| 2005 Developer and Owner of
the Year
Mesirow Stein's Dynamic Duo
by Craig Barner Visitors
find that good things come in pairs at Mesirow Stein Development Services Inc.
Richard Stein and Michael Szkatulski, the senior managing directors of
the Chicago-based firm, greet guests in their River North office with warmth and
energy.
On the same day they were being interviewed for this article, Stein and
Szkatulski learned that the firm won an Award of Excellence from the San Antonio-based
Urban Land Institute. The prestigious ULI honor came for serving as the development
adviser on The Glen, a mixed-use project in north suburban Glenview that is knitting
the 1,121 acres of the former Naval Air Station Glenview, which the military closed
in 1995, to the rest of the community.
Most significant, Mesirow Stein
has landed two recent contracts, partly due to previous work, that will have an
impact on Chicago business for generations: the $151 million Graduate School of
Business Hyde Park Center, which opened in 2004 on the University of Chicago's
main South Side campus, and the $850 million, 2.3-million-sq.-ft. West Building
for exhibitions under construction on the McCormick Place Convention Center campus,
also on the South Side.
The firm was named the development manager for
the Rafael Vinoly-designed Hyde Park building in part because it developed the
GSB's Gleacher Center conference and meeting facility in the Loop in 1994, said
John Huizinga, the Walter David Bud Fackler Distinguished Service Professor of
Economics and former GSB deputy dean.
Similarly, Mesirow Stein is a member
of Mc4West, the consortium with the design-build contract for the West Building,
in part because it was the development manager of the $675 million South Building
that opened in 1996 at McCormick Place.
"They came to the [Mc4West]
team with a lot of knowledge based on how to do a job of this complexity on the
existing campus," said David Causton, general manager of McCormick Place.
Mesirow
Stein Development Services Inc., which was founded in 1971 as Stein & Co.,
has a distinguished history in Chicago, and its principals understand the needs,
aspirations and personalities of business leaders in the public and private sector.
Every year the firm is involved in development valued at several hundred millions
of dollars.
And these developments, which range from Loop skyscrapers to
mixed-use projects over hundreds of acres, show the firm possesses the know-how
to keep Chicago growing and in the forefront of the nation's business radar. At
the same time, the firm is dedicated to community building and revitalization
with the Glenview and other projects in the city and suburbs.
Major players
in construction, real estate and design say Mesirow Stein has a solid reputation.
"We
have done a lot of work with them, and we rank them right at the top," said
Bruce Lake, president of Chicago-based general contracting firm James McHugh Construction
Co.
For these and other reasons, Midwest Construction has named Mesirow
Stein its 2005 Developer and Owner of the Year. The award has been given annually
for seven years.
In 1997, Chicago-based Mesirow Financial, a financial
services firm with expertise in investment management and banking, acquired Stein
& Co. and made it a wholly owned subsidiary. Mesirow Financial, a private
firm, recently told Crain's Chicago Business that its revenues topped $300 million
- triple from a decade ago.
Stein's 40 Years Richard
Stein, the 66-year-old senior partner, has had a big impact on the region's landscape
for decades.
Stein started in development in 1962 when he formed Klein
& Stein in Chicago with partner Ray Klein.
"He was short and bald,"
the tall Stein said of his partner. "We'd walk in and say, 'Klein & Stein,'
and everyone thought it was a comedy act."
The firm, which was last
known as Littlestone Co., was sold in the early 1970s when Klein moved.
Stein
& Co. was formed, and the firm focused on developing the city's Near West
Side and Old Town neighborhoods, particularly in condominium conversions. Stein
said that over the years, the firm has closed about $2 billion in that market
alone.
In the 1980s, the firm branched into the suburban office market,
including the Arbor Lake Center and Lake Cook Office Centre, both in Deerfield.
Stein met Szkatulski, 52, while the Lake Cook project was under way.
Szkatulski,
who had worked as an architect for Chicago-based architecture firm Skidmore, Owings
& Merrill LLC for five years, said he switched to the development side of
the business because he "was pretty good at solving problems."
"I
thought he was great at solving problems and was a brilliant architect, too,"
Stein added.
Having cut its teeth in the suburbs, the firm signed deals
for office projects in the Loop in the late-1980s, including 203 N. LaSalle St.
and the Metcalfe Federal Building.
Mesirow Stein's most significant project
- and one Stein cites as among his proudest accomplishments - was the AT&T
Corporate Center, a 60-story edifice that opened on West Monroe Street in Chicago
in 1989.
"After that, no one ever asked us if we were big enough to
do anything," Stein said.
The skyscraper, which SOM Principal Adrian
Smith designed himself, features classic styling elements, such as setbacks, and
rich detailing inside, including wood, bronze and pattern marble floors.
Further
solidifying the firm's reputation are the mixed-use and residential developments
it is involved in, including the conversion of Fort Sheridan, a 714-acre U.S.
Army base in north suburban Highland Park and Highwood that closed in 1988, into
a residential neighborhood and University Village, a 58-acre neighborhood that
is revitalizing a formerly blighted area on the
Southwest Side not far from
the University of Illinois at Chicago and Maxwell Street market.
After
Mesirow Financial acquired the firm, Stein and Szkatulski continued to head development
activities.Molding Mesirow Stein Mesirow Stein Development
Service Inc. generally eschews focus on just a few development areas but instead
has experience in many.
The approach has several advantages, including
avoiding the inevitable troughs of the real estate market and attracting high-performing
employees, Szkatulski said.
The approach appears to be paying off.
"It
looks like to me that the firm isn't dabbling in things," said Susanne Cannon,
associate professor of finance and director of the Real Estate Center at DePaul
University in Chicago. "What they've doing is developing expertise in several
areas."
She pointed to the specialty Mesirow Stein developed of converting
military bases into mixed-use communities in the 1980s and 1990s when the market
could be "grim" and carrying its knowledge into similar projects with
a residential focus.
Stein said units ranged between $180,000 and $1.3
million at University Village and $250,000 to $4 million at Fort Sheridan.
"My
view has always been that communities are healthier when they have an array of
price points, mixture of incomes and much more diverse community," Cannon
said.
Smart growth principles were implemented at The Glen, said Don Owen,
director of capital projects and planning for the village of Glenview. For instance,
a train station was located on the development's eastern border where high-density
residential is located so residents can catch the Metra commuter train into Chicago.
The
diversity of elements - a 45-acre manmade lake for recreation and water retention,
children's museum, golf course - was a factor in The Glen's being named Facility
of the Year in 2000 by the Washington, D.C.-based National Association of Installation
Developers. A Client Focus Mesirow Stein focuses with pinpoint
intensity on satisfying client needs, getting maximum value and delivering projects
on time and on budget.
"We don't treat our clients' money any differently
than our own money," Stein said.
For instance, the firm generally
stipulates the value of its agreements with general contractors, rather than choosing
negotiated guaranteed-maximum-price contracts, because it has the expertise to
price construction services.
"If you're going to contract that way,
you really have to be equipped to administer the agreement and enter what is at
its base an adversarial relationship," Szkatulski said. "Most developers
have defaulted in favor of GMP-type agreements, which we also use. For us, it's
a strategic question, not an automatic decision."
Similar attention
is devoted to agreements with architects and subcontractors to maximize client
value while respecting the professionalism of all involved.
"You have
to have the experience and know-how to understand the business and how it's represented
in the contracts and what effect it'll have on the deal," Szkatulski added.
Mesirow
Stein has also elected the design-build method on several projects because the
cost can be guaranteed. Indeed, the culture of delivering maximum value pervades
the firm.
For instance, a change was implemented to the McCormick Place
West Building that will save money for the Metropolitan Pier and Exposition Authority,
the convention center's owner, said Causton, the complex's general manager.
A
key McCormick function is the movement of freight between a truck marshalling
area and the docks serving individual exhibition halls without using city streets.
Originally, plans called for constructing an elevated road parallel to the Stevenson
Expressway between the marshalling area, which is east of Martin Luther King Drive,
and the West Building docks west of MLK Drive.
The development team's alternative
idea was to build a smaller elevated road between the existing South Building's
docks, which are east of MLK Drive, and the West Building's docks, Causton said.
Freight for the West Building will effectively be routed via the South Building
docks.
"They (the development team) saved us, ultimately, millions
of dollars," Causton added.
At Fort Sheridan, Mesirow Stein turned
to history when it faced the task of transforming the garrison with military-style
architecture into a welcoming residential community.
The firm's landscape
architect discovered comments about the fort's landscaping from O.C. Simonds,
the original landscape architect in the 1890s and contemporary of luminaries Frederick
Law Olmsted and Jens Jensen. "He [Mesirow Stein's landscaper] said it's just
like the man stepped out of the grave," Szkatulski said.
Forest Hills
Gardens, a planned community in Queens, N.Y., from the same era, was also studied.
Two
ravines the Army had converted into landfills were dug out and replanted with
native species. Curvilinear streets, street furniture, flower boxes and fences
were incorporated to reflect the landscape style of late 19th Century America.Getting
Personal Even with the emphasis on skills and professionalism, humility and
the personal touch play a part in the Mesirow Stein method for itself and project
partners.
For instance, Mesirow Stein yielded when it floated an idea to
save money on the GSB's Hyde Park Center.
Glazing covers the four tulip-shaped
steel columns of the GSB's Hyde Park Center, and the panes essentially act as
the roof in those areas. A flat roof would have saved money.
But architect
Vinoly pushed to retain the original plan because the concept of glass cones in
a glass box was essential to his design. Ultimately, cost savings were identified
elsewhere.
The emphasis on the personal touch translates into exceeding
Chicago requirements on Affirmative Action. As part of the McCormick Place West
Building project, the city requires 25 percent certified Minority Business Enterprise
participation and 5 percent certified Women Business Enterprise participation.
Kimberly
McCullough, director of business and workforce diversity for McCormick Place,
said the Mc4West proposal has several additional initiatives, and these include
scholarship-based education plan for minorities and women, an idea to help emerging
firms and a strategy to bring together mentor firms and protégé
firms.
"Richard Stein has expressed a personal interest in this program,"
she added.
"He is actively involved in the Affirmative Action initiatives
and is committed to making it happened in a positive way."-
Craig Barner
Editor
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