Google is negotiating to buy the spaceship-like James R. Thompson Center in Chicago in a deal that could provide a much-needed boost to the city’s Loop business district.
The Mountain View, California-based tech giant is seeking to buy the Helmut Jahn-designed building at 100 W. Randolph St., where it plans to expand its Chicago offices into a large portion of the 17-story building’s soon-to-be-renovated office space, according to people familiar with the deal.
It’s the latest twist for a 37-year-old building that faced the wrecking ball until Chicago developer Prime Group emerged last year with a plan to buy it from the state for $70 million.
It’s not known whether the Chicago developer, led by Chairman and CEO Mike Reschke, will flip the 1.2 million-square-foot structure to Google when Prime Group’s purchase is completed sometime this year or if Reschke will carry out his redevelopment plan for Google. Reschke previously said he planned a $300 million renovation that would create modern offices, outdoor terraces and potentially a luxury hotel on upper floors.
As part of the deal, the state planned to eventually buy back 427,000 square feet of offices that it would use after Prime Group’s work to modernize the facility, including an all-new glass exterior. The state has an option to make a one-time payment of $148 million or pay $258 million in rent over the next 30 years, at which time it would own its office space.
It’s unclear how Google’s deal to buy the building would affect that agreement, which calls for 1,300 state employees to be based in the renovated space. The price also could not be determined.
The deal is not done yet and could change, though a spokeswoman for the Illinois Department of Central Management Services said the Thompson Center is on schedule to be sold this summer to the previously selected buyer.
Reschke declined to comment on Google’s plans. A Google spokesperson pointed to a Chicago workforce of nearly 2,000 people and said that the company will “explore opportunities to ensure our physical space meets the needs of local Googlers.”
Latest Chicago Deal
If an agreement is reached, the deal will continue the company’s tradition of big, unexpected real estate moves in Chicago.
It signed a 2012 deal to move the headquarters of Motorola Mobility, which Google owned at the time, into more than 600,000 square feet of space in the Merchandise Mart along the Chicago River. By the time the move from far north suburban Libertyville happened in 2014, Google no longer owned the phonemaker.
In 2015, Google moved its Chicago office from a nearby building in River North to Fulton Market, the former meatpacking district that was in the early stages of making a transition into what today is the fastest-growing urban office market in the country. That building, called 1KFulton, was redeveloped by Chicago’s Sterling Bay, which bought the former Fulton Market Cold Storage building in 2012.
During the time Fulton Market has emerged as a trendy office destination, the center of the Loop on and around LaSalle Street has fallen behind other pockets of the city in the competition for tenants. Older buildings in the city’s onetime financial center have lost major tenants such as Bank of America and BMO Financial to new towers along the Chicago River, Fulton Market and other developments.
Real estate investors, city officials and the Urban Land Institute have been studying ways to revive the Central Loop, which could include converting some office buildings to apartments and creating public plazas and other attractions.
A major hiring initiative by Google in the area could give the area back some of its swagger, making it more attractive to tenants and investors as the downtown area tries to bounce back from a sharp decrease in foot traffic since the onset of COVID-19.
It also could boost another investment involving Reschke, who CoStar News reported in May is working to cut a deal to buy the office towers BMO is vacating at 115 S. LaSalle St. and 111 W. Monroe St. That deal, if completed, is expected to be at a steep discount to the nearly $191 million that Samsung Life Insurance owned on the buildings’ debt before the South Korean investor handed back the buildings to its lender.
BMO is in the process of moving workers to the recently completed 52-story BMO Tower at 320 S. Canal St.
Thompson Center Prospects
A high-profile owner such as Google would have been unthinkable in recent years as the state sought to sell the Thompson Center, which has been in need of long-deferred maintenance and which Illinois Gov. J.B. Pritzker and other state officials have said is a drain on finances because of high costs to heat and cool the structure.
Some developers coveted the Thompson Center not for the building itself but for the huge potential development site in the heart of the city. The building likely was spared in part because of the complexity a teardown would have required, since a developer would have been asked to guarantee that several CTA train lines connected to the building would continue running uninterrupted.
Google’s interest in the Loop is new, but the company has been building a major presence in the city for years.
In April, just after Google parent Alphabet announced plans to invest $9.5 billion this year in office space and data centers, CoStar News reported that Google plans to add a large block of office space in Fulton Market.
Google has yet to publicly confirm plans for the Fulton Market expansion. The latest space, expected to be 200,000 square feet or more in the 16-story Fulton Labs building at 400 N. Aberdeen St., will continue the firm’s growth in the former meatpacking district.
Google already leases more than a half-million square feet in the 1KFulton building at 1000 W. Fulton and in a nearby building at 210 N. Carpenter St.
The company had been close to finalizing deals to occupy two new buildings Chicago developer Sterling Bay planned to build in the neighborhood, one of which Google would have owned, before those plans were halted early in the pandemic. Google would have added about 800,000 square feet combined in those two buildings.
Previously, Google has said it plans to add 10,000 workers across Chicago, Atlanta, New York and Washington by 2025. Adding the Loop hub in the Thompson Center, while keeping its space in Fulton Market, would provide Google with room for thousands of employees in Chicago.
Google doesn’t currently own any of its real estate in Chicago, but it has been a major investor in properties throughout the world. This year, Google also has struck deals for office buildings overseas in London and Warsaw.
Google has spent billions of dollars for office buildings in New York, as well, including a $2.1 billion deal for the St. John’s Terminal building at 550 Washington St. in the Hudson Square neighborhood on the west side of Manhattan.
Previously, Google paid $2.4 billion for the Chelsea Market building in Manhattan in 2018 and $1.77 billion for the massive 111 Eighth Ave. building near Chelsea Market back in 2010.