Chicago’s South Loop Is Ripe for Development

CHICAGO—While visiting Hilton’s first tri-branded property to celebrate the opening party, which includes Hilton Garden Inn Chicago McCormick Place, Hampton Inn by Hilton Chicago McCormick Place and Home2 Suites by Hilton Chicago McCormick Place, GlobeSt.com took the skybridge over to McCormick Place exhibition and meeting facility and if anything is clear from the tour, it is that with only three hotels near the largest exhibition and meeting facility in North America, the area is ripe for development.

McCormick Place offers 2.6 million square feet of exhibit space, 173 meeting rooms, the 4,249-seat Arie Crown Theater, and one of the largest ballrooms in the world. The centerpiece of the McCormick Square campus, McCormick Place is directly attached to the 10,000 seat Wintrust Arena and three hotels totaling over 3,900 onsite rooms and suites. Owned the Metropolitan Pier and Exposition Authority and managed by SMG, a worldwide convention management company, McCormick Place attracts close to 3 million visitors each year.

Those visitors each year are coming to a district that is quickly evolving, says McCormick Place’s Jane Hogan, director of sales for Collection at McCormick Square. She tells GlobeSt.com that she expects the area to continue that evolution in in the coming years. “The South Loop has become one of the hottest submarkets, and that’s giving new life to some of its historic structures.”

As GlobeSt.com reported earlier this year, more mixed-use projects are planned in the Historic Motor Row district. In February, we reported that commercial real estate investment banking firm Continental Partners secured a bridge loan on behalf of KCI Co., a private investor, for the acquisition of a 115,000 square-foot industrial building at 2222 S. Michigan Ave. along the South Loop’s landmark Motor Row. The new owner plans to reposition the former auto showroom into a class A, mixed-use property, according to Eugene Rutenberg, director at Continental Partners.

“This was a highly opportunistic deal,” Rutenberg previously told GlobeSt.com. He said at the time that Motor Row sits in the McCormick Square entertainment district, an area he said is “undergoing tremendous revitalization and is on track to become a new Chicago hotspot.”

First Hospitality Group Inc. founder and chairman, Stephen Schwartz, who, along with Hilton, opened the Hilton tri-branded property, says that he is thrilled to bring three powerhouse hotel brands, as well as inventive new dining concepts to the “continuously-evolving landscape of McCormick Place and the Motor Row District.”

According to Schwartz, “This tri-brand hotel will serve as a convenient ‘one-stop-shop’ for convention-goers looking to rest and recharge or enjoy the local flavors of Chicago while remaining just steps from their convention events. “It is also a great option for guests traveling with larger groups or extended families, as everyone can stay under one roof despite having varied preferences on room-type and price-point.”

So what’s next for the new hotspot? According to JLL’s EVP, Chuck Johanns, not only is the South Loop a hotbed of development for hotels, but across several sectors. He tells GlobeSt.com that “Notably, the redevelopment of office space at the Old Post Office has brought attention to the area. There are also massive multi-property type developments such as The 78, which is in process, and South Bank on the horizon. DePaul University’s new Wintrust Arena and the development of the new Hilton and Marriot Marquis hotels also points to the increase in tourism and foot traffic in the area.”

JLL SVP, Liz Gagliardi adds that we are going to see a lot of new multifamily supply also coming on line in 2019 and 2020, which may create some temporary lease up headwinds, but the medium term and long-term arrows are pointing way up for the South Loop. “We’re excited about bringing 1407 on Michigan, a recently delivered new boutique luxury multifamily property, to market. It includes more than 40,000 square feet of commercial space occupied by Rush University Medical Center, amazing finishes and amenities all delivered in an intimate setting — a great example of how the South Loop can really work.”

Gagliardi tells GlobeSt.com that the area has also been the recipient of infrastructure investments such as the new water taxi stops, public parks, and possible adjustments to the Metra tracks will all contribute to increased livability for the area.  “With the additional residential units will come additional retail, shopping, restaurants, and night life. The area’s basic advantages remain the core drivers; its proximity to the CBD, the lake, the Museum Campus, and great transit connectivity will continue to attract more and more development in the South Loop.”

Check out the photos below from our trip to Chicago’s South Loop.