Downtown has been a boom town for condominium conversions, but that could be changing, says Christy Lockridge, director for Heller Financial, Inc. "I would argue the condo market is getting a little tougher. We're seeing a lot more need for mezzanine financing," Lockridge said. "There's a perception in the market that it's slowing down."

Likewise, the developers may discover, if they haven't already, that they need a greater equity position in the hotel portion of the project.

"Typically, hotels are considered to be a risky investment," saiys Ted Mandigo of Elmhurst, IL-based TR Mandigo Co. He pointed to Marriott's Longwharf property in Boston of the Atlantic Ocean, which lenders still considered a "C" property at the time. "Hotels tend to be extremely good producers on the upside of the economic cycle but as you get on the downside of the cycle, they leverage the other way."However, Mandigo was impressed with the plans, which would bring pedestrian traffic through the hotel. "Retail is very attractive to visitors and guests," Mandigo says.

The consensus is that all three elements would have to move forward for the project to succeed. Although different developers are involved in the various components, they would share common elements in the mixed-used project. However, Hill said "because the residential is physically on top of everything else, it can't be built or occupied" until the retail and hotel pieces of the puzzle are in place.

A Commonwealth Edison substation is all that's left of the State Street block bought by the city and razed for development, which was stalled by the early 1990s recession.

The Solomon Cordwell Buenz's portfolio includes the Sheraton Chicago Hotel and Towers, Crate & Barrel's flagship store on Michigan Avenue and luxury Bristol Condominiums in the Gold Coast area here.