Could Tribune Tower go residential?
REAL ESTATE | Zell may not be thinking lease deal, as first believed
When Tribune Co. Chairman Sam Zell decided in June to put the company's iconic Michigan Avenue tower on the market, the common belief among real estate experts was that he wanted a standard sale-leaseback deal. That's one in which the seller gets a lump of cash and agrees to a long-term lease that gives the buyer a safe return.
But hold on. Sources said Zell, who has hired Eastdil Secured LLC to market the tower and a parking lot abutting it, is thinking big. They said Zell wants nothing better than to turn over all of Tribune Tower to a residential developer. Such an owner could use it as a Gothic ornament for new construction on the parking lot.
(Chris Sweda/Sun-Times file)
That would mean moving Chicago Tribune staff somewhere else, possibly the company's printing plant at 777 W. Chicago. An alternative would have the downsized Tribune squished into the lowest floors of the tower, with the floors above converted to condos.
The tower holds 940,000 square feet, and the Tribune is believed to occupy about half of it. Around a third of the building is empty, sources said.
Clearing the newspaper out of the tower carries risk for Zell. With markets slow and credit excruciating, a buyer might pay more if Zell would keep the company there on a lease. But as one expert said, "Their credit is so lousy that it wouldn't matter that much."
The billionaire property mogul might take his chances with a developer willing to pay top dollar, maybe at least $250 million, for a career-capping, ego-elevating deal.
In other words, selling the tower is a bit like selling the Tribune-owned Chicago Cubs.
IN-SPIRED: Just how goofy is the Chicago condo market? Some would say it has been goofy for years, but now that credit is constricted and speculators have left the market, consider this statistic from the Appraisal Research Counselors Ltd. report on downtown condos. It said that in the second quarter, 466 condo sales contracts were signed downtown, but 358 were attributed to the 150-story Chicago Spire. The spire developers reported their initial sales in the 1,200-unit building in one swoop, so they skewed the results. Without the Spire, the downtown market had only 108 sales in the second quarter, an extremely low figure.
Appraisal Research said buyers are on the sidelines and developers are resorting to incentives, many of which are not advertised and are offered only when the sales center has a live prospect. But despite few new buildings being started, Appraisal Research found that the market still has an unsold inventory of about 7,300 units, which is a couple years' worth of decent sales.
SPEAKING OF INCENTIVES: How about free gas for a year and a free parking space for life? Those are the carrots that Chieftain Group is dangling to draw traffic this weekend for its Lexington Park project in the South Loop. From 11 a.m. to 5 p.m. Saturday and Sunday, buyers who reserve a unit with a $1,000 deposit will get a parking space valued at $34,900. Chieftain said they also will get a closing credit of $5,000, enough for a year's supply of gas.
Lexington Park is a 35-story building under construction at the northeast corner of Michigan and Cermak. The sales center is at 2138 S. Indiana.
Britta Rivera, vice president of U.S. sales for Chieftain, said sales in the building have surpassed 50 percent and deliveries are expected late this year. Lexington Park has 297 condos and 36 low-rise loft units. Prices are quoted at $239,900 to $727,900.
JUST PUBLISHED: The Chicago Architecture Foundation has issued Chicago Architecture: 1885 to Today, by Edward Keegan. The photo-rich guidebook is helpful as a primer on the most noted Chicago buildings and is careful not to neglect the best examples of modern design. The text is more descriptive than critical, but some entries refer to a backlash in recent decades over the relentless geometry of Ludwig Mies van der Rohe. The book includes for laughs Stanley Tigerman's 1978 doctored photo that shows Mies' Crown Hall of the Illinois Institute of Technology tilted in Titanic-like pose in Lake Michigan, ready to sink to the depths.
DOING THE DEALS: ShoreBank Corp. has opened its first loan office dedicated to owners and developers of multi-family housing. It's at 2100 S. Marshall Blvd. in Little Village and marks the bank's first foray into the Latino market since its 2006 purchase of Greater Chicago Bank. . . . Represented by Podolsky Northstar Corfac International, the Alexander Graham Bell Montessori School and Alternatives in Education for the Hearing Impaired moved to a shared campus at 9300 Capitol Drive, Wheeling. The schools moved from Mount Prospect. Podolsky has been building a client base among nonprofits and is representing Roycemore School in the pending purchase of a building at 1200 Davis St., Evanston. . . . Duke Realty Corp. has started a 70,000-square-foot addition at 1005 N. Commons Drive, Aurora, for the expansion of tenant Import Logistics Inc.