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Developer, condo group quarrel

THOMAS A. CORFMAN

January 4, 2006

Developer Christopher Carley, who has proposed the nation's tallest building, has a problem closer to earth: a lawsuit by the condominium owners of his recent eight-story Gold Coast development.

The condo association of 65 E. Goethe St. filed a complaint last week in Cook County Circuit Court, alleging more than 25 instances of improper construction or maintenance.

Carley said he has already agreed to make about three-quarters of the repairs, and has been negotiating over the rest with the association.

"We'll get it to their satisfaction," said the chairman of Chicago-based Fordham Co. The complaint does not specify damages. Carley said the amount in dispute is about $100,000. Weather has delayed some repairs, he added.

In July, Carley proposed a 115-story condo/hotel tower to be designed by Spanish architect Santiago Calatrava on a site along the lakefront at the Chicago River. The next month, investors in another Carley project, the Fordham at 25 E. Superior St., filed a suit charging that construction costs were misrepresented.

Carley said he hopes that case will be dismissed. But "sophisticated lenders" who are considering the Calatrava tower won't be affected by either case, he said. "It's part of being a large development outfit," he said.

Golub buys studios: As expected, Golub & Co. has completed the purchase of the historic Streeterville studios of WBBM-Ch. 2, with plans for construction of a 750-unit apartment complex after the CBS affiliate moves in late 2007 to its new home on Block 37, said Michael Newman, president of the Chicago development firm.

Golub has formed a development joint venture with Boston-based Halcyon Ventures, which was formed in 2004 by former principals of AEW Capital Management LP, a frequent financial partner, said Lee Golub, executive vice president with the developer.

Crate & Barrel leaseback: New York investor Lloyd Goldman has completed a $40 million sale/leaseback deal for the Northbrook headquarters of Crate & Barrel Inc., according to property records filed last month. Goldman is best known as the lead financial partner in plans to rebuild the World Trade Center site.

The housewares retailer had been seeking a long-term agreement for the 159,500-square-foot building at 1250 Techny Rd., with an initial annual rent of $2.4 million, not including taxes and operating expenses.

The transaction allows Crate to free up capital, said a spokeswoman, who declined to comment on the financial terms but said the company signed a 20-year lease.

Chicago-based U.S. Equities Realty LLC and New York-based Sonnenblick-Goldman Co. represented Crate.

Vacancy rate movement: The vacancy rate for newer, Class A office space is moving in opposite directions in the city and the suburbs, according to a report by real estate firm CB Richard Ellis Inc.

The suburban Class A vacancy rate fell to 16.1 percent during the fourth quarter, compared to 17.6 percent a year ago. During the same time frame, the downtown Class A vacancy rate rose to 16.7 percent from 14.1 percent.

One difference is new construction, which has continued downtown, driven by large tenants willing to pay premium rent for new towers, said Lisa Konieczka, a CB senior vice president.

The firm represented Vernon Hills-based CDW Corp., which, as expected, said Tuesday it would consolidate its downtown offices at 120 S. Riverside Plaza, increasing its downtown space by 75 percent, to 252,000 square feet. The building, constructed in 1967, is owned by Trizec Properties Inc.