|By Susan Diesenhouse, Chicago
TribuneMcClatchy-Tribune Business News
Sep. 13, 2006 - As construction finally gets under way on a $260 million Gold Coast hotel and residential condominium project, Chicago also might be spawning a new hospitality chain.
Work started last month on the 60-story Elysian Hotel and Private Residences, which consists of 188 hotel condo suites, 51 residential condos and parking for 110 cars at 11 E. Walton St. Since marketing started in 2003, buyers have agreed to purchase 158 units. The rest are on sale for $480,000 to $6.8 million.
"This will be the flagship for a new Chicago-based hotel company, Elysian Hotels & Resorts," David Pisor, chief executive of the development entity Elysian Worldwide LLC, said Tuesday.
Elysian flags may someday fly on hotels in Washington and San Francisco. "We're negotiating on properties," he said.
If Elysian succeeds in becoming a Chicago-based hotel chain that builds and runs its own properties, it would be something "that rarely happens," said Brian Flanagan, president of Property Valuation Advisors Inc., a real estate consulting firm in Chicago with a hospitality practice.
"To start a new hotel franchise is extremely capital intensive, requiring multiple locations," said Flanagan.
It's a good time for hospitality, an industry in a growth cycle, said Bruce Ford, executive vice president of Portsmouth, N.H.-based Lodging Econometrics.
"We've had three good years, and the next few look pretty good," said Ford.
But until a second Elysian opens, Ford added, "essentially, you have a developer building an independent hotel."
Nevertheless, it's an accomplishment a long time coming.
Marketing for the project began three years ago, with construction scheduled for fall 2005. That was delayed as the developer acquired more property contiguous to the site, now 42,000 square feet, and sought city approval to build 60 rather than 40 stories, Pisor said.
In the past three years construction costs have soared here and nationwide. The 656,000-square-foot project pegged at about $235 million last year will now cost about $260 million.
How to build four stories of underground parking next to a Red Line subway tunnel added complexity, Pisor said. "The delay was painful," he noted.
The project is being designed by Lucien Lagrange Architects and managed by Golub & Co.
With a slew of other luxury residential and hotel condo projects coming on the market, Elysian hopes to distinguish itself with superior service and memorable food when completed in fall 2008.
And food is in Pisor's blood. Raised in California, he spent many years working for his aunt Alice Waters at her famous gourmet restaurant Chez Panisse in Berkeley, Calif., which features farm-fresh food.
"I cooked, managed, waited on tables and cleaned lots of organic carrots," he recalled. That, too, "was painful."
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