Developer Michael Reschke is plotting his comeback. In his largest venture since his days running Prime Group Realty Trust, Reschke has taken an equity stake in the construction of a condo-and-hotel building on the Near North Side.
Given the location -- southwest corner of Rush and Walton -- it's not surprising that the property will be one of the poshest in town. But by bringing Reschke on board, the other partners in the project demonstrate they're intent on doing something unique.
Called the Elysian, the building will contain the first hotel in Chicago whose rooms are available for sale. Clients could buy one just as they would a condo, while putting the room into the hotel's rental pool for days when they aren't using it. It's supposed to appeal to world-traveling CEOs and those who want a break from long drives back to Lake Forest.
Reschke and David Pisor of Elysian Development Group LLC hope the business model will launch a new hotel brand to be expanded beyond Chicago. They talk about going other places where the wealthy like to travel, such as New York, Paris and maybe Aspen, Colo.
But the Chicago project is the first order of business. "I think the marketplace for hotels in three years will be fabulous," said Reschke, who joined the project to provide construction management and marketing expertise. Pisor's know-how is in lodging and food service. His family owns five restaurants on the West Coast, including the prestigious Chez Panisse in Berkeley, Calif., and he'll be involved in planning the Elysian's hotel-related dining.
The two men didn't disclose terms of their partnership, which also includes resorts operator Waterford Hotels and Inns Inc.
Reschke said the goal is to make the Elysian an intimate, small- scale hotel that pampers both guests and residents. The building's design by architect Lucien Lagrange calls for a Greco-Roman exterior of precast stone, and an interior that rethinks standards of how a hotel should run, such as abandoning the registration desk in favor of personal greetings and escorts to the room.
Owners of the hotel rooms will get a mahogany armoire for storing personal effects while their place is being rented. For the owners' return, hotel staff will place the photos of the grandkids back on display.
Donald Trump is pursuing the same kind of "condoized" hotel for his proposed 90-story building at the current home of the Sun-Times, 401 N. Wabash. But Reschke and Pisor said they're aiming for a different market than Trump is. The Elysian, they noted, is a fraction of the size of Trump Tower Chicago. At 40 stories, the Elysian will contain only 27 condos, usually two to a floor, that aren't included in the hotel rentals. They're priced at $2 million to $5.5 million, unfurnished. The hotel's 171 rooms sell for $490,000 to $700,000, furnished.
I asked Pisor if wealthy people like the idea of strangers traipsing around their place. He said no one has raised that concern. "People who stay at really high-end hotels get the concept," he said.
Sales so far bear him out. The partners report that they have sales contracts on more than 50 percent of all units. A few more sales and they should get the loans necessary for construction to start around the middle of next year. The building should be done two years later.
Reschke said one sales program calls for buyers of the hotel units to place them in the rental pool enough days to pay their mortgage, condo assessment and property taxes. The owners generally would get about 36 percent of room revenue, with Pisor hoping for rates of $450 to $750 a night. That's roughly the range in which the super-luxury Peninsula hotel operates at 108 E. Superior.
"It's sort of a comeback for me," said Reschke, who resigned in April 2002 as chairman of Prime Group Realty Trust amid shareholder criticism. "But I like to say I never went anywhere." The company was caught between high debt loads and inability to sell its office buildings. But Reschke said he's been active in real estate since then through his privately owned Prime Group Inc., which owns development sites at 300 N. La Salle and between Lake and Randolph on the west bank of the Chicago River.
Reschke said he's pursuing a two-tower residential plan for the river site while raising capital for a bid to buy the publicly traded trust and take it private.
But in the meantime, Reschke has more than an investor's interest in the Elysian. He's also a buyer of a home there on a high floor.
DOING THE DEALS: CB Richard Ellis Inc. brokered a lease to Life Fitness, a unit of Brunswick Corp. that manufactures exercise equipment, at 5100 River Road, Schiller Park. The company took 79,000 square feet in a relocation from Franklin Park. The deal will include a product showroom.
FindArticles > Chicago Sun-Times > Oct 8, 2003 > Article > Print friendly
http://www.findarticles.com/p/articles/mi_qn4155/is_20031008/ai_n12523123/print

Written by: No Author