In an effort attracting national attention, plans to shift Chicago’s LaSalle Street from a 20th-century home of trading pits, boardroom tables and posh bankers’ offices into a 21st-century residential neighborhood are coming into focus with the first look at these potential office-to-apartment conversions.
The stretch of LaSalle in the Loop business district, which has served as the nation's longtime commodities trading capital and was once the city's unquestioned financial center, now has six contenders for the conversions after a winnowing by the city’s planning department.
Unveiling the contenders is the latest step in Mayor Lori Lightfoot’s LaSalle Street Reimagined initiative, nearly three years into a pandemic that has led to a period of low office usage in parts of the country. While there's talk in some cities about the possibility of trying to turn office space into residences because of current demand, the Chicago initiative shows what those conversions could look like — assuming office workers and demand don't return first around the nation and remove much of the incentive.
The initiative is also considered to have additional promise because Chicago's downtown residential population has grown faster than similar areas of any other major U.S. city in the past few decades. In Chicago and elsewhere, the topic is fueled in part by local business owners depending on workers in nearby office buildings to generate needed retail revenue. That's affecting restaurants and stores that provide tax revenue, drawing concern from elected leaders in those areas.
“This is our once-in-a-generation opportunity to create an economic model based on inclusive growth,” Lightfoot said when she unveiled the initiative in September.
For Chicago, renderings accompanying some of the contending proposals show for the first time how older-generation office towers would function as apartment buildings, with one image displaying a two-level market at the base and another depicting an open-air terrace carved into a mid-rise floor.
Online presentations by the development teams slated for March 2 could be followed by the selection of finalists as soon as late March, bringing LaSalle’s future look further into focus.
Chicago’s plan, to offer public dollars for proposals in which 30% of the newly created apartments would have affordable rents, looks to reduce office vacancy in older buildings on LaSalle while also addressing the city’s dearth of affordable homes — particularly downtown.
Seeking Public Financing
Developers are seeking tax increment financing and other public dollars to offset the cost of their projects and to offset the below-market rents in many of the units.
The city is likely to support multiple proposals, a planning department spokesman told CoStar News.
Lightfoot’s planning-stage initiative could be joined by discussions in other large cities that also face high office vacancy and affordable housing shortages. Similar discussions about converting offices to apartments are playing out from Los Angeles to New York. Those cities haven't had office usage return yet to pre-pandemic levels.
Chicago’s central business district, once known for office towers and hotels, is now home to more than 244,000 residents, according to city officials, citing census data.
While residential rents continue to rise, LaSalle has been hit with moves by huge corporate tenants such as Bank of America and BMO Financial to new trophy towers along the Chicago River. The arrival of COVID-19 in March 2020 led to work-from-home trends that continue to challenge some landlords throughout the country, further straining some older buildings that are struggling to compete with high-end new space.
That has led to foreclosure suits and other financial distress, including the recent decision by the longtime owners of the Chicago Board of Trade Building at the southern end of the so-called LaSalle canyon to hand the property back to their lender. That 44-story tower, topped by a massive statue of Ceres, the Roman goddess of agriculture, once was known for the trading of agricultural commodities and other securities in open-outcry pits.
City officials and other real estate investors in the area hope the housing initiative and Google’s plans to own and have thousands of employees in the formerly state-owned James R. Thompson Center will lead a successful reshaping of LaSalle.
In December, the city unveiled nine residential-conversion plans that emerged from its call for proposals in the fall.
Here are the six proposals still in contention:
30 N. LaSalle
Chicago developer Golub & Co. and the distressed tower’s lender, American General Life Insurance, plan to invest $186 million converting the 43-story building into 432 apartments. The project also would include creating ground-floor retail, green space and seating along LaSalle and Washington streets. A rendering of the project also shows a large outdoor terrace area cut into a mid-rise floor.
208 S. LaSalle
An affiliate of Chicago’s Prime Group, the Mike Reschke-led firm that also is redeveloping the Thompson Center for Google, proposes a $130 million conversion of the office portion of the 21-story building into 280 residential units. Reschke previously has developed two hotels within the Chicago landmark: a JW Marriott and The LaSalle. Under the plan, residents would have access to hotel amenities and a newly created fitness center, dog run and lounge.
135 S. LaSalle
Chicago firm Riverside Investment & Development and New York-based owner AmTrust Realty propose a $258 million conversion of the 44-story former Bank of America building into 430 apartments and 80,000 square feet of new lobbies, retail, restaurants, event and cultural space. The developers also hope to bring a fresh-market grocery store to the landmark tower.
111 W. Monroe St.
Prime Group and Capri Interests plan a $180 million conversion of the former BMO-occupied tower that Reschke’s firm bought last year. The 23-story building would be redeveloped into 349 apartments, a hotel with a spa and fitness center on lower floors, a rooftop pool and restaurants.
Clark-Adams Building
Two development teams have proposals for the 41-story tower at 105 W. Adams St.
Minneapolis-based Maven Development Group wants to spend $167 million on a 423-unit conversion that would not include the lower 10 floors, where a Club Quarters Hotel and Elephant & Castle Pub are located. The project would create a rooftop amenity deck.
Chicago firms Blackwood Group and Celadon Partners propose investing $192 million on a full-building conversion that would create 247 larger units, as well as a fitness room, roof deck, food market and coffee shop.
Five of the six proposals would designate 30% of the units affordable. The other, by Blackwood and Celadon, would have 75% of the units be affordable.