Olympics Win Could Bring $2B of CRE Projects

Some benefits to commercial real estate would be almost immediate, like the construction of a 3.5-million-sf dormitory complex for the 17,000 athletes and Olympic officials, which could be converted to up to six million sf of multifamily housing after the games, says Jones Lang LaSalle managing director Thomas Kirschbraun, who spoke to more than 350 attendees at yesterday's RealShare Chicago.

Kirschbraun has been advising the Chicago 2016 Committee on development strategies for the Olympics. Other benefits will be more long-term, but also more far-reaching such as infrastructure improvements and having Chicago "on everyone's tongue," he says.

The Olympic Village, where the athletes and officials would stay, would be constructed on a 37-acre site south of McCormick Place. It would be retrofitted after the games to about 2,500 multifamily units. In addition, there would be five pads where four high-rise towers could be added, Kirschbraun says.

There will not be a lot of developments built specifically for the games because a developer "cannot do a development and plan to pay off the debt in a three-week period," Kirschbraun says. But, there will be a "long-term impact on the hotel industry," he adds. The number of hotels doubled in Barcelona and increased 35% in Atlanta after they were Olympic host cities. "Long-term, it really does boost the convention business," he says.

Some improvements would benefit all areas of commercial real estate over the long-term such as infrastructure improvements. "It also serves to accelerate the development of infrastructure," Kirschbraun says. Generally, about 20 years of improvements are completed in the seven years leading up to the event. The games would also educate about four billion viewers about the Chicago area, a place many associate only with Al Capone and Michael Jordan, he says.

A popular RealShare highlight turned the spotlight on Tim Callahan, the former chief executive for Trizec Properties and Equity Office Properties, in a one-on-one interview with Michael Desiato, group publisher and editorial director of Real Estate Media. Callahan discussed the inner workings of the Trizec sale, formation of Callahan Capital Partners and the Equity Office Portfolio disposition plus working with Sam Zell.

Callahan said Callahan Capital Partners, for which he is CEO, delved into the decision to acquire either the Denver or Chicago portfolios that Blackstone was selling. "We really made the determination that we had to sort of focus on the markets where we thought we had the greatest chance for success," he said. Callahan Capital Partners was successful in its bid for the 2.8-million-sf Denver portfolio that, he believes, now makes them the largest property owner in Denver. He added that they chose to base Callahan Capital Partners in Chicago, in part, because they like living in the city and would like to own property in the area again.

Desiato asked Callahan about working with Zell. Callahan acknowledged the two have different personalities, but that the "diversity made us work better together." He said he wouldn't change a thing about his life and, including turning to real estate because he didn't get into medical school. "I was much better because of things that did not work out," he added. "To a certain degree, how you overcome failure or problems define you."

RealShare conferences are produced by Real Estate Media, publishers of GlobeSt.com, Real Estate Forum, Real Estate New York and other print and online publications devoted to commercial real estate.