The new retail space will be along State Street, according to Thor Equities. The hotel, which has frontage along Monroe Street and Wabash Avenue, already has retail space. Thor Equities already owns Gallery at State Street at 36 S. State St., where Forever 21 is a tenant; as well as the 260,000-sf Gallery at Canterbury in south suburban Markham. Thor Equities paid $19 million for the 80,000-sf mixed-use building on State Street but the value-added specialists spent twice that amount renovating the property.

"This historic site enjoys a reputation as one of America's grandest and most beloved hotels," says Thor Equities chief executive officer Joseph J. Sitt. The hotel was opened 13 days before the Great Chicago Fire, was rebuilt by Potter Palmer and reopened two years later, the first to have electric lights and telephones in guest rooms. Every US President from Ulysses S. Grant to Bill Clinton has been a guest, with Clinton using it as his headquarters for the Illinois and Indiana primaries. The guest list has included Mark Twain, Buffalo Bill, Rudyard Kipling and the Dali Lama. Frank Sinatra was among those to perform in the hotel's Empire Room.

With its storied past, the Palmer House is headed toward landmark designation. The department of planning and development was given permission in June from the commission on Chicago landmarks to seek the consent from the hotel's owners for the designation, which would limit work that could be done to the property.