A landmark at what could be Chicago’s most impressive corner is losing a major tenant and faces an identity crisis.
The 360 N. Michigan building, at the southwest corner of Michigan and Wacker, will be mostly empty once its largest tenant, Crain Communications Inc., leaves in the spring. The owner of Crain’s Chicago Business is headed south to 150 N. Michigan.
So the landlord of 360 N. Michigan, New York property mogul Joseph Chetrit, is looking at his options. A source familiar with the building said Chetrit wants to convert the building into a hotel and build an addition to it, using a tiny parking lot immediately west of the building to enlarge the floors. Chetrit’s other interests here include a stake in Willis Tower.
It’s a dusting off of a plan that was offered in 2004. Chetrit hired architect Lucien Lagrange for that work. The new effort would encounter many obstacles in the market.
The neighborhood already has an abundance of hotels, and more boutique operations are coming. Virgin Hotels bought a vintage office building at 203 N. Wabash, the former IBM building is getting a luxury hotel in 2013 and the nearby Chicago Motor Club Building also is being eyed for a conversion to lodging.
Lagrange, who graciously spoke to me while on holiday in Paris, said he isn’t involved with Chetrit this time. “He invests in buildings to collect the rents. Redeveloping the property would be way too risky for him,” Lagrange said. Chetrit could not be reached.
The building, formerly the Stone Container Building, has been a Chicago landmark since 1996 and is part of a corner that’s an open-air architectural museum. The Beaux Arts design of Alfred Alschuler opened in 1923 and sits on land that was part of Fort Dearborn. Its original name was the London Guarantee Building for the British insurance company that built it.
Old-timers will remember it as the former home of the London House restaurant and the studios of WLS radio when it pumped out Top 40 hits.
THREE’S A CROWD: The former IBM Plaza at 330 N. Wabash would seem to be on a roll. Following a renovation and a plan to bring a hotel into its lower floors, the building has signed two large office tenants and is negotiating with a third. But some brokers are wondering if the 52-story building has enough space to go around.
The association management company SmithBucklin Corp. in December took 111,000 square feet in the building in a move from 401 N. Michigan. The announcement followed by a couple of weeks the decision of the American Medical Association to lease up to 300,000 square feet in the building, which would be renamed AMA Plaza. Also, the building is negotiating a lease with the law firm Latham & Watkins LLP for about 150,000 square feet.
Several brokers said they doubted the building had enough contiguous space to satisfy all three and suggested the Latham deal is getting shaky. An executive at Prime Group Realty Trust, a part owner and manager of the building, declined to comment and Latham’s managing partner in Chicago could not be reached.
Howard Ecker, the tenant broker who represented SmithBucklin, said Prime Group has had to move some current tenants but that everybody fits. He said office users have rediscovered the landmark, designed by Ludwig Mies van der Rohe, because it is built to standards that some newer towers cannot match. “It offers column-free space, and there are four banks of elevators instead of the usual three,” Ecker said. Prime Group, Ecker said, “priced it right and they made the deals.”
LINCOLN PARK LOG: It’s a new year, but feelings are still raw over the decision by Fresh Market to pull out of a lease deal at Lincoln and Webster, where the grocer would have been part of a mostly residential rehab of the old Lincoln Park Hospital. Neighbors felt the grocer would bring truck traffic onto their sidestreets, and Mayor Rahm Emanuel and Ald. Michele Smith (43rd) brokered a compromise that would have kept most deliveries on busy Lincoln Avenue.
Fresh Market withdrew from the deal last month. Richard Zisook, principal of Sandz Development Co., said Tuesday that Fresh Market used an obscure clause to wriggle out of the deal, but he said he’s not mad at the grocer. “I was double-crossed by Michele Smith,” Zisook declared.
He said informants told him the alderman arm-twisted Fresh Market to get out. Smith said in response, “That’s completely untrue. I had one conversation with Fresh Market during the negotiations and they seemed comfortable with what was going on.”
INDUSTRIAL STRENGTH: The industrial market here revived in 2011, according to fourth-quarter numbers from Cushman & Wakefield Inc.
It said market vacancy declined to 9.8 percent at yearend 2011 from 11 percent the prior year. Cushman also said leasing activity rose nearly 11 percent during the year and that property sales increased.
In a separate assessment from Grubb & Ellis Co., the real estate brokerage ranked Chicago’s industrial market as among the strongest in the country. Grubb & Ellis was not so bullish on Chicago in other property categories for 2012.
Nationally, Grubb predicted a continued “sluggish recovery” in commercial real estate and ranked the sectors, from strongest to weakest, as follows: multi-family housing, hospitality, industrial, retail and office.