Chicago’s Old Main Post Office, long a white elephant, is seeing a striking turnaround

In a few weeks, Chicagoans will be able to begin appreciating the metamorphosis happening at the Old Main Post Office downtown.

It’s an example of what vision, nerve and almost a billion dollars can accomplish. Add to that a dose of luck.

But that was probably overdue for a landmark building that sat empty through nearly a quarter century of neglect, impractical schemes and indecision about what to do with vast floors that, viewed from one end, seemed to stretch to the horizon.

Even as a blight, it’s remained a gateway to downtown, as it spans Ida B. Wells Drive, and traffic to and from the Eisenhower Expressway flows right through the massive building.

The 2.7 million-square-feet colossus — the space equals that of three typical Loop high-rises — deadened development in the southwest quadrant of downtown Chicago.

“It was like a cork” on an expanding Chicago’s expand core, says Brian Whiting, chief executive officer of Telos Group, the building’s leasing agency.

Come September, he can pop the cork and celebrate.

That’s when the Old Post Office — the project’s official name — is due to open for its first tenant, a corporate office of Walgreens, which has leased 200,000 square feet.

Development experts say the lease, announced in mid-2018, prompted other companies to consider the building.

601W Companies/Telos/Gensler

Other incoming tenants include Ferrara Candy, the ad agency AbelsonTaylor and meal-kit provider Home Chef.

Whiting says deals so far cover 600,000 square feet and that he’s in negotiations for another 1 million square feet. A source says one company that’s close to signing is Uber Technologies, but Whiting would not discuss that or any pending deals.

Whiting says because the building has a property tax exemption as a landmark, he can offer a lower gross rental rate than towers along Wacker Drive.

The owner, 601W, has had success renovating buildings for the tastes of modern office users. The New York company bought the Old Main Post Office in 2016 for $130 million. With backing from JPMorgan Chase, it’s putting $800 million into a complete rehabilitation and amenities for tenants and the public.

It acquired the property from Bill Davies, a secretive British investor who scooped it up in 2009 when the U.S. Postal Service auctioned it off.

With the country coming out of recession, Davies had no access to capital, and the property’s code violations only got worse. The 2016 sale came after then-Mayor Rahm Emanuel threatened to take the building via condemnation. Davies died around the time the sale closed.

The spur for the building’s turnaround “was the city saying enough is enough and telling ownership that we needed to catch the [economic] cycle,” says Eleanor Gorski, the city’s acting planning commissioner, who ran the city’s landmarks division under Emanuel.

Gorski says the building won’t get any city subsidy even though the property is within a tax-increment financing district. But infrastructure work along Canal Street does qualify for a subsidy, according to Gorski.

Mark Karasick, a partner in 601W, declined an interview request.

Karasick was interested in the property as far back as that 2009 auction but thought the price was too steep.

With his second chance, he’s taken what was a liability — the vast space — and turned it into a customizable asset suitable for corporate headquarters or tech startups.

“You have an entrepreneurial, progressive type of owner who is making significant investments in amenities,” says Brad Serot, vice chairman of the firm CBRE Group, who represented Home Chef in its lease negotiations.

He likens the work to the Merchandise Mart, another classic that was reinvented.

Colin Boyle / Sun-Times

Improvements will include a first-floor food hall, common areas for relaxation and conversation, and a rooftop with basketball courts and a quarter-mile running track. Pending discussions with the city, the property also will offer enhanced access along the Chicago River. All of the mechanical systems are new, as are the 2,200 windows.

For the Chicago Metropolitan Agency for Planning, another incoming tenant, the historic rehabilitation and its proximity to Union Station and the Ogilvie Transportation Center, helped seal the deal, according to spokeswoman Tina Fassett Smith. The publicly funded agency is moving from Willis Tower in September 2020.

She says as an early tenant, the agency had its choice of spaces and is leasing a section that includes what was the suite for Chicago’s postmaster.

“We’re planners here, so the reuse of existing infrastructure is really our bread and butter,” Fassett Smith says. “It’s exciting to see the investment around the transportation hubs.”

The building used to be mentioned as a possible casino location. But Whiting says that’s out of the question.

Once, potential developers of the post office site would sketch out a mix of uses that were sometimes incompatible. Some strayed toward the bizarre — a water park, auto mall or a mausoleum.

The bet by 601W still could end badly, given that there’s still a lot of space to rent. In the jaded world of real estate, though, it’s looking awfully like a miracle.