Garrett Kelleher, the Irish developer trying to restore Chicago's status as home to the tallest building in the US, has one last chance to keep his dream alive.
The planned lakefront skyscraper is nothing more than a hole in the ground six years after the financial crisis derailed Kelleher's ambitions.
To salvage the project, he must line up money to get out of bankruptcy, then obtain financing for the 610-metre, Santiago Calatrava-designed Chicago Spire condominium tower, which would surpass New York's 1 World Trade Center by 68 metres.
"I never understood how that project was going to work, frankly," said Alan Lev, chief executive officer of Belgravia Group, a Chicago-based housing developer uninvolved in the project. "It's a real eyesore sitting in the ground, so I hope somebody does something with it."
The Spire site at the mouth of the Chicago River is a reminder of the lingering effects of the housing bust. It's keeping one of the best parcels of land in the nation's third- most-populous city empty, even as cranes and scaffolding rise in the rest of downtown Chicago for apartment, hotel and office projects.
Kelleher's Shelbourne North Water Street LP broke ground on the tower in 2007 and was forced into Chapter 11 bankruptcy protection in October.
A deal was completed last month under which Atlas Apartment Holdings, a Chicago-based apartment owner and developer, will provide financing to pay off property debtholder Related Cos.
If Atlas and Kelleher are unable to pay Related, founded by billionaire Stephen Ross, the land will go to the New York-based developer.
Atlas and Kelleher have two options and an October 31 deadline to satisfy Related's claims, according to a bankruptcy court filing. They can give Related $109 million, or they can pay $22 million and get a five-month extension. With the extension, they will have to come up with an additional $92 million by the end of March, according to the filing.
Even if they're able to repay creditors, the developers will still need to get financing for the 150-story tower's construction.
The Spire site. Photo / Wikipedia-Daniel Schwen
The Spire's completion would have significant meaning for Chicago, said Antony Wood, executive director of the Council on Tall Buildings and Urban Habitat, which is based in the city.
"It would be a big deal for Chicago both in terms of its height and its title, and also its prominence on that site right on the lake and the difference of its architecture," Wood said.
Chicago has a long history as a tower capital. The Home Insurance Building, constructed from 1884 to 1885, was the world's first skyscraper, according to the Guinness Book of World Records. The 10-story building, at the corner of Adams and LaSalle streets, was torn down in 1931.
Sears Tower, now known as Willis Tower, was the tallest US building from 1973 until November. The Council on Tall Buildings and Urban Habitat determined that month that 1 World Trade Center, which is approaching completion, had surpassed Willis Tower because of its 124-metre spire.
"The skyscraper was born in this city and people still associate a huge amount of pride with not only the buildings that are here, but Chicago being at the forefront of pushing what the skyscraper is," Wood said.
Kelleher started his Dublin-based company, Shelbourne Development Group, in the 1980s focusing on loft conversions in Chicago. The firm invested in property in Dublin's city centre and London's financial district while also building in Brussels, according to Shelbourne's website.
Ireland's 'bad bank- the National Asset Management Agency, earlier this month hired receivers to some companies controlled by Kelleher, who borrowed from the country's lenders for a building spree that was to include the Spire project.
Kelleher, through a spokesman, declined to comment. He took over the proposed project in July 2006 after Fordham, a local developer, failed to obtain financing for construction of what was to be known as Fordham Spire.
Kelleher is "not one to back away from a fight," said Thomas Murphy, an attorney for Kelleher's Shelbourne Development.
"Garrett wants to build the Chicago Spire," Murphy said. "We think there's more demand on an international basis for the units."
Steven Ivankovich, Atlas Apartment's principal, didn't return telephone calls seeking comment. Joanna Rose, a Related spokeswoman, declined to comment.
Home prices in the Chicago area plunged 39 per cent from the peak in 2006 to the bottom in 2012. They've since rebounded 19 per cent, according to the S&P/Case-Shiller property-price index for the region.
Chicago's median sales price rose to $237,000 in March from $187,000 a year earlier, according to the Illinois Association of Realtors.
While construction is increasing in downtown Chicago, few developments are condo complexes. The number of condos sold in the city fell 4.8 per cent in March from a year earlier to 1,123, according to the state Realtors group.
Willis Tower was the tallest US building from 1973 until November. Photo / Wikipedia-Rob Young
"If you were to take a look at the cranes out there, the vast majority are for apartment buildings," said Ron DeVries, a vice president at Chicago-based Appraisal Research Counselors.
Last year was a record for apartment completions downtown, with 2,695 rental units becoming available, the most in at least 20 years, DeVries said. About 2,300 will be added this year, and more than 4,000 will be delivered next year, he said.
Condos in the Chicago Spire, if it's built, would be more expensive than the median price for a home in the city. Plans called for units to range in size from 50 square metres to 956 square metres, with prices starting at $750,000.
In 2008, Shelbourne said it had commitments for the sale of more than 30 per cent of the tower's 1,194 units.
The property's troubled history is echoed in its highest-profile condo buyer. In 2008, the penthouse, which was listed at $40 million, was to be purchased by billionaire Ty Warner, the founder of Oak Brook, Illinois-based Ty, the maker of Beanie Babies stuffed toys.
Earlier this year, Warner was sentenced to probation for evading taxes on money hidden in a Swiss bank account.
The developer used to have a sales office in the NBC Tower, near the construction site. The office, now closed, had a model apartment with a full-scale photo of a 90th-floor view, taken from a helicopter. The penthouse would have been on the 141st and 142nd floors, where the developer said the Earth's curvature would be visible.
The tower's amenities were planned to include a swimming pool, half basketball court, cigar room and 40-seat cinema.
The Spire has always had its sceptics, and some continue to wonder if it can ever be built. Lev of Belgravia said it's expensive to build a tower that isn't architecturally complex, let alone one as difficult as the Spire.
The building has a helix-like look, resembling a drill bit. Calatrava, a Spanish architect, also designed the expansion of the Milwaukee Art Museum and the mass-transit hub being built at the World Trade Center development in New York.
"It's a great thing for Chicago if they can pull it off," Lev said.
Wood of the Council on Tall Buildings said he's confident people will buy condos in the Spire should it be built.
"We could say with some certainty that there is going to be a high percentage of people who are buying these apartments as investments," he said. "It would be the first of its kind, in a sense, of an iconic residential building on a brilliant site that's going to get the world's attention."