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Here’s Who’s Behind the Huge Children’s Memorial and Lakeside Developments

Dan McCaffery takes on some tough projects, even for a big city developer. But two of his most important, controversial plans are moving ahead in early 2014.

A concept rendering of the Chicago Lakeside development site covering more than 600 acres near the South Shore neighborhood.   Illustration: SOM / Courtesy McCaffery Interests

Since 1991, Dan McCaffery and McCaffery Interests has developed or managed the construction of Roosevelt Collection, Harper Court, Church Street Plaza in Evanston, the former Children’s Memorial Hospital (CMH) site, and Chicago Lakeside at the old South Works site, along with many small projects. Few local developers have a comparable local portfolio, and even fewer are willing to get so muddied in pursuit of neighborhood-altering mega projects.

Down at 79th Street and the lakefront, McCaffery Interests has been steering the master planning and infrastructure upgrades of the former South Works U.S. Steel factory site. Chicago Lakeside envisions a city within a city, with thousands of residences, plentiful commercial space, a waterfront park, and employment centers.

Further north CMH’s move to Streeterville left six hollowed-out acres in central Lincoln Park. McCaffery Interests’ just-approved $300 million plan would fill the gap with an influx of hundreds of new apartments and condos, new retail spaces lining Lincoln Avenue, new open spaces, and a reopening of CMH’s 850-space parking garage. The seesawing battle over the design of this site greatly extended the public review period and came close to toppling the proposal on more than one occasion.

In a recent interview, McCaffery explained why all the time and energy invested in selling the Children’s Memorial redevelopment proposal was worth it.

You had some big news last week on the development front, with City Council’s zoning approval of the Children’s Memorial redevelopment plan. Relieved to have a finish line in sight?

I’m relieved but not any less determined. I recognize we’re not at the end of the line. There are some folks that want to object.

Speaking to that, I understand McCaffery Interests has weathered more than 50 public meetings yet you’ve come out the other end with a more-or-less intact plan. How have you been able to carve consensus?

I think the number one thing is that the plan makes sense. It’s not a ridiculous plan—contrary to what certain people say it’s not overly dense. It’s more dense in residential use than has been on that site for a while, but it’s probably less dense—less intense—than the use [hospital] that’s been on that site for a hundred years. A lot of people see that and, I would have to say, a minority does not.

What helped rally the troops for you in getting the zoning approved?

We made considerable compromises. The alderman [Michele Smith (43rd)] fought hard for the changes that she wanted and there was a lot more clarity this time around for what the situation was with the school, so that was taken out of the mix. There was a decrease in the total number of units [from 968 to roughly 750] and an increase in the amount of parking [850 garage spaces plus new underground parking for the senior housing component]. I think the final thing would be increased understanding about the project.

Understandably, the closer you are to the project the greater the resistance. Who’s got a bugbear? It’s more the Mid-North Association than any of the others—and they’re the closest. They are, and again I say somewhat understandably, the most nervous about what’s going to take place. I actually believe that those that live closest to the site will be the ones that benefit the most. I hear them say things like “it’s too tall, it’s too this and that”, “our home values will go down.” I believe strongly their home values are going to step up more than anybody else’s.

And does that have to do with the retail component?

It doesn’t have to do with any one thing in particular. One has to know that the existing site has an ambulance runway—so someone is coming out his front door looking at that. It has surface loading docks. It has pick up and drop off places, like a backdoor where you drop off tanks and so forth—come out and look at that. There’s a huge, probably 20-30 foot vent that comes out of the hospital and just blows hot air. You can take a long look at that. And then there’s a stretch along Lincoln with a big blank wall. Now, admittedly, on Orchard Street they look across at the remaining façade of the Wilson/Jones building but we’re replacing that. It’s going to look the same as today except for one thing: it’ll have a lovely brand new appearance. Further down you can have a look at the Nellie Black building—we’re rebuilding that to be just as nice. So those that have a nice front door are not going to have it changed. The rest of the perimeter of the site is going to be much more handsome.

Then you take the two buildings that we call the annex—the white terra cotta buildings. The one that’s beyond repair is going to be built again as though it was repaired. The other will be upgraded.  The buildings known as the laundry and the power plant don’t have any opening to the street. We’re going to open them up at the street level, putting in picture windows. Sidewalks that are skinny as hell will be widened; fresh trees will go in throughout the site and new fountains along a new passageway [cutting a jagged line east-west]. So if you want to go from Orchard to Lincoln now, you can walk through the site passing fountains, flowers, and landscaping. I understand though—people who have lived nearby for years are afraid this will make it worse. You’re talking to a guy who’s convinced their beautiful places will only be more beautiful and more valuable.

Going back to the origin of this development for minute, what prompted you to take the lead? Was the firm’s interest in large-scale urban revitalization the key?

Yeah. Number one, I think it’s a fabulous location and great opportunity. I don’t mind telling you there are days I wish I hadn’t [taken on the redevelopment]. I just see a great opportunity here—we don’t do cheap things, we don’t do poor quality buildings; we have a commitment to the public domain. As I walked around the site a few times before I decided to get into it, I said “geez, this area could use some help.” The hospital has done marvelous work but when it comes to the public domain, they were not so marvelous. That’s not the business they were in. It’s the business I’m in and I believe we’ll do it—and I don’t believe at anybody’s expense.

You’ve been in this business more than 20 years. Would you rank Children’s Memorial as one of the most arduous projects you’ve been involved with?

I mean, it’s arduous but I don’t know about most arduous. We’ve had some tough ones. We built on Union Square in San Francisco; we built in historic Georgetown in D.C.; and in Arlington, VA, which is a very, very tough place to do work in.

It’s pro forma. It’s not any different than I expected. But, having said that, it is a long and winding road to go through. But you go through it whether it is D.C. or Lincoln Park. With urban development, it’s part of the price you pay.

And just to get the record straight, when did you start with Children’s Memorial?

A little over four years ago.

Moving on to Lakeside, it seems like the firm is more into the master planning and marketing side, courting other partners in development. Is that accurate?

Not anymore. We were fully focused on getting the road in. I took some major tenants down there two or three years ago and they’d just say “call me back when the roads are in—when we’re not getting around in a four-wheeler.” In suburban areas you often make your leases from a four-wheeler. But this is totally an urban area. We’ve gotten the roads in; we’ve had a lot of meetings with a lot of tenants. The ICSC convention, which is the [international] council of shopping centers, is coming up in May. I’ll bet we meet with 20 or 30 people and I think we’ll have some [tenant] announcements even before the convention. You don’t make a deal at ICSC, but you expose the project there. I think there will be big stuff in the next 12 months.

You mean major groundbreakings?

I don’t know about the groundbreaking itself because the site also needs infrastructure work, but if not we’ll have some announcements on committed tenants, on homes, and I’m quite certain we’ll have announcements on commercial space.

And that’s part of the 800,000-square-foot mixed-use phase one development?

Our master plan is what we call in the business a block plan. In other words, you can take a block and move it over here, move it over there. So we will be testing the acceptability of certain portions of the site to different tenants. Regardless of the specific corner that we’ve labeled Phase One—if somebody says they’d rather be elsewhere that’s what you do.

And then, we’re going to be responding to the Request for Qualifications for the Obama Library. I’ll sing the same song to you that I sing to others: I really do believe [Lakeside] is the ideal site. That’s not to say that I’m the ideal developer because presidential libraries are developed and managed by foundations. But my position—and I’m in the Rahm Emanuel camp—is I want it to be in Chicago. So having it in Chicago, you ask what’s the best site. And I turn to 600 acres with two miles of lakefront—with no homage to pay to old infrastructure—in the area where he was first elected to office.

Everything we’re going to do down there [Lakeside] will be state-of-the-art, sustainable, 21st Century stuff—everything the president has spoken about. With the Obama Library in the corner of it [see rendering below], the foundation can say “we don’t want the library to be his legacy, we want the entire 600 acres.” We want to have a model of the future city in the United States, on the lake, managing water resources, managing its waste products. In Copenhagen, 96% of all waste—including human waste—is brought back as energy to the city. We bring back 12% and the rest goes to landfill. All of these things are possible [at the development site] because we have no infrastructure. Up in say Kenilworth, or the Gold Coast, you know what you have to tie into? Hundred-year-old sewers, hundred-year-old water pipes.

As important as anything, our development will extend the city. Our site is in Chicago, but people don’t associate it with the city and yet it’s closer than Northwestern University. Does anyone think it’s a real hardship to get to Northwestern University? No, of course not. I’m going to tell you something: it’s twice as hard to go there than to our site, because of [the] Lakeshore Drive [extension]. It’s beautiful and it develops an area of our city that has been detached for a long time.

I’m telling you where my heart and soul believes the right site to be. I’ll add another thing: If the Obama Library goes to the site that we’re at, you put a hydrofoil station at Navy Pier—the state’s number one tourist attraction—and you connect to the Obama Library.

That’s a thought. Is there something you can nail down that draws you to these transformative city projects as a developer?

Not everything we’ve done is transformative. Some of it is nice and small. We just try to do good stuff. You know, this one is a little bit bigger than most—I hope it doesn’t choke the horse (laughs). We could probably have done smaller projects and economically done better but we seem to be attracted to the challenge of the urban fabric.

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