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Buyers want to turn Chicago Athletic Association into hotel, source says

Exteriors Landmark Chcago Athletic AssociatiBuilding. Tuesday June 26 2012 I Scott Stewart~Sun-Times

Exteriors of the Landmark Chcago Athletic Association Building. Tuesday, June 26, 2012 I Scott Stewart~Sun-Times

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Updated: July 28, 2012 6:31AM

The Chicago Athletic Association was a private club whose plush chairs and well-dressed waiters recalled the days when it was an enclave for the city’s elite. But like other such clubs, it couldn’t survive changing times and the end of the three-martini lunch. It closed in 2007, but left behind a grand property on Michigan Avenue.

The club sold its buildings at 12 S. Michigan and 71 E. Madison before the real estate crash. They’ve been empty ever since as the buildings fell into financial limbo, including a foreclosure. The 12 S. Michigan building, which dates from 1893, was closed up like a tomb, albeit one with large windows looking out onto Millennium Park.

But the fiscal mess is close to being cleared up. A source said a buyer for the properties has emerged and wants to convert them into a hotel. The purchaser is Chicago-based AJ Capital Partners, according to the source.

AJ Capital renovated a hotel in Lincoln Park and plans a new one on the Near West Side. Partners in the firm could not be reached for comment Tuesday.

The source said the sale is expected to close in about a month. The price couldn’t be learned, but it will be a fraction of what the properties commanded in 2007.

Back then, Songy Partners LLC and Snider-Cannata Interests LLC took control of them for $29.95 million, judging from property records. They wanted to convert the site into an Omni Hotel, but defaulted on a $26.2 million loan to Anglo-Irish Bank, which itself ultimately failed.

A Dallas-based buyer of distressed debt, Lone Star Funds, got the deed last October for $1.8 million, records show, and marketed the site for sale through HFF LP.

AJ Capital has hotels and resorts on the West Coast and Mexico. Earlier this year, it renovated the Hotel Lincoln at 1816 N. Clark into upscale lodging. It also plans to open a Soho House hotel in a former warehouse at 113 N. Green.

OFFICE SPACE: The midyear data on downtown and suburban office space in Chicago draw a portrait of an economy adrift.

For the first time in a while, downtown vacancy rates rose during the second quarter, according to a report by the tenant advisory firm Studley Inc. The report finds that at midyear, downtown vacancies stand at 17.6 percent, up from 17.5 percent in the first quarter. The numbers haven’t changed much over the last year.

There likewise is little direction in rental rates, with the downtown average of $32.65 a square foot up 0.46 percent from the first quarter, Studley said.

In the suburbs, vacancies declined to 25.1 percent compared with 25.6 percent in the first quarter, while the average rents slipped less than a percentage point to $20.05 a square foot.

Studley’s submarket data showed vacancies picking up in the central Loop along with rental rates. Something’s got to give with those dual trends. The firm also reported declines in office rental rates in the Near North and South Loop areas.

The firm said several blocks of space hitting the sublease market affected its figures. Studley noted that United Airlines is marketing 240,000 square feet at 77 W. Wacker for sublease, and the National Restaurant Association has put 42,000 square feet on the market at 175 W. Jackson.

THE REEL STORY: Chicago has a long-neglected history in the silent film era, and it emanated from the former home of the Essanay Studios at 1333 and 1345 W. Argyle. The studios nurtured the likes of Wallace Beery, Gloria Swanson and Charlie Chaplin, who it is said welcomed the film industry’s westward march to California because Chicago was just “too damn cold.”

The buildings are the longtime home of St. Augustine College, which plans a renovation and restoration to celebrate the property’s history. The college has hired Johnson Lasky Architects to draft a reuse plan and will hold a meeting at 11 a.m. Saturday for people who want to learn more.

The report is due to be released Oct. 6 at a St. Augustine’s gala.

Assisting with the project is Gary Keller, chief executive of Xomix Ltd. and a preservationist. He said Essanay Studios helped establish Uptown as an entertainment district.

DOING THE DEALS: Opus Development Corp. sold a 291,000-square-foot building at 1540 S. 54th Ave., Cicero, for $21.6 million. It is leased to baker Cloverhill Pastry-Vend LLC. The buyer was Cabot Properties Inc. … Paine/Wetzel/TCN Worldwide said it represented Integrated Merchandising Systems in it lease of 312,000 square feet at 10100 58th Pl., Kenosha, Wis.

David Roeder reports on real estate at 6:22 p.m. Thursdays on Newsradio 780 and 105.9 FM WBBM. The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday.

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