* Fran Spielman…
The vacant Old Main Post Office that hovers over the Eisenhower Expressway is about to be converted from a dilapidated civic embarrassment into a bevy of construction activity.
Five months after Mayor Rahm Emanuel’s bold threat to seize control of the giant hulk, the city has reached a court-approved agreement with its new owner, 601W Companies LLC, to begin a five-year, $500 million renovation and restoration. […]
Strict and staggered deadlines have been set through 2018 to correct more than 20 code violations cited by the city since 2012. The work also will include: replacing the building’s massive roof; restoring its historic lobby; repairing building facades; new high-speed elevators; and overhauling the electrical, plumbing, heating and ventilation systems.
Only after that nitty-gritty work is done can the decaying building be converted into commercial office space expected to house up to 12,000 people. The construction project alone is expected to take about 1,500 building trades workers.
After the three-phase renovation, it is hoped tenants will be drawn to a strategically located building with 18-foot ceilings and wide-open floor plans of up to 250,000 square feet per floor.
* From an Emanuel press release…
601W’s three-phase renovation plan will comprehensively rehabilitate the building as offices, primarily targeting commercial users attracted to the building’s 18-foot ceilings and 250,000-square-foot open floor spaces. Amenities will include a three-acre rooftop park complex and a landscaped riverwalk that will be open to the public.
An estimated 12,000 people could work in the building when fully-leased. The rehabilitation project is projected to generate more than 1,500 construction jobs. The agreement also includes requirements for minority- and women-owned business participation in the work to redevelop the facility.
“Developing the Old Post Office will bring thousands of jobs for Chicagoans and renew a building that has been neglected for decades,” Ald. Daniel Solis (25th) said. “This agreement is a significant step forward, and I look forward to continuing our progress.”
“The scheduled improvements involved significant cooperation by the City and 601W,” Department of Planning and Development Commissioner David Reifman said. “They will result in a first-class development that will benefit the entire City of Chicago,”
International Property Developers North America has also agreed to pay the City $800,000 for the violations incurred by the prior owner from 2009 to March of 2016 when it sold the property to 601W. The complex had been cited with more than 20 building code citations since 2012.
The old Post Office was designed by Graham, Anderson, Probst & White and built in phases from 1921 to 1932. Listed on the National Register of Historic Places, it has been vacant since the city’s main post office operations relocated in 1995.
- Cheryl44 - Wednesday, Jul 20, 16 @ 9:16 am:
I’ll believe it when it happens, not before.
- independent - Wednesday, Jul 20, 16 @ 9:27 am:
I wonder if the Governor is in favor, after all, it will pay union workers to complete the project. Just think instead, if the Governor had his way we could import non-union labor from other states and save lots money.
- a drop in - Wednesday, Jul 20, 16 @ 9:30 am:
“Will Chicago’s old post office finally be renovated?”
Save the headline. I have a feeling it will be used again in a couple of years.
- illinois bob - Wednesday, Jul 20, 16 @ 9:34 am:
Let me get this straight. “Someone” will kick in $500 million in renovation costs (tripling that is more likely before it’s done), for a massive building with no anchor tenants in a downtown market that still has a 11.6% office vacancy rate. Putting such a massive space on the market will have a disastrous affect on the market if it’s priced low enough to attract tenants. Connected contractors will make a fortune on this, but their just isn’t a demand for that much office space at that location.
Whoever finances this turkey will be taking a huge bath. Why do I get the feeling that Rahm will wind up sticking Chicago taxpayers with the bill?
- Scott Cross for President - Wednesday, Jul 20, 16 @ 10:07 am:
Good news. Turns around a high profile eyesore, creates lots of well paying jobs here and now, and creates another destination for a corporate HQ move like McDonald’s, Google, MillerCoors, etc. Ans the magic words “court approved agreement” give the deal teeth. Hats off to David Reifman.
- wordslinger - Wednesday, Jul 20, 16 @ 10:35 am:
–I’ll believe it when it happens, not before.–
Ditto.
Where’s the $500 million coming from?
- Illinois Bob - Wednesday, Jul 20, 16 @ 10:51 am:
Any chance this will be financed by a TIF?
- Doug Simpson - Wednesday, Jul 20, 16 @ 12:29 pm:
I hope this happens. I can make my crib look groovy like Greg’s room in the attic!
- Arthur Andersen - Wednesday, Jul 20, 16 @ 2:49 pm:
Color me skeptical, as well.
Securing construction financing will be very difficult for a project of this size and scope, especially without any anchor tenants. The footprint is much larger (6 acre floors!) than what most office tenants prefer.
I wouldn’t want to be the person that signs off on this loan.
- DaBears - Wednesday, Jul 20, 16 @ 4:57 pm:
Is anybody here actually involved with commercial real estate downtown? This deal is a huge victory for the city, by one of the most successful privately funded commercial developers in the country. Go look at their website! The demand for large, open space cannot be met, and rumor has it that they already have several major tenants -of a half million square feet or more- considering relocating headquarters there (including McDonalds coming for the burbs). They’ve done this in NY, and have been one of the biggest owners of downtown office buildings for most of the past decade (including the AON building)! And has anyone gone by Pru and seen what they did there already??
The couple deals I worked on with them couldn’t have gone smoother, and they spend extra money renovating to draw quality tenants. My tenants have been thrilled so far at Pru and Civic Opera building. I think we should all be thrilled about the jobs that will be provided and can’t wait to see the finished product!!
- Veil of Ignorance - Wednesday, Jul 20, 16 @ 5:04 pm:
I had always hoped that at least part of the Old Post Office would be converted into a year-round public market, which Chicago doesn’t have like many major cities. There’s likely plenty of parking there and it’s near public transportation and walking distance from the Metra station.
- wordslinger - Wednesday, Jul 20, 16 @ 5:17 pm:
–The demand for large, open space cannot be met, and rumor has it that they already have several major tenants -of a half million square feet or more- considering relocating headquarters there (including McDonalds coming for the burbs). –
Really? And you’re positioning yourself as some downtown real estate heavyweight?
You might want to get yourself up to speed on the McDonald’s corporate relocation plans.
It was in all the papers, tv, radio — five weeks ago.
That never came up in all your real estate circles?
- Arthur Andersen - Wednesday, Jul 20, 16 @ 6:29 pm:
DaBears, you’re a tenant rep broker, I surmise?
Here we go with the experience thing again, but old AA’s teams leased, bought, sold, managed, developed, or redeveloped several million square feet of downtown Chicago office space, including a couple of the most recognizable buildings in the city. (Certainly one of the most notorious, too.)
I will readily concede that your on-the-ground knowledge is probably fresher than mine. I will say that in my experience and based on watching recent major moves, I don’t see a lot of demand for 250k floor plates for single or multi tenant use. As a practical matter, who would want to walk the length of a football field to see a colleague? I also can’t begin to imagine what kind of (expensive) infrastructure will be required to make this thing comply with today’s fire codes.
- Arthur Andersen - Wednesday, Jul 20, 16 @ 8:07 pm:
Just noticed I left something out of my previous comment.
It’s worth noting that the new developer is both experienced and has an established record in Chicago. They did a fine job when the anchor tenant in one of their Loop buildings went BK and they had to scramble to fill around 100,000 feet pronto in a soft market. Having said that, this property isn’t your average Loop high-rise. I wish them well.
Word, to your question, it’s my understanding that their primary sources of funding are private equity firms and hedge funds.