What are the likely real estate implications for the Near North Side following the new ruling on Cabrini-Green public housing?
Paraphrased from a reader’s Tweet, this is a fair question for those who own a property near Cabrini-Green or are thinking of buying.
The site is well-known to most Chicagoans: It’s the location of the former Cabrini-Green public housing development, which was slowly demolished starting in 1995 (the last high-rise was taken down in 2011). A total of 586 row houses remained, with 440 sitting vacant.
Back in April, the CHA released a development zone plan update for the roughly 65 acres of vacant land remaining within the Cabrini area. It called for 2,330 to 2,830 new and rehabbed housing units by 2025, 30 percent of which would be public housing.
Now comes this ruling. It was a settlement between the CHA and public housing advocates regarding the vacant rowhouses and the land in general. The ruling guarantees that the 440 unused townhouses in the Cabrini-Green area will have a mixed-income future. Forty percent, or 176 units, will be set aside for public housing, according to the Tribune, with another 15 percent designated as affordable housing for low-income families.
But that doesn’t mean less market-rate housing will be built. In fact, much more must be pursued if the settlement’s public housing objective—1,800 low-income units by 2022 in the square mile from North to Chicago avenues and Halsted to State streets—is to be reached. The mandated minimum public housing allotment for individual developments on CHA-owned land will also nudge to 33 percent from 30 percent. The hope is to alleviate concerns about a concentration of poverty and crime in the area, which mixed-income housing does—just check out this 2011 report from the Urban Institute.
So how about the surrounding market? What will happen?
First, regarding the ripple effects across Near North Side, there’s little reason to overreact and assume they’ll be major. Old Town was Old Town and Gold Coast was definitely Gold Coast during the years when Cabrini was in the national spotlight for crime and violence.
And for units built closer to the public housing ones, you can expect listings and rentals will actually match comparable properties in the area.
Take the new 240-unit rental building from Oregon–based Gerding Edlen. The building, dubbed Xavier for St. Francis Xavier Cabrini, will sit at the corner of Division and House streets when it’s completed soon (it will open to renters in October), and it will have 10 percent public housing units and 10 percent affordable housing units (their inclusion in the process was voluntary, so their threshold to meet requirements is lower). The remainder of the units in the building are market-rate with rents for studios starting at $1,825—more than at NewCity, in fact.
Then there are the 47 town houses from Ranquist Development Group, called Basecamp River North, which sold out last year after just four months. Priced between $529,900 and $915,900, the units are all priced at or a bit lower than other recently sold properties in River north (five comparable town houses sold in the area in the last year for between $685,000 and $1.1 million). People are still joining the Basecamp waiting list in hopes that a contract or two will unravel.
However, some new properties in the area have been slower to attract buyers.
The mixed-income communities of Parkside of Old Town, 600 units of rental and condo, took awhile to catch on with market-rate renters and buyers. Prices in these buildings along Division Street have also been tamped down relative to real estate east of Orleans Avenue (with market rents 10 to 15 percent lower than in homogenous buildings). This is particularly true for for-sale units that sat on the market long enough to enter the recession.
But resale prices since 2013 have climbed with the overall market, as other residential developments trickle to nearby parcels. Better integration of this standalone cluster with the surrounding city through continued development of vacant land and the growth of retail won’t harm neighboring real estate and should lift Parkside and its yet-to-be-built companions.
“If you drive the area, it’s remarkable to see so much construction underway in and around Cabrini,” says Susan Enright, managing partner at Appraisal Associates and, until a few years ago, a resident of Old Town. She tallied a cluster of market-rate projects at Cabrini’s southeastern corner, either newly completed or breaking ground: two rentals by Fifield Cos. on the 800 block of North Orleans Avenue, one with 310 units; a 50-unit condo building at Segwick and Locust; and a 24-unit boutique rental at 858 North Franklin Street. Enright appraised the latter before it opened last spring, and developer Domus Group attained its steep target rents with a rapid lease-up. Three-bedroom units are going as high as $10,000. Clearly, if mixed-income housing is to have a broad downward effect it hasn’t happened yet.
Gerding Edlen is gearing up to submit a project for CHA land when the Request for Proposals comes out in October, and may pursue another on neighboring private land. There will be incentives for developers of CHA land to go above the 33 percent public housing requirement, to as high as 40 percent, but Matt Edlen, the director of acquisitions and development for Gerding Edlen, thinks there will be a robust response to the RFP regardless of density bonuses and the like.
“Retail will have a longer gestation period,” he adds, “but we’re providing space for a couple of independent businesses and at some point commercial will spread west along Division from Wells.” NewCity’s retail conglomeration and the services of Clybourn Corridor point north, but are also very accessible to new Cabrini construction.
2 weeks ago