There can be little doubt. In Chicago real estate, 2019 was the year of the Old Post Office. What was an empty hulk that deadened life in downtown’s southwest quadrant now leads its revival as a hipster haven. It’s a testament to how an investor can change public perceptions with a well-located asset and almost $1 billion in capital. But there’s another part of downtown facing challenges.
That fact might come as a surprise. Isn’t downtown doing well? Yes, it is. All the job growth statistics say so. But there’s trouble ahead for the heart of it all. It’s the Central Loop, defined here narrowly as the blocks within or just outside the L tracks. Its main artery is La Salle Street, the traditional hub of government, finance and legal services in Chicago.
With a lot of pre-World War II buildings and the canyon effect on La Salle, the Central Loop has a classic feel. But to companies, that can translate into a stodgy image and inefficient floor layouts. Some are leaving for the West Loop and elsewhere.
Research staff at the real-estate firm Cushman & Wakefield produced a thoughtful report about the Central Loop that detailed its 5 million square feet of current or pending vacancies in office space. The vacancy rate of more than 15% probably will be the highest of any downtown sector. Bank of America, BMO Harris and Northern Trust are moving most employees from La Salle Street, although BMO Harris will keep its branch at 111 W. Monroe St. and Northern Trust is retaining its headquarters on La Salle.
Companies are competing for younger talent “more likely to finish the workday with an impromptu meeting at a nearby brewery than on the 5:05 train to the suburbs, since marriage and home ownership are delayed for this generation,” the report said. “They favor an open workspace with a high degree of flexibility, huddle rooms to support teamwork and ample lifestyle amenities that, together, provide a seamless synchrony of work and personal life.”
Building owners need to rethink their office layouts and streetscapes, the report said. For La Salle Street, it suggests replacing traffic with more pedestrian space. There’s also a mezzanine outdoor walkway. It’s a noble try, but it sounds too much like the old State Street Mall, and with more shadows.
Steven Bauer, executive director at Cushman, said the Central Loop can capitalize on its strengths. “It feels like Chicago. You’ve got the best location still, with access to all the Metra and train lines.” He cited improvements to the Daniel Burnham-designed office building at 125 S. Clark, with its Revival Food Hall, as one example of the possibilities.
“Many people like the grittiness of an older building, the feeling that it’s something different from steel and glass. But the space and the amenities have to work for them,” Bauer said.
Other Central Loop buildings with successful makeovers include 70 W. Madison, a 1981 building that had the era’s sawtooth design for more corner offices, and the current conversion of the upper floors of Macy’s into tech-friendly offices, said Bob Chodos, vice chairman of Newmark Knight Frank and a board member of the Chicago Central Area Committee.
And what should be done with the decaying James R. Thompson Center, 100 W. Randolph St.? State government is selling the Helmut Jahn-designed building, prompting a debate: Save it or tear it down? Last month, I wrote with some ruefulness that it should be demolished. I said a recent scheme to integrate it with a high-rise wouldn’t work. That prompted a generous note and renderings from Jahn agreeing about the high-rise and explaining his idea for a retrofit.
“I propose the doors come down and the atrium becomes a public place with upgraded retail and restaurants,” he wrote. “The lower floors, with up to 60,000 square feet flexible tech offices. Above, a hotel and co-living apartments with terraces facing the atrium. These terraces and those along the curved south side are greened with trees and climbing vines and will grow well in this protected in-outside environment. The façade and the environmental systems will be tuned to work together and use the sun as energy source. This fresh start will work!”
So there you have it — another idea for a big piece of the Central Loop puzzle. Maybe 2020 won’t be the region’s big year for an Old Post Office-like renewal. But anybody who loves Chicago would wish to see it soon.