CHICAGO-The Fifield Cos., based here, and Marietta, GA-based Wood Partners plan to break ground on the $175 million K2 apartment tower this month, finishing the five-tower complex at K Station in the far West Loop. Fifield has enjoyed success at the complex due to opening apartment towers at the start of the housing downturn, but before the credit crunch hit in the past two years.
The K2 tower, at 34 stories with 496 units, will open at 365 N. Halsted St. in 2013. McHugh Construction is the general contractor and Pappageorge/Haymes is the architect. Amenities will include 9-foot ceilings, plank flooring, a 70-foot outdoor lap pool, business center, theater room, two-story workout area and bicycle storage.
Steve Fifield, chairman and CEO, tells GlobeSt.com that it took five banks to gain about $76.7 million in financing for the project. Funding came from the Private Bank of Chicago, Comerica Bank, Fifth Third Bank, Cole Taylor Bank and the Bank of the West. “After going through this banking crisis this past year, it took us five banks to close this,” he says. “That’s why we decided to call it K2, one of the hardest summits to climb in the world.”
He says his firm was incredibly fortunate to start the K Station project when it did, right at the beginning of the rise of the smoking hot apartment market in Chicago. So far, the company has opened the Echelon and the East and West towers at Alta, as well as the Left Bank tower, which was bought out by partner Prudential. Fifield, with partner Pacific Life Insurance Co., has since offered its remaining three towers for sale for about $850 million. “Our agreement doesn’t allow me to talk about the sale other than I can say they are on the market,” Fifield says. CBRE is representing the sellers.
Fifield says even with his highly-occupied properties, the downtown can easily absorb another apartment tower. He says the market traditionally absorbs about 2,000 new units per year, and even absorbed almost 3,000 units in 2010. High demand from Generation Y youngsters not wanting to own homes will keep the absorption on track, he says. Other recently announced projects such as the Coast at Lake Shore East, 500 Lake Shore Drive and AMLI River North, with delivery set for 2013-14, still won’t keep up with demand, Fifield says.
He also says he’s not worried about developers looking to cash in on the renter demand. After the fall from the good first half of 2011, banks have tightened up lending and red tape continues, keeping newcomers almost effectively out of the game for the next couple of years, Fifield says. “There’s just tremendous capital constraint right now,” he says. “Those who were lucky to get projects in under the wire are good, but skepticism now about the economy will conspire to restrict the amount of new projects that can get off the ground. It’s likely you’re not going to see the frenzy of companies launching two-to-three projects at a time as we did in 2003-05.”
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