Manhattanized : Construction Boom Lifts Windy City

By LARRY GREEN

May 21, 1986 12 AM PT

Times Staff Writer

CHICAGO — Bloomingdale’s is going up on Michigan Avenue. Traffic is jamming up in the central business district. A Radio City Music Hall-like theater is opening in the Loop. A Rockefeller Center-type office complex is shaping up on architects’ drawing boards. New hotels and apartments are growing like weeds in the city’s central core.

Chicago’s downtown is becoming Manhattanized.

In its metamorphosis, the Windy City is shedding its rusty coating as an outmoded industrial and manufacturing center. Its rapidly expanding downtown core is emerging in post-industrial America as a financial, legal, communications and residential center. Office skyscrapers are its new factories. Downtown high-rise residences are its new neighborhoods.

“An explosion of construction . . . is changing the face and function of downtown,” Mary K. Ludgin and Louis H. Masotti say in a study of Chicago’s central city renaissance.

Economic Bright Spot

Downtown, in fact, is the one bright patch of economic landscape in this city suffering from a decade of vanishing industry and jobs.

“We are rebuilding the city on contemporary terms to fit the needs of the 1980s and 1990s,” Chicago developer Richard A. Stein said.

An $11-billion building boom is powering this change, the biggest physical and functional transformation of the central city since it was rebuilt from the ground up following the destructive 1871 Great Chicago Fire. A third of all the downtown office space built in the last 115 years has gone up in just the past seven.

The activity is lively. Giant cranes, balanced on narrow steel pedestals, turn day after day, redesigning the skyline, fitting new post-modern towers of mirrored glass and polished metals amid smaller, decades-old buildings of marble and limestone.

Creating Trendy District

Seemingly overnight, apartment and office buildings rise on vacant railroad land. Skid Row is replaced with high-rise residences for young professionals. A trendy neighborhood of art galleries, jazz clubs and loft apartments appears where forbidding, deserted blocks of drab warehouses scared visitors away. This is SuHu, Chicago’s version of New York’s SoHo district.

Since 1979, more than 13,000 downtown apartments, town houses, and residential lofts have been completed--enough for a small suburb. Another 3,000 are under construction and 11,500 more on the drawing boards.

This housing, in turn, is creating a new urban constituency for Chicago: downtown residents who work, shop, dine and seek entertainment near their homes.

“We are one of the major American cities that has secured the future of its downtown by building housing downtown,” Elizabeth Hollender, Chicago’s planning commissioner, said. “We will never be like Detroit, closing down at night. We are developing an 18-hour downtown.”

The boom is giving new life to the central city’s once-declining retailing and entertainment enterprises.

“The growth of downtown is oxygen for us,” said Paul Costello, spokesman for Marshall Field & Co., Chicago’s largest retailer. “Without those developments, we can’t go forward. They are the paramedics for Loop retailing.”

All this growth is occurring over roughly 11 square miles, about half the size of Manhattan Island, but an area 20 times larger than Chicago’s original and traditional downtown, a 35-square-block area encircled by elevated transit tracks and better known as the Loop.

Has Manhattan-Like Features

The new “downtown” reaches west from the heart of the Loop almost two miles to Ashland Avenue, south nearly three miles to Cermak Road and the Chinese district of Chicago and north more than a mile to North Avenue. Lake Michigan’s irregularly shaped shoreline forms the eastern edge.

In addition to SuHu, this downtown includes, on a smaller scale, other attractions associated with Manhattan. There is a financial district, a Little Italy, Chinatown and Greektown, museums and libraries, a major convention center, a Central Park-like park, waterfront both along the lake and the banks of the Chicago River and a 5th-Avenue-like shopping strip on North Michigan Avenue.

And, like New York, Chicago’s central city is also an island of sorts. Just as Manhattan’s skyscrapers are ringed by water, Chicago’s new towers are hemmed in on one side by the lake--and on the three others by public housing projects.

“The city core is beginning to butt up against what was the outer rim, where it was safe to put public housing because that was undesirable land in the 1950s,” Masotti observed.

Projects Form Barrier

“By 1990 Chicago’s political establishment will face its single most important planning decision: the disposition of the public housing projects which rim the central business district,” said Ed Marciniak, an urban studies professor at Chicago’s Loyola University.

“These family-occupied projects, mostly high rises, stymie the urban revitalization now proceeding north, south and west from the central business district,” says Marciniak.

Downtown expansion, which began as a trickle of activity in the 1950s and swelled into a major boom in the last seven years is likely to continue, although at a slower pace, for the rest of the century.

Planners, economists and developers cite a range of factors that are fueling Chicago’s downtown expansion.

One is the city’s central location and its role as a national transportation hub and as a major convention site. O’Hare International Airport handles more aircraft traffic annually than any other in the nation. It is Chicago’s post-industrial answer to the cluster of six downtown train stations that were the symbol of the city as America’s railroad hub. The airport is one reason Chicago plays host to about half of the country’s 50 largest trade shows and to thousands of smaller conventions each year.

New Hotels Opening

Three new hotels are under construction in downtown Chicago and a fourth, a small luxury hotel, is about to open in a rehabilitated office building. At least two more are in the planning stages.

A second factor in the city’s boom has been the growth of financial markets in the last 10 years. “Chicago is the capital of futures trading for the world,” said Bill Murschel, spokesman for the Chicago Board of Trade.

Home to the world’s two largest futures exchanges, the Board of Trade and the Chicago Mercantile Exchange, the city accounts for 80% of the nation’s futures transactions. In the last 10 years, trading volume at the Board of Trade alone increased more than four-fold. The Chicago Board Options Exchange, founded only 13 years ago, is now the world’s largest options market. Last year the Midwest Stock Exchange did three times the dollar volume of New York’s American Stock Exchange.

All four exchanges have built giant new trading floors since 1979, spawning new office towers nearby to house traders and support services.

Transit Stations Form Hub

The building boom is also fueled by easy access to the downtown area. Expressways, subways and commuter trains all converge on the central city. One of the hottest real estate development areas now is around the commuter train stations, a construction trend imported from New York. The same developer who was responsible for putting the Pan Am building on top of New York’s Grand Central Station put together the deal that allowed several office buildings to go up over a railroad right of way.

Sears built the world’s tallest office building just two blocks from the commuter stations. And now a developer is planning another complex with as many square feet of office space as Sears Tower next to the skyscraper. A new tower is going up over the Northwestern Railroad’s downtown station and another is planned atop Union Station. They are the city’s last two remaining train depots.

Builders have been encouraged by liberal zoning laws, quick approval of permits and the availability of money from investors. “You can get things done quickly in Chicago,” developer Belcaster said. “It takes one year to clear permits and start construction compared to two or three years in New York and four to six years in San Francisco.”

“Developers build because we have money (from lenders),” says developer Stein. “We don’t base it on supply and demand.” Much of the construction money has come from insurance companies and pension funds.

Seeking New Experience

Still other motives for the downtown growth are changing lifestyles and a changing work force. Developers and urban planners say that both the parents of post-World War II babies and the now-adult baby boomers themselves are returning to the city to live. The parents are returning because they no longer need quality public schools, something major Midwestern cities have been unable to provide for a quarter century. Their adult children are moving to the city because it is a new living experience, they are likely to remain single longer, childless longer and be part of the new white-collar, high-rise work force.

“Professionally, economically and socially, big cities are where the action is,” Northwestern University’s Masotti said. “If they (urban residents) want flora and fauna, they’ll go to Club Med twice a year.”

The expanding downtown, which represents only about 4% of Chicago’s total area, is one of the few places in the city where there is construction of any kind. In the last 15 years Chicago has lost 25% of its factories, leaving it with about 6,000 today. That has driven jobs from the city, eroded its tax base and contributed to the widespread deterioration of neighborhoods.

“During the last 10 years a lot of city money has fueled the Loop building boom,” says Wim Wiewel , director of the University of Illinois at Chicago’s Center for Urban and Economic Development. “Most infrastructure spending went downtown, where the service industries are, and not to neighborhoods, where manufacturing is.”

Another view was voiced in a recent Chicago Tribune editorial: “Anyone who thinks . . . new downtown investment cheats the neighborhoods doesn’t understand city finances. The downtown boom subsidizes the rest of the city. Without it, homeowners’ taxes would soar or neighborhood services would collapse.”

Expansion Has Casualties

The expansion has not been without its victims. Edward Lawrence, a real estate analyst and founder of Friends of Downtown looks down on new towers rising in the old Loop from his new high-rise office. “Buildings are being torn down,” he said, “rents are rising . . . business that serve downtown businesses are being driven out.”

So too are the poor. Four towering apartments described by Mary Ludgin as “yuppie housing” have gone up where Skid Row transient hotels once provided housing for disabled, marginally employed and retired persons. One of the downtown’s largest missions is under mounting pressure to move.

“We shouldn’t be forcing out people just because new people aren’t satisfied,” Lawrence said.

“You need a healthy downtown if you want a healthy city,” economic development analyst Ludgin retorted.

Signs of Health

There are many signs that Chicago’s downtown is healthy today. For example:

-- State Street merchants, in the heart of the traditional Loop, have seen their sales increase to $850 million in each of the last two years, up by $200 million annually from 1980, when there were three more department stores there.

-- The Levy Organization, which develops new buildings and is the largest restaurant operator in the central city, reported that its almost 20 restaurants grossed about $50 million last year. It opened its first restaurant in the Loop in 1981, at a time when food industry veterans were leaving the area. “Everybody asked us if we were crazy,” said Mark Levy. “Well it was a success from day one.”

-- A group of developers is spending more than $4 million to restore the Chicago Theatre, a 1921 movie palace, converting it into a 3,800-seat performing arts center that will open in September. The theater had once been marked for demolition because it was thought that downtown was dying as an entertainment center.

-- The city’s 100-year-old Chinese community is spending $70 million for a 30-acre expansion of its business district, which will meet downtown development now moving south toward it.

-- Up to $3 billion is being spent to develop 40 acres of land into a Midwestern version of Rockefeller Center. The first tower, which will house NBC’s Midwest offices, will begin to rise this summer. The entire project will eventually contain office space equal to three Pentagon buildings and will provide jobs for 46,000, and housing for about 10,000 residents.

-- Bloomingdale’s will be the anchor of a massive new development on Michigan Avenue across from Chicago’s landmark Water Tower and the 100-story John Hancock Center. “We are building in the image of Bloomingdale’s 59th Street store (in Manhattan),” said the store’s chairman, Marvin S. Traub. The new 66-story building will include six floors of shopping, a Four Seasons hotel and 125 luxury condominiums in a $450 million project.

-- On 20 acres of railroad land, developer Daniel N. Epstein is creating River City, a complex of luxury apartments, restaurants and shops. Like other developers at the forefront of Chicago’s boom, Epstein saw an opportunity where there was only rust.

But if the Windy City is becoming Manhattan-like, those involved in the transformation are certain it will never become fully Manhattanized.

“That means no sunlight, big towers, a LaSalle Street (Chicago’s Wall Street) without character . . . and a lot of pretense,” developer Lawrence Levy said.

“To say Manhattanization makes people think of intense density, garbage on the sidewalks and substandard buildings because of rent control,” Stein said. “Contrasted to New York, Chicago has an urban environment that is livable.”

“And,” added Levy, “it has no New Yorkers.”

Researcher Wendy Leopold assisted in the preparation of this article.