WEDNESDAY, NOVEMBER 26, 2008
by Jenn DankoChicagoMagellan Development Group LLC has no reservations about accepting proposals for the hotel portion of its forthcoming Aqua development. The Chicago-based firm has been vying for a new tenant since Fairmont Chicago terminated its contract for expansion in September.
Since announcing its decision to rescind plans for a 225-room, $82.4 million expansion in the 87-story Aqua tower, Brian Gordon, vice president of Magellan Development, says the company is zeroing in a number of new hotel concepts that have yet to enter the Chicago market.
"There are so many exciting hotel concepts in Florida, California or even outside the US that aren't here and want to be (in Chicago)," Gordon says. "We think we're going to get something really cool."
Magellan has hired CB Richard Ellis to market the open space, which includes the lobby and ballroom on the first floor, as well as floors four through 18. The space can accommodate between 215 to 300 rooms, depending on the configuration. In the case of Fairmont, the hotel was opting to offer all suites, which scaled down the number of rooms to 225.
"We are very particular; we want a concept that will go with the overall composition of the building," Gordon adds. "Aqua is a unique structure, so we want the hotel to match that."
Chicago architect Jeanne Gang of Studio Gang Architects designed the aquatic-inspired building, which carries an estimated price tag of $475 million. Located within Magellan's Lakeshore East development complex at 225 North Columbus Drive, the hotel portion of Aqua was poised to complement the existing Fairmont hotel located across the street at 200 North Columbus Drive.
Strategic Hotels & Resorts Inc., which bought Fairmont in 2005, initially signed a contract that called for an $82.4 expansion, but pulled back on September 26, citing a shift in the financial markets since the initial purchase.
While Gordon says that Strategic Hotels left "a fair amount of money on the table," backing out of the contract initially came as a surprise to Magellan.
"We were having a discussion with them and hoping to get a year's extension on the contract," Gordon says. "When we came up with the planning, they decided to terminate. It was a surprise from the standpoint that we were trying to work on an extension."
Gordon adds that while CBRE has already toured several prospective tenants, Strategic Development's decision to back out will likely delay the opening of the hotel portion. The retail portion of the building and the apartment units are on track to open and move in spring 2009; the condo residents will start to take occupancy in the fall.
John Karver, senior vice president with CBRE, says he hopes to have the preliminary marketing work wrapped up in the next two to three weeks. Shortly after, he expects to see "a number of proposals" on table from both national and international hotel outfits.
Gordon says that despite the financial markets, he remains confident that the Aqua stands on its own as a unique sell for a distinctive hotel that has more too offer than room and board basics.
"Obviously, it would have been a lot easier before all of it happened, but because the property is so special, we are confident it will go."
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