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Motorola to bring a new flavor to Merchandise Mart

MotorolMobility will relocate is Libertyville IL headquarters Merchandise Mart Chicago occupying top four floors rooftop summer 2013. Photographed Thursday July

Motorola Mobility will relocate is Libertyville, IL headquarters to the Merchandise Mart in Chicago, occupying the top four floors and rooftop in the summer of 2013. Photographed on Thursday, July 26, 2012. | Richard A. Chapman~Sun-Times

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Updated: September 8, 2012 6:05AM



Chicago’s Merchandise Mart, a powerful presence along the Chicago River since 1930, is vast, regal and successful. But as commercial buildings go, it’s an odd creature.

It’s a place where the public is invited — and where it’s not invited.

The core business was long wholesale showrooms, where retailers’ representatives were welcome but not everyday consumers, although that restriction has eased in the past few years. The rest of the building was offices and related services open to all.

The formula has changed over the building’s life. Come mid-2013, it will change again when Google Inc. brings 3,000 jobs into the building. As part of its purchase of Motorola Mobility, the search-engine company is taking the mart’s top four floors and the rooftop. The jobs are being transferred from Libertyville.

At 600,000 square feet, it’s a decent chunk of the 4.2-million-square-foot mart. But its importance goes beyond the deal’s numbers.

The “Google search” for downtown space that ended in the mart is a character-changer for the building. It also will encourage changes in the surrounding River North area already catering to a young and educated worker base.

For the mart, the importance is Google’s stature more than the jobs. Three thousand people are an incremental difference to the mart. Mark Falanga, president of Merchandise Mart Properties Inc., which manages the site, said 38,000 people come through the mart every day. And traffic spikes during its roughly 20 trade shows per year. Falanga said Google is a welcome addition but probably not enough for a dramatic shift in the mart’s retail offerings.

The difference is in the branding of the building, still among the largest in the world. The mart was associated for decades with the politically famous Kennedy family, which owned it from 1945 to 1998. Family member Christopher Kennedy continued to manage it until last year.

The mart has called itself a global “epicenter for high design,” and now it can also lay claim to being a high-tech hub. It seems like a strange role for an Art Deco landmark whose hallways are decorated with archival photos, but the mart has been a fast learner.

This year, it opened a 50,000-square-foot incubator for emerging companies called 1871. The venture built on connections the mart has enjoyed with advertising agencies such as WPP and Publicis Group, office tenants that demand the latest in wiring.

Google certified the mart as attractive to a brainy work force. Neil Stern, senior partner at the retail consulting firm McMillanDoolittle LLP, said the greatest benefits to the city could be indirect.

“You’ve got these tech companies congregating together, which helps with critical mass,” he said. “What inevitably happens, it attracts other businesses of a similar nature who want to be close by. It attracts service providers. And most important, if you watch Silicon Valley, people will leave these companies and start new ones — spinoffs, splinters and new companies getting birthed.”

Google is moving into former showroom floors. Those operators have been moved to other floors, part of a consolidation that Falanga said was designed to free space while also grouping the showrooms more efficiently.

The mart offers luxury kitchen and bath showrooms to which the public is invited, plus other centers for commercial furniture and products, home furnishings, outdoor furniture and gifts. It also found space for apparel makers evicted from showroom space in the adjacent 350 N. Orleans building, whose owners want classic office tenants instead.

The showroom business expands and contracts with pressures in different industries. Falanga noted that the mart once had showrooms for appliances and rugs, sectors that now market their wares differently.

The niche is less stable than leasing offices to creditworthy tenants. For that reason, the Google lease adds to the mart’s value, and many real estate experts believe it will be sold. Its New York-based owner, Vornado Realty Trust, has tried to sell it in the past as it winds down its investment in showrooms.

Vornado Chairman Steven Roth said in a shareholder letter last April that the company would keep the Merchandise Mart “for now.”

Falanga said: “Any notion of the building selling is speculative.” He said it is not currently being marketed.

The building’s space devoted to the offices has ranged from 25 percent to 50 percent, Falanga said. He said the share currently is more than 40 percent.

The Kennedy family is laying its own plans for developing a vacant riverfront site it still owns near the mart. High-rise residences and offices are in the long-term plan.

The mart, meanwhile, has cast its lot with public access and the public is getting more reason to pass through its doors.



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