Redefining price of luxury living

Spire's $40 million penthose may break new ground in city real estate

By Susan Diesenhouse Tribune staff reporter
September 27, 2007

The Chicago Spire developer has distinguished the tower he is building by its height, 2,000 feet, and by the cost, at least $1.5 billion to complete what will be the world's tallest residential high-rise.But Wednesday, Garrett Kelleher, chief executive of Shelbourne Development Ltd., left real estate circles here agog with the news that unit prices would reach as much as $40 million, or about $4,000 a square foot, for the two-floor penthouse."We've never seen anything like this in Chicago," said James M. Kinney, president of Rubloff Residential Real Estate. "There are people who are holding property that's worth a lot, but nothing at that price has traded here."

"[The developer] must be looking for someone with a large ego and large wallet who wants to say, 'I live in the highest condo in the world,'" added Kinney.Most of the 1,193 units in the 150-story Spire will be priced from about $750,000 to $10 million, Kelleher said in an interview last week.But the 10,293-square-foot penthouse "will be on the highest condo floors in the world, with 360-degree views, in a signature building designed by Santiago Calatrava with its own private elevator from the base to their floor," Shelbourne spokeswoman Kim Metcalf explained Wednesday. "Whoever buys that will have a completely unique home."In Chicago, most luxury downtown condominiums are selling for about $750 to $1,100 a square foot.At the Mandarin Oriental Tower Chicago, prices for a residential condominium reach $892 a square foot, said the developer, Gerard Kenny, president of Palladian Development LLC. At the Waterview Tower and Shangri La Hotel, residential condominiums are priced as high as $1,000 a square foot, said Sean McMahon, project manager for developer Teng Associates. At the Trump International Hotel & Tower, the average is $1,093 a square foot, Donald Trump said recently."[In recent years,] some condominium sales have quoted as high as $1,400 a square foot, but that's not the norm," Kinney said.He said the highest sale price recorded in the multiple listing service is $8.27 million, paid in November for a 10,950-square-foot penthouse at 800 N. Michigan Ave. There might be condominiums that are worth more than that, Kinney said, but they have not yet been marketed."A $40 million price, that's in the outer atmosphere," said Rick Cavenaugh, president of Chicago-based Fifield Realty Corp. "If they could get that, it would be cool, but those are New York numbers. Are we there yet? We don't know."Indeed, in New York one London-based oil industry executive reportedly agreed to pay $56 million for a triplex penthouse in the Plaza Hotel overlooking Central Park."Prices like that haven't been achieved in Chicago, but if they sell it, Shelbourne would set a new standard," he said.

Fed Slashes Interest Rates By 50 Basis Points

The Federal Reserve slashed benchmark interest rates by a half point in an agressive move to prevent the economy from moving into recession and to ease the pains of the housing bubble. The decision to cut the overnight federal funds rate from 5.25% to 4.75% was unanimous. This is the lowest level since May of 2006 and the first time the Fed has cut interest rates since June 2003. It was the first 1/2 point cut since November of 2002.

The Fed also lowered its discount rate it charges banks for direct loans by the same percentage.

"Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time," the Fed said in a statement outlining its decision.

"The committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth," it said.

The stock markets responded favorably by moving higher as most analysts had only predicted a 1/4 point cut. The Dow was up nearly 2.4% to 13,723 in late trading Tuesday.

The new land grab

Private equity firms and hedge funds are snapping up cheap land in markets where real estate has gone from boom to bust. Fortune's Katie Benner reports.

By Katie Benner, Fortune reporter
September 17 2007: 10:00 AM EDT

(Fortune Magazine) -- Picking off land from over-leveraged homebuilders during crashing real estate markets was once the purview of local developers. This time, however, global players, including D.E. Shaw, Apollo Real Estate Advisors, and the Rockefeller Group, are eyeing land in Florida, Colorado, California, and other subprime-ravaged states.

Their plan is obvious in the wake of the real estate meltdown: buy these hard assets and wait until the markets bounce back. "The Rockefeller Group is actively researching Florida properties that may become available for purchase," a spokesman for the New York-based investment and real estate firm told Fortune. "There are definitely opportunities for homebuilders to sell some of the land they acquired when the residential market was very strong."

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Chicago takes lead for 2016 Olympics

By Roger Blitz
Published: September 14 2007 16:45 Last updated: September 14 2007 16:45

Chicago is the early frontrunner to host the 2016 summer Olympics after the International Olympic Committee on Friday unveiled a shortlist of seven cities that have entered the race.
Madrid, which came fourth in the final 2012 ballot, and Tokyo, which hosted the 1964 Games, are also in the field. The other shortlisted cities are Rio de Janeiro, Prague, Doha and Baku.
Prague and Madrid will be at a disadvantage because another European capital, London, is hosting the 2012 Games, Olympics observers say. With Beijing hosting next year’s Games, IOC members may feel less pressurised to award the 2016 Games to another Asian country like Tokyo.

Rio, which failed to make the official candidate list for the 2012 race, hosted the PanAmerican Games this summer and no South American city has ever staged the Games. But it is already hosting football’s 2014 World Cup.

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