Foreclosure threatened for Central Station development
South Loop monolith under the gun
10/26/2011 10:00 PM
Bank of America may soon foreclose on Museum Park West, a 298-unit condo building in which the developer Central Station Development Corp. has sold just 65, or 22 percent, of the units since the building opened in early 2010.
According to Crain’s Chicago Business, Central Station Development Corp. owes Bank of America $125 million, making it the most costly Chicago foreclosure case since the housing bubble burst in 2007. According to Crain’s, the developers testified at a civil trial last month that the building would likely enter foreclosure.
Multiple calls to Central Station Development Corp. were not returned. The corporation is a joint venture between Fogelson Properties, headed by Gerald Fogelson; Enterprise Companies, headed by Ronald Shipka Sr.; and Cleveland-based Forest City Enterprises.
Spearheaded by Fogelson, Central Station Development Corp. has been active in South Loop condo construction since 1989.
But the developers kept building after the housing bubble burst — the Museum Park West project was rolled out in October 2007, after the foreclosure crisis was well under way.
If Museum Park West does enter foreclosure, Bank of America or the new property owner could follow the recent trend of converting vacant South Loop condos into rental units. “I think it will turn rental very soon,” said Bob O’Neill, executive director of Grant Park Conservancy, who has monitored how the real estate boom impacted the lakefront.
Central Station Development Corp. also took out loans from Bank of America on 1600 Museum Park, the 275-unit condo building at 1629 S. Prairie Ave. and the 288-unit condo high-rise, 1901 Museum Park South, at 1901 S. State St.
Almost half the units at both of buildings remain unsold, according to figures from Appraisal Research Counselors. The loan status of both buildings is not known.
Fogelson and Central Station Development Corp. differ from many South Loop developers burned by the housing bust in that they built in the area well before gentrification and previous to the housing bubble.
A 2001 Chicago Journal profile of Fogelson cited him as the developer who saw the real estate potential of the Museum Park area, bounded by Grant Park on the north, McCormick Place on the south, and Lake Shore Drive on the east. Before Fogelson, according to the article, “Chicagoans merely accepted the land as part of the city’s gritty face.”
Some locals continue to pay tribute.
“I’ve lived in Chicago since 1982 and the area south of Grant Park was a disaster then,” said O’Neill. “Without Central Station, the South Loop would have stayed a disaster. It was all railroad bed.”
“His Central Station project was the major investor in the South Side,” said Tina Feldstein, president of the Prairie District Neighborhood Alliance, a neighborhood organization that initially was created to represent new condo owners in the South Loop Lakefront area.
“He got trapped in the end, but I don’t think the community will hold it against him,” Feldstein added. “Believe me, the guy’s got big plans — the question is how you adapt to the current economy.”
Other condo owners have adapted for the time being through rentals. A slew of South Loop high-rises have gone rental, including the Lexington Park Building at 2138 S. Indiana Ave., Astoria Tower at 8 E. 9th St., and The Terrazio at 1935 S. Wabash Ave.
In fact, one of those owners is Central Station Development Corp., which rented the 20 unsold units in the 289-unit One Museum Park East, at 1211 S. Prairie Ave. Renting became an option at Museum Park East because Central Station had paid off its loans for that building.
“The rental market is still good — people are spending a lot for rentals,” said Feldstein, who recalls when the buying market was also good.
“I remember when One Museum Park East opened in 2005,” Feldstein said. “There was a line around the block and people were buying two or three units.”