A Chicago landmark linked to a debate about gangster Al Capone — and once the tallest building west of New York City — is for sale after the 40-story office tower’s lender moved to foreclose on the longtime owner.
Newmark brokers have been hired to seek a sale of the Jewelers Building at 35 E. Wacker Drive, overlooking the Chicago River, Newmark’s Jim Postweiler said.
The lender, John Hancock Life Insurance, moved last month to foreclose on Toronto-based property owner The Dorchester Corp. after its loan matured, property and court records show. Newmark, also the property’s receiver, seeks to sell the beaux-arts-style building on behalf of John Hancock in what would be the first ownership change since 1981.
A sale would be the latest twist in the property’s colorful history, including its unusual design by a protege of architect Daniel Burnham and much-scrutinized lore that Capone's organized crime outfit ran a speakeasy from the top of the tower.
The building also once featured an unusual, internal car-parking system to protect jewelers from being robbed of their valuables. More recently, it has made cameo appearances in the movies “Batman Begins” and “Transformers: Dark of the Moon.”
It is unclear how much the lender is expecting in a sale. One person familiar with the property estimated bids could be from $50 million to $55 million, or a little under $100 per square foot.
Property sales throughout the country have slowed since interest rates began increasing more than a year ago, and it has been over a year since the last office tower sold in downtown Chicago.
But Newmark is hopeful that the property’s unique traits, and $118 million in upgrades over the past two-plus decades to modernize the tower, will help it stand out.
“This is one of those downtown historic gems that’s had a lot of upgrades and renovations,” Postweiler said. “This has a good chance of trading."
He added, “We’ve had good interest, but this is not a market where you count any chickens. These are difficult times, but we’re pleased with the results thus far.”
It’s unclear how much balance remains on the overdue loan. Dorchester borrowed $65 million in June 2013, according to Cook County property records. Dorchester has owned the building for over 40 years.
John Hancock’s parent company, Toronto-based Manulife Financial, and Dorchester did not respond to requests to comment from CoStar News.
Crain’s Chicago Business in May reported that the Canadian owner was trying to line up a buyer ahead of a summer loan maturity, then marketed by Chicago-based real estate firm Draper and Kramer. It was billed as a candidate to be converted to apartments, but no buyer emerged ahead of the loan maturity, sending the property into receivership.
Newmark also is emphasizing the possibility of a residential conversion or continued operation as an office property, with 71% of the 556,200-square-foot building leased.
The largest tenant is construction firm Clayco, which occupies 66,770 square feet, according to CoStar data.
Protection for Valuables
Built in the 1920s, the ornate terra cotta tower was designed by architect Frederick Dinkelberg, who closely worked with Burnham and helped him design buildings in other cities, including the Flatiron Building in New York.
The Jewelers Building was named for its unusual indoor parking and elevator system designed to help jewelers avoid the threat of robbery while transporting highly valuable goods.
Drivers entered the building on Lower Wacker Drive, leaving their cars with attendants who, using a mechanized electrical system, lifted cars to parking spaces on the second through 22nd floors, according to the 1990s city report.
“When the owner returned, the car was returned by the same system, without being touched by a human hand, guaranteeing the security of both owner and vehicle on entering and leaving the building,” the report said.
Plagued by frequent mechanical breakdowns and the increasing size of cars, the parking system was removed in the 1940s and replaced with traditional office space. Today, there are 90 parking spaces within the tower.
Capone also has been frequently associated with the building, rumored to have once controlled operations of a Prohibition-era speakeasy in the top-level cupola, which later became a bar and restaurant called the Stratosphere Club.
It was “supposedly supplied with its liquor by Al Capone’s criminal organization,” according to a report on the building by the Commission on Chicago Landmarks, before the building became a city landmark in 1994.
“While there is no documentary support for this story, if true it would have a particular irony in that one of the other tenants of the building in its early years was Joseph Triner, local head of the Illinois Liquor Control Commission,” the report added.
Historians have disputed the Capone stories, arguing that the Stratosphere Club didn't open in the top floors of the building until the late 1930s, by which time Prohibition had ended and Capone was in prison.
More recently, German-born, Chicago-based architect Helmut Jahn ran his firm from the cupola until he died in 2021. His firm has since moved out of the building.
For the Record
The seller is represented by Newmark brokers Postweiler, Peter Harwood, Derek Fohl, Jack Trager, John Daniels, John Howley and Mary Gilbank.