The Hancock, 875 N. Michigan Ave., is the third tallest building in Chicago and the 16th tallest in the world. The building was completed in 1969 and was extensively renovated in 1998. Included in the sale, which was first reported by GlobeSt.com in December, are the building's 880,000 sf of office space, 153,000 sf of retail space on the lower levels, a 710-space parking garage, an observatory and rooftop broadcast antennas. About 700 residential condominiums are not included in the sale.
Newman tells GlobeSt.com that the various aspects of the building are part of what made the building so attractive. "It really has got different components. We look at it as almost five different pieces: Office, retail and the parking along with the antenna and the observatory," he says. "We figure that we are really going to look at each one individually and try to figure out how to improve on what we think is already a great asset."
The retail is almost entirely occupied with long-term leases, Newman says. The office space is currently about 75% leased and leasing office space will be a priority, he says. "The office space needs to really be a focus of what we are doing, which it is going to be," he says. "Generally, we have got smaller users in the building. There are not really any large users, although there a few that we are talking to." The gross lease rate is about $30 per sf, Newman says. Office suites ranging from 500 sf to 100,000 sf are currently available.
There had been previous talk of a hotel occupying some of the office space and Newman tells GlobeSt.com that a hotel is still a possibility. "We have not gone into it yet but we are not going to ignore the possibility of putting a hotel in the building," he says. "We have nothing specific that we are working on, but it certainly was and has been talked about for the last few years, unrelated to our purchase."
Newman says that extensive renovation is not planned for the building. "A lot of money has been spent on the building already. We are going to do a few things to the building, some cosmetic stuff and some other things," he says. "The building is in very good shape."
Newman and Michael Goldman, senior vice president of finance and acquisitions for Golub, represented the joint venture that purchased the building. Shorenstein Properties LLC was the seller of the building and was represented by Eastdil Secured LLC, of Chicago. The law firms of DLA Piper and Sullivan & Cromwell represented the joint venture and the law firm of Pillsbury Winthrop Shaw Pittman represented Shorenstein. Lehman Brothers provided the financing, the amount of which Newman would not disclose. Golub will serve as the manager and leasing agent of the building.
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