(Crain’s) — Developer Centrum Properties Inc. has killed a proposed 41-story condominium building in Streeterville, selling the site to North Shore developer David Hovey, who plans to eventually build an apartment tower there. And in a dance of developers, another site three blocks east is being put on the market by Draper & Kramer Inc. after talks fell apart to sell that site to Equity Residential, an apartment real estate investment trust. Mr. Hovey paid nearly $20 million late last week for a site at St. Clair and Illinois streets, sources say, where Centrum had proposed the second stage of the Cityfront Plaza project. The three-tower Cityfront Plaza site stretches from St. Clair to Fairbanks Court along the north side of Illinois Street. Sales for the second phase, called the St. Clair, had stalled after more than 15 months of marketing, with contracts for just 40% of the 261 units in the proposed building. The first phase of Cityfront Plaza, a 281-unit building at the corner of Fairbanks and Illinois, was completed last fall and is about 90% sold. The St. Clair project joins a growing list of downtown condo projects that developers have dropped this year before construction started. Projects totaling more than 1,400 units were canceled during the first half of 2008, according to a second-quarter report by Chicago residential consulting firm Appraisal Research Counselors. An executive with Centrum did not return calls requesting comment. Executives with Chicago real estate firm Jameson Real Estate LLC, which brokered the deal, referred questions to Mr. Hovey. The Streeterville project would be the first downtown tower for Mr. Hovey, a modernist architect and experienced high-rise developer in the northern suburbs. Mr. Hovey, president of Glencoe-based Optima Inc., confirmed that the deal had closed but declined to disclose the exact price. But he called the price “very attractive” given the site’s location one block east of North Michigan Avenue. Amid the current credit crisis, a venture led by Mr. Hovey paid mostly cash for the property, sources say. The Centrum-led venture also provided so-called “seller financing,” a loan to cover some of the purchase price. Mr. Hovey said he is considering an apartment tower. But lenders have also pulled back on construction financing for apartments. With about 2,500 new units to be delivered to the downtown market by the end of next year, many observers do not expect another building to start until 2010. “We’re in no hurry,” Mr. Hovey says. The deal marks a shift in the negotiations between Mr. Hovey and Centrum executives, who in June had a tentative deal to sell Mr. Hovey the site of Cityfront Center’s third phase. That site, which is zoned for a 50-plus story hotel/residential building, is between the existing building and the St. Clair site. But that site came with a much higher price tag of between $45 million and $50 million. | 
