Shaking the Foundation: Chicago’s architecture community devastated by recession

After glorying in a decade of booming construction, the city’s architecture community has been hit hard by the economic downturn. What does that herald for the future of one of the city’s signature attractions—its collection of memorable buildings?

The view northeast from the Willis Tower (née Sears) will change if the projects in the works (in blue) reach completion. In the current economy, that’s no guarantee.
The view northeast from the Willis Tower (née Sears) will change if the projects in the works (in blue) reach completion. In the current economy, that’s no guarantee.

“Look at that view!” exclaims the architect Lucien Lagrange, pausing during a walking tour of The Elysian, his nearly completed 60-story mixed-use hotel and condominium tower at the corner of Rush and Walton streets. The high-rise is the latest in a string of French-influenced buildings that Lagrange has designed for downtown Chicago over the last decade and that have made him a celebrity in luxury real-estate circles.

The Elysian is nothing if not dramatic and includes such details as a cobbled carriage-drive entrance, complete with a bubbling fountain that suggests Baron Haussmann, with maybe a touch of Morris Lapidus. Lagrange is standing in what will be the living room of one of the building’s eight penthouses, a drop-dead two-story space with a picture window the size of an Imax screen looking out on downtown Chicago.

In the distance, one can pick out a number of the most prominent sky-scrapers that have gone up in recent years—Jeanne Gang’s Aqua building, Adrian Smith’s Trump building, George Pappageorge’s Museum Park East building—as well as Lagrange’s own Park Tower, the building many say kicked off the downtown condo boom by selling out two years before it was completed in 2000, at the then-record price of $400 per square foot.

Lagrange is here on this late August afternoon to give a tour to several real-estate brokers, an effort that the developer hopes will assist in selling the building’s remaining units. The Elysian is a hybrid: In addition to 52 condominiums, there are 188 hotel condominiums—units that are rented out when the owners aren’t using them. The condominiums have sold well. The hotel condominiums, however, are another story. Let’s just say it has not been a good summer.

“We’re not going to see anything like this again for a long time,” Lagrange says regretfully. “The party’s over.”

The party he’s referring to, of course, is the decade-long building boom that transformed downtown Chicago before collapsing late last fall amid the implosion of the financial markets.

The numbers tell the story: According to McGraw-Hill, which tracks national construction starts, the Chicago metro area added an average of 129 million square feet of new construction—both residential and nonresidential— annually between 2000 and 2007. The number for 2008 was about half that, and 2009 looks to be even worse. There has not been a major construction start in downtown Chicago in over a year, and none are on the horizon in the foreseeable future. The effect of this slump on the city’s architecture community—the second largest in the United States after New York—has been devastating.

* * *

Consider Jackie Koo. Last spring, she completed The Wit, a stylish boutique hotel at the corner of State and Lake streets in the Loop that was her first large project as an independent architect. The hotel—which includes a spectacular rooftop restaurant and bar—received heavy coverage in the local media and immediately took off as the place to see and be seen in downtown Chicago. The wait for tables at the bar can seem endless, and even standing room is in short supply.

Normally, a success on this level would mean calls from developers and your pick of future projects. Not this year, however. “What I’m being told by developers is they would love to hire me if they could get financing, but they can’t, because everything is frozen,” Koo says.

Instead, she is working on her first-ever campaign to market her firm and surviving on institutional work from the Chicago Housing Authority. “The Wit was a huge step for me, and I feel lucky to have gotten it done at all, because there are a lot of carcasses out there right now in terms of dead projects,” she says.

“It’s scary,” says Dirk Lohan, a principal at Lohan Anderson and the designer of such high-profile civic and corporate commissions as the John G. Shedd Aquarium’s Oceanarium and the Adler Planetarium’s Sky Pavilion. “I’ve been in practice for over 30 years and have seen my share of ups and downs but never anything like this, where business just disappeared overnight.”

“This is a complete halt,” says George Pappageorge, the cofounder of Pappageorge Haymes Partners and one of the most prolific residential designers in the city. “It’s amazing the number of calls that came through in a short period of time last fall putting projects on hold. It does not compare to anything I’ve seen before.”

The layoffs started in the summer of 2008 when the financial markets began wavering, and they have continued ever since. According to the American Institute of Architects (AIA), Chicago has about 5,000 architects, 3,000 of whom are AIA members. There are no official numbers on unemployment, but informal estimates range anywhere from 20 to 60 percent. The losses are, by most accounts, the steepest in a generation and possibly the steepest since the Great Depression. “There have been deep cuts across the city and region and country,” Grant Uhlir says. Uhlir, a principal with Gensler, is the designer of the recently completed Block 37 retail mall across from Macy’s as well as AIA Chicago’s 2009 president. “Young and old, everyone has been affected.”

Lagrange says, “The industry is shrinking—I shrank by more than half, and I don’t think that’s unusual.”

* * *

Recessions are nothing new, of course, as any student of Chicago architecture knows. In fact, the city’s architecture community has been continuously shaped and reshaped by recurring economic crises, with two of the most severe being the Panic of 1893 and the Great Depression of the 1930s. Both of these led to widespread changes that fundamentally altered the nature of the community.

“Depressions make the old things go away,” says Tim Samuelson, the city’s cultural historian and a leading expert on 19th-century Chicago architecture. “There are many aspects of things that thrived before but do not come back. There’s a real ebb and flow in terms of style and technology.”

The Panic of 1893, for example, all but destroyed Louis Sullivan’s practice. His partner, Dankmar Adler, left the business, and the firm—at one time one of the largest in the city—dwindled to just three or four associates. When the panic finally subsided in the late 1890s, Sullivan’s proto-modern ideas were officially out of style, eclipsed in the popular imagination by Daniel Burnham’s grandiose neoclassical designs. Burnham, a far more astute businessman than Sullivan, emerged from the panic as the clear leader of the Chicago architecture community, a position he enjoyed until his death in 1912.

The Great Depression had a similar effect. In the late 1920s, the two largest architectural firms in Chicago were Holabird & Roche and Daniel Burnham’s successor firm, Graham, Anderson, Probst & White. Both survived the downturn but never regained their earlier momentum.

“Holabird in the 1920s had over 300 associates,” says Robert Bruegmann, an architectural historian and author of The Architects and the City: Holabird & Roche of Chicago, 1880-1918, the definitive study of the firm. “But during the ’30s, they eventually got down to just six or so people. They really did almost nothing for a number of years, and afterwards they never really got back to the kind of high-profile work they were known for in the past.”

During this period, Chicago—like the rest of the country—experienced a 20-year drought of new construction. By the time the Depression finally lifted in the aftermath of World War II, a new style—modernism, or the International style—as well as a new architectural establishment, had arrived. “The older people either retired or died, while the younger people went in different directions and started their own firms, with the most spectacular example being Louis Skidmore and Nathaniel Owings,” Bruegmann says.

Indeed, the firm Skidmore and Owings founded—Skidmore, Owings & Merrill—ushered in a new era in skyscraper design for downtown Chicago with the completion of the Inland Steel Building in 1957.

More recently, a prolonged downturn in the 1990s finished off the eclectic postmodern architecture of the 1970s and 1980s and led to a resurgence of modern forms in the early 2000s.

Whether a similar dynamic will occur over the next few years is unclear. Many, however, believe a new, straitened era of design is beginning and that this isn’t necessarily a bad thing. “By the end of the boom,” Dirk Lohan says, “design was getting outrageous and unreal. I think it’s going to be simpler going forward. Everybody is conserving their assets and living more modestly, and I think the same thing is happening in architecture.”

“The high-tech look that was so hot in the 1990s and early 2000s has been supplanted,” Bruegmann says. “I think some of these things—like Calatrava’s extravaganzas—are going to look really, really dumb in the future.”

* * *

In addition to design changes, firms are confronting a radically altered business climate. Many are hustling for work wherever they can find it. Lagrange, for example, recently scored two different commissions in Saudi Arabia and another in China, while Lohan is designing hotels in India.

“The midsize and larger firms in Chicago are fairly well positioned for overseas work in terms of skills and management,” Lohan says. He adds, however, that “it takes money to promote yourself in those markets. A quick trip to India or Saudi Arabia is $15,000 to $20,000, and after a while that starts to add up.”

No matter where firms work, however, architectural fees are taking a hit. According to Grant Uhlir, “Many times [fees] end up right where they were ten years ago.”

The overall problem is a lack of financing. At the height of the boom, developers needed to put up as little as 10 percent of the cost of a building to secure a standard construction loan. Today, according to Dan Ryan, the Midwest market director of Jones Lang LaSalle, it is more like 50 percent—and even that may not be sufficient. “In general, large-scale projects that have lower levels of equity are virtually impossible to get financed in this environment,” he says.

Some architects and developers—remembering the lost decade of the 1990s—think it could be ten years before downtown Chicago sees another new high-rise. Others believe a modest recovery is on the horizon. “I think things are shaking loose a little bit,” Jackie Koo says. “I’m getting more nibbles, more toes-in-the-water kinds of inquiries.”

“Last fall and winter, it was very unclear what the depth and severity of the downturn was going to be,” George Pappageorge says. “At this point, the chips have fallen, and we’ve acclimated to the realities of the marketplace.”

Veterans also point out the inherent unpredictability of architectural markets. “In the late ’80s,” Lucien Lagrange says, “all the big master plans for downtown Chicago, like Central Station and Lakeshore East, called for more office buildings. The whole condo boom took everyone by surprise. I was not a condo designer in the early ’90s. But the boom came and we went with it.”

* * *

For true optimism, however, one needs—as always—to speak with a developer. Bob Wislow, the chief executive officer of U.S. Equities Realty and the development manager of Millennium Park—arguably the most significant downtown project since the Sears (now Willis) Tower—has lived through a number of boom-and-bust cycles. Currently, he’s excited by the potential of sustainable or green design to spark a recovery on the commercial side. “The whole green movement is going to filter down to the workplace in the next few years, and I think there’s going to be demand for office buildings that don’t exist,” he says. “Corporations are going to want to be in healthy, green buildings so that they can attract the best employees and improve productivity.”

On the residential side, “there’s a natural demand for 700,000 to 800,000 additional units of housing a year across the country, due to population growth and the obsolescence of existing housing stock,” he says. “At some point you have to start building again.”

Finally—and maybe most important—there are the intangible factors. “There aren’t too many investments that are as sexy as real estate,” Wislow says. “It’s why people build beautiful buildings in the first place. There’s pride and ego involved in buying and selling and building and occupying them. Nothing is going to replace that.”

 

Illustration: Chris Dent

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