University of Chicago Works on Its Neighborhood
By ROBERT SHAROFF
Published: October 23, 2012
Article courtesy of the New York Times
CHICAGO — The University of Chicago is midway through what it characterizes as a “once in a generation” community redevelopment effort aimed at revitalizing 53rd Street, a blighted retail district several blocks north of its historic Hyde Park campus here.
The Harper Court project in Chicago consists of a 150,000-square foot office tower and a 133-room Hyatt Place Hotel.
The $250 million project includes Harper Court, a new 600,000-square-foot, mixed-use project at the corner of 53rd Street and South Lake Park Avenue, along with the renovation and restoration of the adjacent Harper Theater complex, which consists of a long-closed historic movie theater as well as retail and office space. In addition, the university is renovating several other nearby retail properties and is in the early stages of planning a second mixed-use project on a site it owns further up the street.
The aim, said David Greene, an executive vice president at the university, is to create something Hyde Park has not had in many years — a thriving commercial area. If successful, the university will be following what has become a well-worn path in recent years of urban colleges and universities serving as redevelopment engines for their surrounding communities. The University of Illinois at Chicago, for example, has spent much of the last decade building University Village, a new residential and commercial district adjacent to its downtown campus.
“It’s enlightened self-interest for us,” Mr. Greene said. “We’ve always been very competitive when it comes to providing a great intellectual community. But we found there was something missing when we looked at the quality of life for students and faculty who are used to the kinds of amenities you find in places New York, Boston and Palo Alto.”
Mr. Greene added that revitalizing 53rd Street is part of a larger effort by the university to rethink its relationship with the neighborhood, which sits on the lakefront about six miles south of downtown Chicago.
“Over the years and particularly in the 1950s and ’60s, there was a lot of development aimed at creating a barrier around the campus,” he said. “We’re now trying to reverse that trend.”
Will Burns, alderman for the Fourth Ward, which includes 53rd Street, said that the area “has historically been Hyde Park’s downtown, and these projects will help restore that vision.” He added that, “Hyde Park is not really a ward. It’s more of an anarcho-syndicalist collective, meaning that there are more community meetings than you can shake a stick at.”
Indeed, reviving 53rd Street has been a much-discussed neighborhood goal for several decades, but it did not really take off until the university spent about $9 million to acquire the Harper Theater complex in 2002 and the Harper Court site in 2008. “The initial impetus came from the city asking us to help out in terms of purchasing and redeveloping those properties,” said Mr. Greene.
Joseph Caprile, a senior vice president of Jones Lang LaSalle, a large real estate services firm here, who is familiar with the project, said that the university was in a great position to facilitate development in the area. “They have a sound endowment and sound real estate resources,” he said. “They’re also the ones who drive the users down there.”
The largest project, Harper Court, consists of a 150,000-square foot office tower, 74,000 square feet of retail space and a 133-room Hyatt Place Hotel. Harper Court is being constructed by a team of developers assembled by the university and the city.
The university is acting as its own developer for the remaining projects. The developer of all but the hotel component is Harper Court Partners, a partnership consisting of Chicago-based Vermilion Development and JFJ Development.
The hotel is being developed by Smart Hotels of Beachwood, Ohio, and Olympia Development of Portland, Me. The lead equity investor is Los Angeles-based Canyon Johnson Urban Funds, a partnership consisting of Canyon Capital Realty Advisors and the former basketball star, Magic Johnson. The $130-plus million project also received about $23 million in city tax increment financing funds.
In an effort to jump-start the project, the university agreed to lease the new office tower. Robert Turner, chairman of Canyon Johnson, said that the lease, plus the university’s excellent credit rating “made the project much more financeable. We would not have pursued this project without the backing of the university.”
The retail portion, which will open next year, is about 60 percent leased, with the largest tenant — LA Fitness, a health club — taking 32,000 square feet. Other new tenants include Chipotle and Starbucks.
David Cocagne, chief executive of Vermilion Development, said the project would be a retail anchor not only for Hyde Park but also for the neighboring South Side. “Hyde Park is a very dense neighborhood that is under-retailed,” he said.
James Hennessy, the university’s associate vice president for commercial real estate, said the hard part had been persuading retailers “to think a little differently about Hyde Park — to not put it in the box they historically have put it in, which is that there must be something wrong with the area because otherwise retailers would be down here.”
A particularly challenging category, he said, is apparel. “Apparel retailers tend to have a herd mentality and are not all that interested in pioneering,” he said. “Gap will go in as a co-tenant with Old Navy or Victoria’s Secret, but they won’t go in by themselves.”
So far, Akira, a locally based men’s and women’s fashion chain, has agreed to anchor the Borders Building, a 25,000-square-foot building that the university is renovating across 53rd Street from Harper Court. “We already have a lot of Hyde Park customers, but now they’ll be able to shop in their own neighborhood,” said Jon Cotay, co-founder of the 17-store chain.
A peculiarity of Hyde Park is that it lacks two businesses that would seem to be indispensable for a university community, namely a major hotel and a movie theater. Although the university does have a student film society, Doc Films, which shows a mix of new and revived films every day during the school year.
Kevin Schramm, vice president of real estate and development for the Hyatt Corporation, said that “generally speaking, there’s an offspring of services that hover around college campuses. Hyde Park is unique in that it lacks this element.” He said that since the area was also home to institutions like the Museum of Science and Industry, “we expect leisure travel — particularly during the summer months — to be an important factor.”
The Harper Theater, which is across from Harper Court, will reopen in December as a multiplex with four theaters ranging from 90 to 138 seats.
The theater, which has been closed for over a decade, is part of a two-building complex that dates to 1913 and includes a block of historic terra cotta storefronts with second-floor office space. Tony Fox, who will operate the theater, said it has “been a central gathering place for the people of Hyde Park for decades.”
The storefronts and office space reopened this year with the first new tenant being Five Guys Burgers and Fries, the national hamburger chain, which just happens to be a favorite eating spot for Hyde Park’s most notable resident, President Obama.
Mr. Greene added that the university does not intend to become the biggest landlord on 53rd Street. “We want to be able to catalyze development and then get out and let the markets do the work,” he said. “It was clear, though, that if we waited for the markets to start these projects we would have been waiting for a long time.”