MEMO TO: Real Estate Media

SUBJECT: CHICAGO HOUSING MARKET & LAKESHORE EAST

DATE: October 3, 2007

FROM: Larry Schaffel, PR Director, Magellan Development Group
lschaffel@magellandevelopment.com
Tricia Van Horn, vice president/marketing
tvanhorn@magellandevelopment.com
(312) 642-8869

There are continuing, widespread reports that for a variety of reasons, from steadily rising interest rates to skyrocketing gasoline prices, that the housing market is continuing a tailspin started in 2006 at least for the balance of 2007.

Forget about it, at least where it concerns Lakeshore East, which might turn out to be an orchid in a field of weeds.

Our two most recently completed condominium towers, the 304-unit The Chandler, and 340 on the Park, which is adding 344 luxury condo residences across the street from Millennium Park, are 98 percent sold. Both have just begun receiving their first residents.

And the 263 condominiums and penthouses that will occupy the top 29 floors of the distinctive, 82-story Aqua, the tallest residential building in the city with projected occupancy in 2009, are already 91 percent reserved! Ground was broken earlier this year.

Does that sound like the air is flowing out of the housing market?

What’s the secret? Partly, of course, it’s a highly advantageous location. While location continues to be a critical factor for successful real estate, amenities are adding an important new dimension.

It is our observation – and this has certainly been demonstrated at our Lakeshore East village in the heart of downtown Chicago – the most successful real estate developments continue to be those that combine exceptional location with an excellent amenity package because of the demographic dynamics in today’s market.

Our experience at Lakeshore East, a $4 billion mixed-use complex where the Chicago River meets Lake Michigan opposite Millennium Park, is that the renter and, to some extent, the buyer market is dominated by young urban professionals aged 25 to 35. Their mantra is location and amenities. A significant number of our condo buyers are empty nesters that are both full- and part-time occupants of in-town residences with great proximity to the city’s cultural and entertainment attractions. We are witnessing a universal response to vitality and proximity to water and parks, regardless of age. Lakeshore East is surrounded by both and at our core we have a magnificent six-acre park created by renowned landscape architect James Burnett that serves as everyone’s spacious front yard.

Another dimension of the success of our neighborhood is a unique RentBUY program where renters can have up to 25 percent of their rent credited to up to 2.5 percent of the purchase price of a condominium in our complex. Our first rental building, the fully leased 548-unit The Shoreham, achieved 92 percent occupancy in eight months, which is probably a record velocity and we’re confident that RentBUY has stimulated the leasing activity as well as stockpiling our community with future buyers

Another component of a successful complex in the right location with the right amenities is the breadth of the market it attracts. As you might expect, a little over half of our residents are relocating from older nearby buildings and suburbs that possibly lack the facilities and nearby entertainment opportunities. Another 20 to 30 percent are from downstate Illinois or as far as both the east and west coasts.

But most surprising is that growing percentage is from both Europe and Asia. More often than not these are job-oriented relocations. But even in these cases, the magnet is our location and amenities packages in each building and the fact that we offer a superbly located community that is fairly self-contained with respect to upcoming service conveniences from grocers to banks to dry cleaners and restaurants.

That’s what’s working for us today and we believe will continue to dominate the Chicago market at Lakeshore East and perhaps elsewhere for the foreseeable future.

That’s our view of the current housing market. Perhaps you might find it useful in articles that you may be developing on the status of the housing market in Chicago.