticipated the Games would spur redevelopment.
The fate of the former Michael Reese hospital campus, which the city bought last year in anticipation of building the Olympic Village to house the athletes, is now an unknown. City officials have previously said they’ll seek to develop housing at the 37-acre site just south of McCormick Place regardless. But the property may now be worth less than the $86 million the city paid. And private developers may be uninterested — or unable — to proceed on big plans there for years.
Hosting the Olympics also could have bolstered the city’s standing among foreign real estate investors. Chicago hasn’t been listed among the top five U.S. cities for property investment in the Assn. of Foreign Investors in Real Estate annual survey since 2002. Foreign investment here this year has totaled just $40 million, down 90% from last year, according to Real Capital Analytics.
A recovery in real estate development along with leasing activity and property valuations was widely expected to be slow, both in Chicago and nationwide. That’s why the prospect of hosting an Olympics seven years from now, which would require the construction of stadiums, multi-family housing and new infrastructure, was highly anticipated by real estate firms that have been shedding employees and scraping to stay afloat.
Now, a potential bright light at the end of the proverbial tunnel has been extinguished.
“It will take longer, and you won’t have the same rally-around-the-flag opportunity that the Olympics provide,” says Forrest Bailey, president and CEO of Chicago-based real estate firm Draper & Kramer Inc.
Draper is seeking to redevelop the 1,870-unit Lake Meadows apartment complex, located on a 70-acre span between 31st and 35th streets on Martin Luther King Drive, into a mixed-use project with retail and some 7,800 residential units.
Draper’s project, and others on the South Side, would have been in competition with the Olympic Village once the development was converted into for-sale and rental housing.
“You don’t want to overburden the market,” Mr. Bailey says.
But, clearly, losing the Olympics marks a big opportunity lost for many neighborhoods.
While greenbelts like Lincoln Park and the West Side’s Douglas Park would’ve hosted athletic facilities, the games would have been anchored on the South Side.
Plans were to build an aquatic center and 80,000-seat stadium in Washington Park, while the roughly $1-billion Olympic Village would’ve replaced Reese at 30th Street and Cottage Grove Avenue.
Boarded-up buildings far outnumber open storefronts on the streets lining Washington Park, which extends from 51st to 60th streets along Martin Luther King Drive. The games were expected to draw thousands of workers and tourists to the neighborhood, an influx that would, in turn, attract retail and residential development.
Nearby neighborhoods like Bronzeville and Woodlawn also would have seen more investment in retail and infrastructure — developments that now may never happen.
Despite the lost opportunities and sting of Chicago’s fourth-place finish, the prospects for the city’s future aren’t diminished, says Roger Hill, CEO of Gettys Group, a Chicago-based hotel design and consulting firm.
“Chicago is a city that’s very resilient, and we’ll do great things without it,” he says.
