The world of real estate is one of high risk and high reward, and developer Joel Carlins certainly understands the intricacies of this dynamic from his 25 years of building in Chicago.
Co-founder and former CEO of Magellan Development Group, Carlins’ first big deal almost seemed to have fallen into his lap, but years of economic turbulence following the Savings and Loan Crisis and recession in the early ‘90s nearly cost him the opportunity. Nevertheless, Carlins worked out a deal with the Salvation Army to purchase and eventually redevelop their old office site in the Near North Side.
The end result was Park Newberry, an 11-story, 185-unit condo development that pushed the envelope of luxury living. And after its completion, Carlins declared that development was in his genes. It was only the beginning of a career that would see the construction of over three dozen high-profile developments in Chicago, Nashville, Miami and other major cities. Since the formation of Magellan Development Group, the company has developed more than $5 billion in residential, mixed-use and commercial properties.
For the 2021 IREJ Real Estate Awards, Joel is the recipient of the 2021 Lifetime Achievement Award. Mr. Carlins discussed his career as a lawyer and as a real estate developer with the Illinois Real Estate Journal prior to the awards event. The following is a selection of the conversation with Mr. Carlins about his career.
On Joel’s beginnings in real estate…
While I was practicing [law], I had done things for the Salvation Army, and they had a site for sale at Dearborn and Delaware in Chicago. So I wound up getting a site from the Salvation Army and developing it. The reason I wanted to do it is that as a lawyer, I represented all aspects of real estate development, even though I never developed any. I represented banks, I knew how the financing went, I knew architects etc, etc. But I always felt that most of the builders that I represented were out in the suburbs and they were all very wily people who knew how to market to people and I thought, well, if I go develop in the suburbs, they’ll eat me alive because I had no experience like they did.
But what I did know is that I lived in the city and I said, you know, none of them are developing in the city and I think part of the reason was they weren’t used to paying the kind of land prices you’d have to pay in the city. And most of them had never built a high rise, because to justify the land, you have to have enough density. So I said, if I want to get into development, that’s where I should be because nobody was developing at the time as we were going through a recession. When I decided on the Salvation Army site, which I was consulting them on, I would talk about buying it, and then I wound up buying it, and wound up with other clients raising equity and debt.
On Joel’s initial strategy for real estate development…
My parameters for development was going to be somewhere between North Avenue on the north, the lake to the east, and then Madison Street or even closer to the Chicago River on the south. I developed some relationships in the city and I understood that [the goal of] city planning was to try and create the most density near Lake Michigan. So I felt the best thing for density was to be as close to the lake as I could get, or the Chicago River but east of Michigan Avenue. So that was my quadrant, and yet the suburban builders hadn’t yet tried to do the downtown area.
Luckily, I was having some success then all of a sudden, they woke up and saw what I was doing and started to come down. They didn’t come down right away, so I still had virgin area to develop, enjoy, and walk around. But in the beginning, they still didn’t want to be downtown, because when they inquired about the prices, they were still much more reluctant and paying much less for land costs in the suburbs.
On the nautical theme of Lakeshore East…
I always thought there should be a theme, just like how some restaurateurs have a theme, they have their waiters and waitresses dressed a certain way, and their menu, etcetera. And I thought rather than have a typical city block with the same basic structures, and the same basic architecture, that this site was big enough to do what I call a “village in the heart of the city” and to use different architects so things don’t look the same.
So you get that variety, almost like you walk down Astor Street, you see some older buildings, some newer buildings, but not like going to the suburbs where everything basically looks the same. And then for a central theme, I thought about what people like best. For instance, I could ask you what do you like to look at out your windows? You’re probably going to say water, or landscaping, and things of that nature, right, as opposed to looking across the street and seeing another brick building.
On approaching the development of Lakeshore East…
Like I said earlier, I think people like water or grass and when we developed Lakeshore East, this place was a dump. And I said that if we’re gonna develop this much acreage, we should have a park in the middle, because people aren’t going to want to buy something and have construction right next door to them. So this way we could spread out the development and then have wonderful views on all sides: you’ll have a park in the middle, Grant Park on the other side and then the Chicago River. But that was the concept — to make two-thirds of the property green space and the rest vertical.
I also felt there should always be this diversity of architecture. Jeanne Gang is spectacular and we worked with her to do Aqua. We used about eight different architects on different buildings, and we used two different landscape architects, and if you add them all up, and all the different specialties, we’re probably up to over 12 different firms. I think that it’s important that everything doesn’t look the same. And I think that the other nice thing is that when people say, “You built a city within a city,” I said no, I don’t look at it that way. I say we built a village in the heart of the city and it’s the crown jewel of this area. And part of that is substantiated by the fact that if you ask most of the people who live here, they feel it’s their community.
Looking back on his legacy…
When I practiced law, I practiced all over the country in various parts of the world and did some unique things. I was even before the United States Supreme Court, which is a rare opportunity. And if I had a wonderful file, and I did some wonderful things, when it was over, I put it in a file cabinet and that was it. But when you build a building, it’s there beyond your lifetime, and I thought, what a legacy for your children, your grandchildren, to know that if you’re able to succeed, that they can say my grandfather or my great-grandfather did that. So I think this is probably the biggest reward.