CHICAGO-It’s going to be a big bet, but it might be the best move in the downtown office market, as Houston-based Hines and Montreal-based Ivanhoe Cambridge have agreed to jointly build a $300 million office tower. The 45-story tower, to be named River Point, will go up at 444 W. Lake St. in the West Loop as the first speculative tower downtown in two decades.
The 900,000-square-foot tower is somewhat smaller than a previous tower that Hines had planned for the property. Developer Larry Levy and Hines had planned a 1.1-million-square-foot, $536 million office tower there in 2008, with law firm Baker & McKenzie and William Blair signing on to anchor the tower, but financing was not obtainable. Levy is a co-owner of the property. The tenants moved to other buildings downtown.
Now, the joint venture believes there’s enough large-block tenants out there to justify building without contracts. At the beginning of the year, the downtown market had about three million square feet of class A large block space available, according to MB Real Estate, and about 43 tenants seeking 50,000 square feet or more.
Daniel Fournier, chairman and CEO of Ivanhoe, said in a statement that the tower “responds to increasing corporate demand for the highest quality real estate.” Kevin Shannahan, a managing director with Hines and Midwest head, tells GlobeSt.com today that the JV is negotiating with first-tier prospective anchors.
“We are confident they will commit to the property,” Shannahan says. “Remember, tenants signed pretty quickly the first time the building was announced before the recession. Given the demand that’s come from the suburbs and other cities to the downtown, we want to take advantage as the first mover.”
Mayor Rahm Emanuel said at a press conference this morning that the tower is a vote of confidence for the city. “The investors and developers are starting this project because they see that Chicago is a city on the move, shaping its own future and attracting the best and brightest,” the mayor said in a statement.
Architectural firm Pickard Chilton designed the tower, which will include a 1.5-acre public park atop the existing rail infrastructure that will connect the tower and a walkway to the Chicago River, being built over existing rail lines. Construction is expected to start by December, with opening in early 2016.
The financing method for the project has not been revealed. Hines has continued large deals throughout the downturn, and in Chicago most recently released the 57-story Three First National Plaza for $349 million to a Korean-Hong Kong joint venture in August 2011. The Hines US Core Office Fund was the seller.
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