A Chicago real estate firm known for redeveloping historic properties plans to buy the historic former home of the Chicago Daily News from the estate of late billionaire Sam Zell, paving the way for the first change in ownership in half a century.
Blue Star Properties has a contract to buy the 26-story office building at 2 N. Riverside Plaza along the Chicago River in the Loop business district, Blue Star President Craig Golden told CoStar News. He said the firm is still performing due diligence before closing on the purchase.
Zell’s former private investment firm, Equity Group Investments, hired Eastdil Secured brokers to sell the tower, which Zell once considered tearing down, late last year. Zell died about two years ago at age 81.
Blue Star’s ongoing 2 N. Riverside deal is part of the process to wind down Zell’s personal real estate, which in January included the more than $86 million sale of the Cobbler Square Lofts apartment complex in the Old Town neighborhood north of the Loop.
It is not known how much Blue Star is paying for 2 N. Riverside or what the firm has planned for the property. The price is expected to be well below the value of a $65 million loan provided by an affiliate of Voya Investment Management in 2016.
Golden declined to comment on pricing or plans for the building, citing the due diligence period.
Equity Group Investments did not respond to a request for comment, and Voya declined to comment.
The art deco building, whose namesake newspaper shut down in 1978, had been owned by Zell for about 50 years when the Chicago billionaire died in 2023.
Zell had his office in the tower starting in 1982, leading several real estate investment trusts from his office in the building that extended to an outdoor terrace and garden that Zell had built overlooking the river.
Redevelopment plans
During his decades of ownership, Zell explored redevelopment scenarios for the property, including potentially tearing down the building or adding another tower on the property’s large riverfront plaza.
The approximately 2.4-acre property is bordered by the river and Washington, Madison and Canal streets. It is connected by a walkway to commuter trains in the nearby Ogilvie Transportation Center.
It was 54% leased at the time it went on the market for sale last year, Real Estate Alert reported at the time, with the largest tenant one of Zell’s former REITs, Equity Residential.
The riverside tower is known as the first in the city built over train tracks using air rights and the first office property built alongside a large plaza, leading to two common trends in the city. Construction was completed in 1929, just before the start of the Great Depression.
Golden co-founded Chicago developer Sterling Bay before later launching Blue Star and hospitality company 16” on Center.
Those firms’ projects have included buying the 20-story former Chicago Public Schools headquarters building at 125 S. Clark St. for $28 million in 2015, redeveloping it to include the popular Revival Food Hall, and eventually selling it to Germany’s Commerz Real for more than $196 million in 2018. The food hall in the office building, which was renamed The National, closed last year before being relaunched with a new name and operator.
Blue Star and 16” on Center also were involved in the redevelopment of a former Morton Salt warehouse along the river on the North Side, which was redeveloped into a concert venue called the Salt Shed. That project includes a Goose Island Beer brewpub overlooking the river.
Chicago-based 16” on Center’s other live music venues, restaurants and bars include the Promontory, Thalia Hall, Longman & Eagle and the Empty Bottle.
For the record
The seller is represented by Eastdil Secured brokers Bryan Rosenberg and David Caprile.