Two real estate firms that bought a landmark office tower with a colorful history out of financial distress last summer have coaxed a private equity firm to move its headquarters there as part of a turnaround of the property overlooking the Chicago River.
Sheridan Capital Partners leased 25,445 square feet in the Jewelers Building at 35 E. Wacker Drive, according to a statement from the tenant and the property’s owners and leasing brokers.
The deal by Sheridan Capital, an investor in the healthcare sector, is the largest in a series of recent leases that have increased occupancy in the 556,200-square-foot tower to about 70%, according to the landlord.
That is a big step forward from about 60% when Chicago firms Prime Group and CRG, the real estate investment arm of construction firm Clayco, struck a deal to buy the tower last year.
In other deals, Clayco has expanded its headquarters space by 21,664 square feet, to a total of almost 92,000 square feet in the tower, and architecture and engineering firm SmithGroup renewed its 21,666-square-foot lease, according to the statement. Some smaller firms also have renewed their leases, the statement said.
“Our investment in modernizing this nearly 100-year-old architectural gem is yielding great results,” Michael Reschke Jr., executive vice president at Prime Group, said in the statement. “Achieving over 75,000 square feet of leasing so far this year validates our vision to revitalize the Jewelers Building as a vibrant hub for Chicago business while honoring its storied legacy.”
CRG and Prime Group completed the $35.5 million purchase last August, backed by a $32.3 million loan from East West Bank, according to Cook County property records.
It was the first time the building, completed in 1926, had changed hands since 1981. The sale came after the previous longtime owner, Canadian firm Dorchester Group, failed to pay off its loan when it matured in 2023 and was hit with a foreclosure suit.
Sheridan Capital’s lease is a move from a slightly smaller space in the nearby Wrigley Building, according to Crain’s Chicago Business, which earlier reported the deal.
Prime Group is a prominent developer in Chicago, where its projects include the ongoing redevelopment of the James R. Thompson Center for Google in the center of the Loop business district.
CRG is a developer in several property sectors throughout the country, with more than $14 billion in completed projects.
“The Jewelers Building has been Clayco’s Chicago headquarters for over 15 years, and it’s been the perfect location for our growth,” Shawn Clark, CEO of CRG and chief strategy officer for Clayco, said in the statement. “We’ve expanded from an initial 5,000 square feet to now nearly 20% of the building’s space. The location at the intersection of Michigan Avenue and the Chicago River — with the Riverwalk and world-class amenities just steps away — is truly unbeatable. We consider this iconic building the heart of Chicago, and we’re proud to deepen our roots here as we continue to grow.”
The new owners have previously said they were evaluating a range of potential changes, including converting part of the structure to a hotel or apartments and adding a restaurant with river views on upper floors.
The terra cotta building, a Chicago landmark, was designed in the Beaux Arts style by a protege of architect Daniel Burnham. Its name comes from an unusual, internal car-parking system that was designed to prevent jewelers from being robbed of their valuables.
Drivers entered via Lower Wacker Drive, leaving cars with attendants who used a mechanized system to raise vehicles to parking spaces on the lower 22 floors, according to a 1990s report by the city.
Frequent mechanical breakdowns and increasing car sizes led the system to be scrapped in the 1940s, replaced by traditional office space.
Chicago lore also has it that gangster Al Capone once controlled a Prohibition-era speakeasy in the tower’s top-level cupola, which eventually became a bar and restaurant called the Stratosphere Club. Historians have disputed Capone’s connections to the property, pointing out that the Stratosphere Club space didn’t open until the late 1930s. By then, Prohibition had ended and Capone was behind bars.
For the record
The tenant was represented by JLL brokers Pat Schenk and Bill Rogers. The landlord was represented by Madison Rose brokers Adam Pines, Andrew Marty and Matt Pistorio.