Action on old Rezko site near the Loop
By David Roeder and Fran Spielman Staff Reporters July 9, 2013 7:30PM
Updated: August 11, 2013 6:45AM
City Hall will grant itself the power to buy, by force if necessary, the 62-acre tract south of downtown once owned by imprisoned political fixer Tony Rezko. The move by Mayor Rahm Emanuel’s administration is calculated to spur developer interest in the biggest piece of undeveloped land near the Loop.
A number of would-be investors have been snooping around the property for months. Sources said the current owner, a group led by British billionaire Nadhmi Auchi, has held discussions with several prominent builders of high-rises, including Magellan Development Group LLC; the Chicago operation of New York-based Related Cos. LLC, which has taken over the former Chicago Spire site on the lakefront; and McCaffery Interests Inc.
Magellan founder and co-chief executive Joel Carlins said his firm’s discussions about the site “reached some sort of an impasse” but that he’d be open to new negotiations given the city’s activism. “It’s well-located and the market is starting to come back,” he said. “But you still have overbuilding of residential. I don’t know how much retail you can justify there. You have to re-examine the market.”
The old Rezko plan called for 4,600 homes and an Ikea. Any buyer would have to start over in the zoning process. The land runs from Roosevelt to 16th, the Chicago River to Clark.
The city’s Community Development Commission on Tuesday gave the Emanuel administration permission to acquire the property. The action, if approved as expected by the City Council, also gives the city the right to seek appraisals and invite developer proposals itself.
The power of eminent domain gives the city unique leverage. It could tap tax-increment financing to buy the property, a tract mentioned in discussions about a casino.
“We’re not buying this in a speculative way,” said Robert McKenna, assistant commissioner of the Department of Housing and Economic Development. “We want to make sure we only use our authority if there’s a developer.” He said he’s had no conversations about a casino there.
Auchi had a representative at the city hearing who declined to comment. The representative was accompanied by Michael Szkatulski, senior managing director of real estate consulting at Mesirow Financial Holdings Inc. and a longtime associate of developer Richard Stein.
“I don’t have any position in the project right now,” Szkatulski said, although he allowed, “I’d like to.” He said he is leaving Mesirow and could work on the site as a consultant.
Dan McCaffery, chairman of McCaffery Interests, also confessed to prior discussions with Auchi’s representatives. His firm owns the Roosevelt Collection mixed-use complex just north of Rezko’s former property.
CONGRESS STILL IN SESSION: Last December, reports surfaced that the Congress Plaza Hotel at 520 S. Michigan would be sold to New York investment firms for $275 million. The buyers supposedly wanted to turn the property into condominiums.
The report must not have been good for advance bookings. Through its attorney, Peter Andjelkovich, the hotel issued a statement Tuesday saying that the sale has fallen through. The Congress continues to operate as a hotel.
Andjelkovich said that while the owners have no active talks with a buyer, it would be for sale at the right price. The Congress was the target of a decade-long strike by Unite Here Local 1, but the union abruptly made an unconditional offer to return to work in May.
He said a complex ownership group has spent heavily to remodel the 871-room hotel. The owners include Albert Nasser, who is said to reside in Switzerland.
WACKER SALE: Spending $22.75 million, Chicago-based Ameritus LLC bought the 25-story building at 205 W. Wacker. Ameritus worked with an East Coast private equity firm in making the deal.
The 263,000-square-foot building dates from 1928. The company, run by the father-son team of Bert and Jeb Scherb, plans to put $10 million into the mechanical systems, lobby renovations and other work.
Ameritus also owns the adjoining 211 W. Wacker building, original home of the Chicago Sun-Times.
DOING THE DEALS: Mid-America Real Estate Corp. handled the $31.63 million sale of the Danada Square East shopping plaza at the northeast corner of Butterfield and Naperville roads in Wheaton. Newport Capital Partners bought the 202,000-square-foot shopping center, which a Dominick’s anchors, from CBRE Global Investors. …
CBRE Group Inc. said Aldi leased an old Best Buy, a 28,000-square-foot space at 1038 N. Rohlwing Road in Addison. CBRE Senior Vice President Joe Parrott said Aldi will use 18,000 square feet and sublease the rest at the high-profile location near I-355 and Lake Street. … Mathematica Policy Research Inc. nearly doubled its space at 111 E. Wacker after leasing an additional 6,200 square feet. Paine/Wetzel TCN Worldwide represented Mathematica.
David Roeder reports on real estate at 6:22 p.m. Thursdays on WBBM-AM (780) and WBBM-FM (105.9). The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday.