Neighborhood Impact Assessment Hotel, arena and entertainment district development adjacent to McCormick Place May 13, 2013 -1- Table of Contents  Description of the McCormick Place Entertainment District and proposed hotel and events center developments  Existing real estate and neighborhood conditions  Neighborhood Impacts  Comparable Convention Center Districts  Economic Impact Analysis Data driven creativity for innovative clients -2- Description of the McCormick Place Entertainment District Data driven creativity for innovative clients -3- McCormick Place Entertainment District  Includes neighborhoods immediately affected by the proposed developments Arena Site Hotel Site  portions of historic Motor Row along South Michigan and Indiana Avenues  residential blocks north of East Cermak Road Data driven creativity for innovative clients -4- Aerial view of district (east to west)  No displacement of existing residential uses  Maintains existing street grid  Arena adjacent to McCormick Place West Building  Connected by skybridges  Existing McCormick Place parking would serve arena Data driven creativity for innovative clients -5- Arena and hotel site plan 10,000 seat arena 12,000 sf restaurant, retail Select service hotels (up to 500 rooms) 1,200-room hotel Banquet and meeting space Façade restoration 12,000 sf restaurant, retail McCormick Place West Building Rendering courtesy of TVS Architects Data driven creativity for innovative clients -6-  1,000 to 1,200 rooms  80 to 90 thousand square feet of meeting and banquet space  Connected to McCormick Place West Building via pedestrian skybridge  Restaurant and retail on street level View of hotel from west to east at the corner of Michigan and Cermak Rendering courtesy of TVS Architects Data driven creativity for innovative clients -7- The proposed hotel would activate the street  Hotel drop off  Corner bar on currently vacant lot  Retail and entertainment opportunities on Michigan Avenue  Restoration of four historic Motor Row buildings facades Proposed façade restorations, from left to right: Bird-Sykes Company Buildings 1 and 2, Triangle Motor Showroom Building, and the Cole Motor Co. Data driven creativity for innovative clients -8- Proposed arena, hotel and restaurant space adjacent to McCormick Place West Building  Arena  10,000 permanent seats  Multi-purpose event facility  500-room select service hotel  20,000 sf of restaurant and entertainment space  Skybridge connection to McCormick Place Data driven creativity for innovative clients -9- Overview of Real Estate in District Data driven creativity for innovative clients -10- Residential, commercial and industrial buildings in district 20 residential developments  4 residential rental buildings  5 mid-rise condominium  36 town houses  3 row houses  2 single family houses  1 mixed use apartment 13 industrial buildings (including one parking garage) 36 commercial buildings  50 retail store fronts - 27 occupied - 23 vacant  12 single story commercial buildings  23 mixed use buildings 1 hotel Data driven creativity for innovative clients - 11 - From 2009 to 2012, residential assessments declined more than in the City as a whole 0% -2% -4% -6% -8% -10% -12% -14% % Change Motor Row Residential -12.18% Data driven creativity for innovative clients Citywide Residential -1.30% - 12 - The foreclosure crisis has not missed the McCormick Place Entertainment District  Notices of foreclosure (Lis Pendens) have been filed on over 20% of the commercial properties over the last five years  Residential development includes 15 parcels with 1,584 residential units of which 1,125 are rental units and 427 are owner occupied.  As sales lagged during the recession, 2 condominium developments with a total of 423 units were converted to rental.  Over the last 12 months there have been 68 residential condominiums placed on the market.  21 units were removed unsold  34 units are actively being marketed  14 units have sold in the last 12 months ranging in price from $130,000-$383,000  10 of the sold units were distress Data driven creativity for innovative clients - 13 - Bird-Sykes Co. Building #2 -- currently vacant and proposed for façade restoration 2215 S. Michigan Ave Filing date: 2/5/2013 No release or sale recorded Data driven creativity for innovative clients - 14 - Triangle Motor Showroom proposed façade restoration 2229 South Michigan Ave Data driven creativity for innovative clients - 15 - The Bird-Sykes Co. Building #1 vacant and a partial board up 2210 S. Michigan Ave  Located directly across Michigan Ave. from proposed hotel  Store fronts could be attractive for new tenants Data driven creativity for innovative clients - 16 - Cadillac Motor Car Co. Showroom (No.1) – vacant, partial board, portions of façade missing 2416 S. Michigan Ave 11/10/2011 Data driven creativity for innovative clients - 17 - F.I.A.T Automobile Co. Showroom -- current home of RIFF Music Lounge and Pressure Point Recording Studios 2239 S. Michigan Ave Filing date: 10/22/2010 No Release or sale recorded Data driven creativity for innovative clients - 18 - Vacant lots and commercial buildings adjacent to struggling residential developments  Commercial / Industrial / Retail  7 existing retail businesses  3 vacant retail store fronts  2 vacant commercial buildings  1 mixed-use property under redevelopment  3 occupied commercial properties  1 parking garage  6 vacant lots  Residential  13 parcels  1,425 residential units – 1,031 rental – 394 ownership Data driven creativity for innovative clients Harriett Rees House - 19 - Condo developments have converted to apartments as sales lagged Chess Lofts 1200 Number of Residential Units 1031 1000 800 600 394 400 200 0 Rental Data driven creativity for innovative clients Ownership - 20 - 3 High-rise residential towers with combined total of 1,031 units on western boundary Long Grove House 2005 S. Michigan Ave. 2105 S. Michigan Ave. Data driven creativity for innovative clients The Lex Chicago. - 21 - The Prairie Ave. Lofts (Cullerton St. & Prairie Ave.) on the Northern boundary of the District -- seven stories, 138 units Data driven creativity for innovative clients - 22 - The Lakeside Lofts (2025-2035 South Indiana) 25 story buildings with 96 units Data driven creativity for innovative clients - 23 - The Chess Lofts (E.21st St. and S. Calumet ) adjacent to the new development site. 119 condo units on 8 floors. Data driven creativity for innovative clients - 24 - 2 townhome developments with a total of 36 homes (E. Cullerton and S. Calumet) Data driven creativity for innovative clients - 25 - Neighborhood Impacts of the McCormick Place Entertainment District Data driven creativity for innovative clients - 26 - 56 buildings in Motor Row designated as historic landmarks  Motor Row = Michigan Avenue Primarily between Cermak Road and Stevenson Expressway  Largest and most well preserved “motor colony” in the U.S  Center of the auto trade, at the beginning of the 20th century  Included 116 of the earliest auto show rooms, auto part retail and distribution centers, and auto service centers Data driven creativity for innovative clients - 27 - Advantages of façade preservation  Redevelopment options constrained by:  Narrow floor plates and store fronts  Timber frame and concrete construction does not provide clear spans  Environmental hazards  Better serves hotel development  Restaurant and retail development on first level  Function space on upper levels Data driven creativity for innovative clients - 28 - Interior spaces on Motor Row have lost historically relevant interior details Data driven creativity for innovative clients - 29 - Hyatt Calgary – an example of successful façade preservation in a hotel development Data driven creativity for innovative clients - 30 - Proposed hotel could provide stimulus to new development in Motor Row  Existing building stock is unsuitable for many potential businesses  Retrofitting may not be possible and is costly  Possible environmental abatement issues add costs  Buildings may remain vacant resulting in continued blight to the neighborhood and further deterioration of buildings  Façade preservation preserves the valuable historic character and feel of Motor Row  A more vibrant area will encourage further redevelopment resulting in a greater number of historic buildings revived Data driven creativity for innovative clients - 31 - Washington DC – headquarters hotel under construction with façade preservation April 13, 2013 Data driven creativity for innovative clients - 32 - Hotel and arena would stimulate development that supports residential land uses  Currently the district lacks retail or restaurant facilities  A convenient place for visitors and convention attendees to spend their money in the area  Visitor spending will spur retail and restaurant development in the A&E and Motor Row districts  Residents will benefit from:  Access to dining and retail options  New retail and support services will create a greater demand for residential living and increase values  The greater the residential base the more retail and services will be drawn to the area to compete for the additional business Data driven creativity for innovative clients - 33 - Development of 1/3rd of vacant buildings and land for restaurant and retail would meet projected demand Estimated Square Feet of District Development 24,000 104,000 212,000 Hotel and Arena Induced District Development Remaining areas available for restaurant and retail development Data driven creativity for innovative clients - 34 - Gateway District in Cleveland Ohio – an example of urban redevelopment  Sports facility development in 1994  Progressive field (formerly Jacobs Field)  Quicken Loans Arena (formerly Gund Arena)  Generated $250 million in private investment*  Redevelopment of historic buildings Quicken Loans Arena opened in 1994 and is home of the Cleveland Cavilers *Source: Timothy S. Chapin, Journal of the American Planning Association, Spring 2004 Data driven creativity for innovative clients - 35 - Sports facility development in Cleveland has stimulated reuse of historical buildings and street level restaurant and retail development Data driven creativity for innovative clients - 36 - Analysis of Comparable Convention Center Districts City New/Expanded Hotel New/Expanded Facility Neighborhood Development Anaheim Baltimore Boston Chicago Columbus Dallas Detroit Indianapolis Kansas City Miami Beach Nashville New York (Javits Center) New York (New Venue) New Orleans Orlando Philadelphia San Antonio San Diego San Francisco Washington DC Complete or Under Construction Planned Stalled Data driven creativity for innovative clients - 37 - Chicago has fewer nearby hotel rooms San Francisco Las Vegas Orlando San Antonio New Orleans Atlanta San Diego Philadelphia Washington DC Miami Beach Denver Baltimore Los Angeles New York Boston Chicago Average 0 5,000 10,000 15,000 20,000 25,000 Number of Hotel Rooms Within a Half Mile of the Convention Center *After planned expansions in supply Data driven creativity for innovative clients - 38 - Chicago has a relatively low population within 1 mile of its convention center San Francisco San Diego Boston Las Vegas Chicago New Orleans San Antonio Orlando 0 20,000 40,000 60,000 80,000 100,000 120,000 Number of People within 1 mile of CC Source: Esri Data driven creativity for innovative clients - 39 - Chicago ranks in the middle in total income within 1 mile of the Convention Center San Francisco San Diego Boston Chicago Las Vegas New Orleans San Antonio Orlando $0 $1,000 $2,000 $3,000 $4,000 Total Income ($ millions) within 1 mile of CC Source: Esri Data driven creativity for innovative clients (calculated by multiplying average household income by households) - 40 - McCormick Place is comparatively distant from the major tourism attraction of the city *After planned expansions in supply Data driven creativity for innovative clients - 41 - Chicago has comparable transit access which will improve with the addition of the Cermak Station Data driven creativity for innovative clients - 42 - Chicago - McCormick Place National Vietnam Veterans Art Museum Glessner House Museum Prairie Avenue District 10 Minute Walk Women’s Park and Gardens Hyatt Regency 5 Minute Walk McCormick Place Bird Sanctuary Chicago South Loop Hotel Data driven creativity for innovative clients Mercy Hospital Lakefront Trail - 43 - San Diego Convention Center USS Midway Museum Pantoja Park Embassy Suites San Diego Bay 5 Minute Walk Childrens Museum of San Diego Childrens Park Manchester Grand Hyatt 10 Minute Walk Westfield Horton Plaza Hilton Gaslamp Quarter Hard Rock Hotel Petco Park Seaport Village San Diego Marriott Marquis & Marina Omni Hotel Embarcadero Marina Park North/South North Hilton San Diego Bayfront Data driven creativity for innovative clients - 44 - Henry B. Gonzalez Convention Center Residence Inn Marriott Travis Park The Alamo Crockett Hotel San Antonio Riverwalk La Quinta Inn & Suites Rivercenter Mall 5 Minute Walk Arneson River Theater Marriott Rivercenter 10 Minute Walk La Villita Grand Hyatt San Antonio Fairmont Hotel Mexican Cultural Institute Hemisfair Park Tower of the Americas Institute of Texan Cultures Alamodome Data driven creativity for innovative clients - 45 - Las Vegas Convention Center The Strip Fontainebleau Resort Las Vegas Hilton Las Vegas Hotel and Casino Springhill Suites Riviera The Las Vegas Country Club 10 Minute Walk 5 Minute Walk Las Vegas Marriott Residence Inn Las Vegas Convention Center Courtyard Las Vegas Conv. Center Renaissance Las Vegas Wynn Country Club Embassy Suites Convention Center Data driven creativity for innovative clients Best Western Mardi Gras Hotel & Casino - 46 - Orlando - Orange County Convention Center International Drive Westin Imagine Orlando 10 Minute Walk Rosen Plaza Hotel 5 Minute Walk Dr. P. Philips Hospital Serenity Spa At the Lakes Data driven creativity for innovative clients Peabody Orlando Hilton Orlando Rosen Centre Hotel Seaworld Orlando - 47 - New Orleans - Ernest N. Morial Convention Center World Trade Center New Orleans Harrah’s Casino Lafayette Square Piazza d’Italia Gallier Hall The Ogden Museum of Southern Art Hilton New Orleans Riverside Wyndham Riverfront Riverwalk Marketplace Courtyard Residence Inn 10 Minute Walk Marriott 5 Minute Walk Confederate Memorial Hall Museum Hotel New Orleans The National World War II Museum Hilton Garden Inn Hampton Inn and Suites Port of New Orleans Mardi Gras World Data driven creativity for innovative clients - 48 - San Francisco - Moscone Center Westin San Francisco The Westin St. Francis 10 Minute Walk Museum of the African Diaspora St. Regis San Francisco Four Seasons Hotel SF Museum of Modern Art Hotel Palomar Westfield San Francisco Centre Maritime Hall Courtyard by Marriott W The Mosser Yerba Travis Buena Park Gardens Hotel Milano 5 Minute Walk The Pickwick San Francisco Mint InterContinental San Francisco Data driven creativity for innovative clients Metreon Zeum: SF Children’s Museum - 49 - Boston Convention & Exhibition Center Institute of Contemporary Art Seaport World Trade Center Seaport Hotel Renaissance Boston Waterfront 5 Minute Walk Bank of America Pavilion 10 Minute Walk Data driven creativity for innovative clients Westin Boston Waterfront - 50 - Economic Impact Analysis 7 Data driven creativity for innovative clients Summary: construction and operational economic impacts are substantial $251.0 million gross and $108.3 million net recurring annual impact from the proposed arena and proposed hotel, related restaurant and entertainment development, captured unaccommodated hotel demand, and new convention center activity will support approximately 970 net and 2,600 gross full-time equivalent jobs. Impact from construction is $1.2 billion, but only occurs during the construction period. Data driven creativity for innovative clients - 52 - HVS method calculates gross and net economic impact to the City of Chicago • Change in McCormick Place events, attendance, room nights • Proposed hotel operating projections Estimate • Proposed room group night forecasts new • Arena event, attendance, and financial forecasts visitation to • Capture of previously unaccommodated hotel room nights Chicago Identify spending habits Estimate spending impacts • Delegates and hotel guests • Day trippers • Event organizers • Exhibitors • Direct –spending by impact generators • Indirect – business purchases related to spending • Induced– personal income related to spending Data driven creativity for innovative clients - 53 - Chicago would import spending from attendees, event organizers, and exhibitors Overnight attendees Daytrip Attendees Event Organizers Exhibitors • Import spending on lodging, restaurant, retail, transportation, and entertainment. • Include convention center visitors and arena and entertainment district patrons. • Spend on lodging, food and beverage, facility rental and services, transportation, and other items. • Spend on lodging, food and beverage, transportation, booth set up, equipment rental, and services. Data driven creativity for innovative clients - 54 - The proposed arena could draw approximately 370,000 attendees and generate 13,800 room nights per year  Arena impact generators include:  Overnight guests from out of state  Non-Chicago metro area residents making day-trips to attending DePaul Basketball games and other events Data driven creativity for innovative clients - 55 - Non-basketball events would generate the majority of arena visitation Arena Event Demand for a 10,000 Seat Venue* Average Attendance Events Events DePa ul Men's Ba s ketba l l Hi gh School Ba s ketba l l Tourna ment Ful l -Hous e Concerts Ha l f-Hous e Concerts Thea ter Concerts Rodeos / Bul l ri di ng Rel i gi ous / Conventions Gra dua tions / Ci vi c Boxi ng/MMA/Women's Ba s ketba l l Motors ports Fa mi l y Shows Ba nquets / Meetings / Pa rties 16 3 4 4 2 2 4 6 2 1 8 6 Total 58 Source: SMG Data driven creativity for innovative clients 9,500 7,500 11,000 6,000 4,000 4,000 5,000 8,000 4,000 5,000 3,000 500 Total Attendance 152,000 22,500 44,000 24,000 8,000 8,000 20,000 48,000 8,000 5,000 24,000 3,000 370,000 *Concert capacity would be approximately 12,000 seats - 56 - The proposed 1,200-room hotel would induce new “in-house groups” and generate 18,000 new room nights per year  In a stabilized year the proposed hotel could achieve:  64% occupancy  $237 average daily rate  National marketing efforts would bring new groups to Chicago that would use only the hotel function space  The new hotel would cooperate with the existing Hyatt to jointly host large group events  Room night demand absorbed from the competitive set was not included in the impact analysis because it is does not represent new demand Data driven creativity for innovative clients - 57 - The table below summarizes annual visitor and room night estimates* Source Room Nights Day Trips Attendance New McCormick Place Events 61,000 205,000 (1) 290,000 Arena 14,000 355,000 (2) 367,000 New Hotel Group Demand 18,000 0 18,000 Unaccommodated Hotel Demand 70,000 0 70,000 (3) (1) 79,000 from outside Chicago (2) 176,000 from outside Chicago (3) 190,000 from outside Chicago *Estimates are for a stabilized year of demand. Data driven creativity for innovative clients - 58 - HVS used reliable sources to estimate visitor spending parameters  Destination Market Association International convention center spending survey of delegates, exhibitors, and event organizers:  Restaurant  Catering  Recreation  Entertainment  Transportation  Facility services  Hotel spending based on historical data on group average daily room rates in comparable hotels  Corporate Travel Index:  Compares cost of business travel in top 100 markets  Consumer Price Index use to inflate certain data points to 2012 dollars Data driven creativity for innovative clients - 59 - Direct visitor spending would increase business spending and personal income in Chicago Multiplier effect example:  Visitors buy meals in Chicago restaurants (direct spending)  The restaurants purchase more food and supplies (indirect spending)  Restaurant staff have more income and spend it in Chicago (induced spending) Data driven creativity for innovative clients Food & Beverage Spending Lodging Spending Other direct Indirect Induced Employment • Business spending • Personal Income • Full-Time Job Equivalents - 60 - New visitors would generate over $250 million in annual gross spending ($108 million would come from outside Chicago) ESTIMATED ECONOMIC IMPACT ($ MILLIIONS)* Gross Net New McCormick Place Events Arena Events Hotel Induced Demand Restaurant and Retail $122.9 27.5 26.2 74.4 $60.6 13.9 17.4 16.4 Total $251.0 $108.3 *For a stablized year in 2012 dollars. Data driven creativity for innovative clients - 61 - The proposed project would support approximately 2,588 gross and 971 net fulltime equivalent jobs FULL-TIME EQUIVALENT JOB ESTIMATES Gross New McCormick Place Events Arena Events Hotel Induced Demand Restaurant and Retail Total Data driven creativity for innovative clients 1,046 266 187 1,089 2,588 Net 478 128 125 240 971 - 62 - The combined construction costs would be approximately $786 million  Impacts would occur over a two- to three-year construction period  Construction costs estimates are based on gross floor building floor areas and would be refined based on further design  For the purposes of impact estimation project costs include hard and soft construction cost but exclude land Data driven creativity for innovative clients Venue Approximate Construction Costs ($ millions) Arena $140 M New Hotel $396 M Entertainment District $250 M All Spending $786 M - 63 - Construction occurring in 2016 creates a onetime economic impact of over $1.2 billion Source Construction Spending Impact Thousands of 2012 Dollars Direct Spending $786,000 Indirect Spending $191,810 Induced Spending $234,733 All Spending Data driven creativity for innovative clients $1,212,544 - 64 - This spending impact would temporarily create 7,408 full-time equivalent jobs. Source Full-Time Equivalent Jobs Arena 1,320 New Hotel 3,732 Entertainment 2,356 Total 7,408 Data driven creativity for innovative clients - 65 - Contact Information Thomas Hazinski Managing Director HVS Convention, Sports and Entertainment Facilities Consulting 312-587-9900 x 11 thazinski@hvs.com Data driven creativity for innovative clients - 66 -