State buys West Loop office building for $73.25 million

Underscoring a plan to depart and sell the Thompson Center in the Loop, Gov. J.B. Pritzker said Wednesday the state has bought a West Loop office building as the new home for 1,000 of its employees.

The state bought 555 W. Monroe St. for $73.25 million. The 429,000-square-foot building was the regional base for PepsiCo before it moved to the Old Post Office.

The workforce headed to 555 W. Monroe will include some Thompson Center workers and others in seven leased properties in the Loop. The state is consolidating those leases, which total $21.3 million in annual rent and operating costs.

Add in the Thompson Center’s $17 million in annual operating costs and state officials concluded buying a 17-story building with a more efficient design will save money in the long run.

“Since I took office, I’ve been focused on making sure that we manage our assets efficiently and maximize taxpayer savings,” Pritzker said in a news release. “This building pays for itself because we are terminating a patchwork of expensive downtown leases.”

A spokesperson for the Department of Central Management Services, which handles the state’s real estate, said relocations will begin in April. There was no immediate word on which agencies are involved except that CMS will move to 555 W. Monroe.

The agency said the state’s overall real estate footprint can be cut by 30%.

Meanwhile, the Thompson Center at 100 W. Randolph St. has suffered from years of state neglect. Its central feature, a glass atrium, makes the building worthy of landmark protection or is a gigantic waste of space, depending on people’s perspectives. Critics of the state’s plan include the building’s architect, Helmut Jahn, who argued it can be adapted for a hotel, offices or co-living apartments. It’s also been mentioned as a casino site, but one the gambling industry doesn’t take seriously.

CMS said the cost to fix assorted problems would exceed $325 million. The state’s announcement Wednesday reiterated its description of the Thompson Center as “oversized, outdated and expensive.”

But the state now is trying to sell the building to the developers, a prospect muddied by a pandemic that has challenged assumptions about real estate demand. The Thompson Center sits on a full-block site that former Gov. Bruce Rauner’s administration said could command $200 million, but that amount could be hard to get now with downtown office vacancies soaring.

The price the state paid for 555 W. Monroe could offer a caution for any seller. Property records show the investment firms that owned the building bought it in 2004 for $172.5 million. They took out an $82 million mortgage on it in 2007, records show.

The building opened in 2002 and was designed by Chicago-based Skidmore, Owings & Merrill. The U.S. Green Building Council gave it a silver designation under the LEED program, or Leadership in Energy and Environmental Design.

State officials highlighted that recognition in saying its annual operating costs will be a quarter of the Thompson Center’s.

Tyler LaRiviere/Sun-Times file