Client: Baker Development Corporation
Baker Development Corporation was in the midst of renovating and adaptively reusing a 100-year-old vacant manufacturing building on 1.1 acres of land at 2017 North Mendell Street in Chicago, Illinois into 52,000 square feet of creative loft office space when it experienced unanticipated cost increases. Baker Development Corporation retained a property tax attorney to seek a Cook County Class 7(b) property tax incentive.
Gruen Gruen + Associates (GG+A) was retained to evaluate the real estate economics of the development. GG+A interviewed and obtained information from the developer about development costs and anticipated rents and space absorption. GG+A interviewed real estate brokers and reviewed secondary office market data and capital markets data. GG+A documented the assessed value trends, office rental rates in the neighborhood, and the negative externalities associated with adjoining manufacturing uses.
GG+A prepared a discounted cash flow residual land value analysis with- and without-the requested property tax incentive and provided an opinion about the feasibility of the project with- and without- the incentive. GG+A also compared the forecast property taxes assuming the provision of the incentive to the existing taxes.
GG+A prepared a report summarizing the work completed, the inputs and results of the discounted cash flow residual land value model, and findings and conclusions. The report will be part of the application for the requested Class 7(b) property tax incentive.