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Developer scours world to fill up Chicago tower

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CHICAGO -- Developer Garrett Kelleher is counting on a weak dollar and the cachet of living in the world's tallest condominium tower to market the Chicago Spire.

It may be a hard sell.

Kelleher's Shelbourne Development Ltd. is laying foundations for his 150-story, 1,193-unit tower even as demand slows at Donald Trump's 92-story hotel and condominium project, being built 10 blocks away.

Kelleher said wealthy buyers in Europe, Africa and Asia will recognize Chicago as a better investment than "problematic" markets such as Las Vegas and southern Florida.

The Spire faces skepticism for its asking prices, including a Chicago record of $40 million for the penthouse.

When it opens in 2011, the 2,000-foot Spire will supplant the 1,450-foot Sears Tower across town as the tallest U.S. building and change the skyline of Chicago, birthplace of the skyscraper.

"I appreciate the bravado and the guts of the developer," said Michael Reschke, chairman of Prime Group Inc., a closely held Chicago developer. "I just don't understand the economics and the market demand."

Shelbourne, based in Dublin, always planned to court buyers outside the U.S., Kelleher said in an interview, a strategy that's more important as demand slows.

Home sales in downtown Chicago slid 43 percent in the fourth quarter to 412, according to Appraisal Research Counselors. U.S. new-home sales fell 26 percent in 2007.

"The U.S. isn't for me at the moment," said Julian Mullins, a London lawyer who owns property in Bulgaria and the Caribbean. "Eastern Europe is cheaper to buy into and offers a better chance of capital appreciation."

Dollar, demand impact

The Spire will appeal to investors looking for luxury properties, particularly those whose value may appreciate when the dollar and demand rebound, said Kelleher, 46, Shelbourne's executive chairman.

"The buyers for the Spire are not people who need 95 percent or 100 percent financing," he said.

Shelbourne declined to disclose how many units have been sold.

Kelleher is funding the first phase of construction, and the company declined to discuss other financing.

At the Spire's Chicago sales office, a model apartment has a full-scale photo of the 90th-floor view, taken from a helicopter.

The company said it's not concerned that the threat of an attack like the one that destroyed the World Trade Center will hurt sales.

The penthouse will be on the 141st and 142nd floors, where developers say the Earth's curvature will be visible.

The design by Santiago Calatrava, who planned the Olympic Sports Complex in Athens, makes the building appear to twist toward the top.

Kelleher is counting on attracting global buyers with amenities including a pool, half basketball court, cigar room and 40-seat cinema.

Chicago itself is a draw because it's seeking to host the 2016 summer Olympics, and property values in host cities often rise, said Kelleher, who serves on a panel trying to bring the Games to town.

Kelleher said he is "not uncomfortable" with reports in the Irish Times of Dublin that the project's cost has risen to $2 billion, from $1.2 billion announced in July 2006. He wouldn't be more specific.

Chicago's priciest

The Spire, overlooking where the Chicago River meets Lake Michigan, would be Chicago's most expensive residential structure.

Apartments start at $750,000, about $750 a square foot, and the penthouse is about $3,880 a square foot.

"The Spire is priced internationally," said Jim Kinney, president of Rubloff Residential Properties in Chicago. Its success would push up residential prices in the city, he said.

Chicago prices ranged from $207 to $1,363 a square foot in the fourth quarter, Appraisal Research said.

Top buildings in New York averaged $2,223 a square foot in the quarter, according to Miller Samuel Real Estate Appraisers & Consultants.

Some new developments in popular parts of London sell for more than 3,000 pounds ($6,000) a square foot, according to real estate firm Knight Frank.

At Trump International Hotel & Tower Chicago, condos cost $580,000 to $9 million. Prices average $1,000 a square foot, up from $500 to $750 when sales started four years ago, said Leah Harriett of Koenig & Strey GMAC Real Estate, the building's sales director.

Trump sales slow

The Trump building has sold about 75 percent of its 825 condos, most in the first two years, and sales are in a lull until construction is completed next year, she said. Developer Donald Trump declined to comment.

The dollar's decline is an opportunity, investor Garvan O'Doherty, said at a Spire sales event in Dublin.

"I may buy two, one for myself and one to rent," he said.

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