SPORTS BUSINESS JOURNAL: Chicago: High Time For Growth
https://www.sportsbusinessjournal.com/Articles/2024/11/25/chicago-project-1901
For months, the team developing the 1901 Project — a proposed $7 billion, 55-acre mixed-use neighborhood that would replace parking lots surrounding Chicago’s United Center — debated how much park space to include in the development.
In the real estate world, the park space decision has traditionally hinged on whether making a dollar today (through commercial space) or creating future value (through a park) is prioritized more.
What if the 1901 Project could do both?
The Reinsdorf and Wirtz families own the Chicago Bulls and Blackhawks, respectively, and, through a joint venture, the United Center, where the two teams play. The families have been involved in Chicago’s West Side for decades. They’re paying for the development privately, with the aim, of course, of financially benefiting. But they know, too, that the 1901 Project could be a unique legacy leave-behind in a historically marginalized community where the poverty rate is 18.3%, according to U.S. Census data.
“We’ve always been really cognizant of building with the tenets of a neighborhood,” said Danny Wirtz, chairman of the Wirtz Corporation and chairman and CEO of the Blackhawks. “We’re looking to establish another incredible addition to Chicago’s already vibrant neighborhood system.”
Bulls President and CEO Michael Reinsdorf was adamant: “It’s absolutely not an entertainment district.”
New public green space is part of that neighborhood-creation legacy, but how much made sense? That the question was even being asked shows how the sports industry is leaning away from event-driven, mixed-use projects that revolve around a sports venue toward a more place-driven, neighborhood development where the sports venue is still a draw but not the development’s sole focus.
“If you do it properly, now you’ve got 365 days a year to generate return on your investment,” said Machete Group principal David Carlock, who is consulting on the 1901 Project. “It makes these kinds of projects viable in locations where an event-driven model would be potentially not viable, or at least much more challenging.”
When Chicago’s famed Millennium Park opened in 2004, there were more than 6,300 residential units in the surrounding area; by 2010, that figure had grown 57%, according to a 2011 DePaul University and Texas A&M study. The same research showed that condos with views of Millennium Park enjoyed a 40% price premium in per-square-foot sales values during that time frame compared to units that couldn’t see the park.
“I’d rather have an apartment overlooking a beautiful park than a sea of concrete,” said Wirtz. “When you create that vibrancy, the financial benefits follow.”
Rios, the 1901 Project’s master planning architect, suggested the park question solution: Elevation. Ten of the development’s 25 acres of green space will be draped atop ground-level buildings housing retail, restaurants and entertainment. In two spots, the parks descend off the ground, rising at a gentle slope that is scalable by people of all abilities, eventually reaching 20 feet high. And thus, said Annie Cazares, United Center vice president of development and strategy, “In the same square footage, you can get a dollar today and a dollar tomorrow.”
The proposed development and its elevated park could stitch together the West Side with economically booming communities to the United Center’s north and east. The 1901 Project, in a city whose Latin motto means “city in a garden,” represents a different kind of legacy for its sports owners. Should the renderings become reality, it could far outstrip the impact of a sports arena.
“That leave-behind for me is pretty exciting,” said Michael Reinsdorf, “and something that, obviously I won’t be around for, but something I’m very proud of when I think about what it will look like and the impact it will have on the city.”
The next evolution
The Wirtz and Reinsdorf families long have operated on the West Side — historically populated by lower-income ethnic enclaves and minority communities. Wirtz’s great-grandfather, Arthur, bought Chicago Stadium in 1935 and the Blackhawks in 1966; the Reinsdorfs took ownership of the Bulls in 1985. The two families privately funded and built the United Center, which replaced Chicago Stadium in 1994, and operate the arena through the United Center Joint Venture (UCJV).
The 1901 Project — named after the arena’s address — was conceived a decade ago as development surged in the Fulton Market neighborhood, east of the arena. But it remained “one of those someday projects,” Wirtz said.
A series of public housing projects to the north were torn down over the years, leaving United Center isolated by a moat of 6,000 parking spots (with another 2,500 spaces privately owned in the neighborhood). On a normal event day, only 50% of the parking is used, according to Reinsdorf. As the Fulton Market momentum grew, the UCJV moved to control development in the immediate vicinity of the arena, which is neighbored to the south by Malcolm X College and a large medical campus.
“The timing is perfect for what’s next in the evolution of the United Center campus,” Reinsdorf said.
Project 1901 planning documents were submitted to the city in September; the UCJV, which will oversee the district, is awaiting entitlements, which would allow it to break ground in the spring of 2025. Commercially, the families’ motivations mirror many other sports venue-adjacent mixed-use developments.
“Right now, I’d say it’s not the best experience until you walk through the doors of the United Center,” Wirtz said. “Imagine adding pre- and post-event experiences, walking through a park, enjoying food, beverage, amenities. Those are all things we do a good job within the four walls of the event, but now you have the chance to extend the events, extend our brands out into the world a little more.”
The music hall will begin generating revenue for the 1901 Project in the first phase. The 6,000-seat venue will be run by the United Center operations team, creating economies of scale — the UCJV already has housekeeping staffs and bartenders, for example — and providing more shifts for the arena’s unionized workers, as well as more dates for shows, which is a challenge at the United Center given its event calendar stays full.
The 1901 Project also provides a broader platform for the UCJV’s blue-chip brand partners, including, for example, United, American Express, Lexus, Foot Locker, PepsiCo, and Anheuser-Busch, which could grow the arena and teams’ sponsorship business. The development plan came together as the corporate brand world is looking beyond how much signage it can get within a sports venue and pursuing more multifaceted engagements instead.
The public-use piece
Chicago is a city of neighborhoods (77 of them, officially) and public parks (there are roughly 570, including the renowned Millennium Park). Chicago’s West Side has never had as much public green space as other more affluent or tourist-heavy regions of the city, but the 1901 Project will address that imbalance in a small way by giving the West Side a unique elevated park system, spread across the top of several buildings surrounding the United Center.
“This is going to be the tissue that ties together all the people and communities using the site,” said Sebastian Salvadó, Rios creative director, architectural design.
The three primary elevated park sections will be accessible either by the ascending ramps or pedestrian bridges spanning roads that connect the second-floor park spaces (which will be lined with guardrails or planted edges). Some of the open space will be devoted to sports, like basketball courts and a roller hockey rink, and other areas less obviously programmed. Storytelling elements will be scattered throughout.
“You could walk through this park and understand stories from the community, from fans, from players, a very different aspect to putting a plaque up that says, ‘We won these championships,’” said Matt Grunbaum, an associate partner at Field Operations, which is designing the 1901 Project’s green spaces.
Parks built on constructed ground, like Manhattan’s High Line (designed by Field Operations) or highway-capping green spaces that plug gaps created by roads, are multiplying across the U.S.
“Where density and housing and all of these things are only increasing, space is a commodity,” said Lisa Switkin, a partner at Field Operations.
Unlike the High Line, an elevated train track converted into a winding park journey through lower Manhattan that requires stairs and elevators to reach, the 1901 Project’s vertical parks will be accessible by ramps as well thanks to their access points’ gradual ascension toward the retail and restaurant rooftop. The open public space will draw different constituents to and from the site, whether United Center event attendees arriving early or staying late, people specifically coming to visit the park or locals enjoying the benefits of living near such a place.
“If you can imagine this incredible green ribbon that surrounds the United Center, I think it’s going to create something really special that is going to be a must-see, must-visit part of any trip to Chicago,” said HR&A Managing Partner Cary Hirschstein, whose firm consulted the 1901 Project team on its green space.
Green space cost
Developers talking with Cazares about the 1901 Project often question the investment in so much green space.
“They think that we’re crazy,” she said, smiling.
The project team didn’t land on 25 acres without vigorous debate, but ultimately designed for the needs of year-round residents, not just the 2.5 million people who visit the United Center annually.
“This should be a destination without a ticket, for everyone, not just in support of whatever event is happening at the United Center on any given night,” said Richard Peterson, a senior project director at Rios.
Park-related expenses such as maintenance and upkeep — the park will be privately owned, with the UCJV on the hook for those costs — must be considered, but can be offset by common area fees assessed to residents or income from sponsored events and festivals that utilize the parks.
There will be upfront costs to put the parks on top of retail space, including designing ground floor buildings that can handle heavier structural loads (and thousands of people) and have waterproof roofs capable of holding soil, grass, plants, shrubs and trees. Switkin said the goal with park investments of this size tends to be revenue-neutrality.
“Is there exact science on this? There is not,” Cazares said.
But even if revenue generation can’t be directly tied to parks, there are ripple effects like increased foot traffic — Millennium Park welcomes an astonishing 25 million visitors annually — and dwell times near the 1901 Project’s proposed ground-floor retail and restaurant locations that, while difficult to quantify, undoubtedly should spur spending that might not have otherwise happened.
There is a sturdy body of research showing that parks increase the value of nearby real estate, and in fact spur development, which in turn generates greater tax revenue for municipalities. A 2016 HR&A analysis found that the area within a quarter mile of Dallas’ Klyde Warren Park saw $1.1 million of residential development per acre annually between 2009 and 2014, compared to the surrounding downtown Dallas neighborhoods, which saw roughly $133,000 per acre, per year.
“In a case like this where you’re looking to build a neighborhood, the parks and open space function as a requirement, if not a necessity, for other development,” Switkin said. “There is that value proposition of saying, ‘I live within a five-minute walk of a great park. I want to live here versus elsewhere.’”
Many successful parks become the identity of their place, like the High Line, which somewhat overtook Chelsea or the Meatpacking District as a geographic signifier for several of lower Manhattan’s neighborhoods. Nothing would please the Wirtzes and Reinsdorfs more than for that to happen with their proposed development in Chicago’s West Side.
“We’re multiplying the moments that people have with our respective teams and a great unifier in the city of Chicago,” Wirtz said. “It’s a really special project.”