108 North State Street
Encyclopedia
108 North State Street is a site currently under development as an urban center located in the Loop
community area
of downtown Chicago, Illinois, United States
. The 3 building structure is being developed by Joseph Freed and Associates LLC, as a project inherited from the Mills Corporation
. Retail development responsibilities have been undertaken by Joseph Freed and Associates LLC. It will be located on the square block bounded clockwise from the North by West Randolph Street
, North State Street
, West Washington Street and North Dearborn Street that is known as "Block 37", which was its designated number as one of the original 58 blocks of the city. The project broke ground on November 15, 2005. On July 31, 2006, the construction phase began. July 2008 marked the opening of the first of the three structures and the shopping center opened in November 2009.
The Mills Corporation has also been contracted to develop an underground transit center beneath Block 37 that will be jointly funded by the City of Chicago, the Chicago Transit Authority
and The Mills Corporation. The planned project includes a new subway station, track connections and a common downtown airport check-in facility for train service to both O'Hare
and Midway airports. Since the purchase in April 2007 the project has stalled. The CTA has pulled out of the project and the current economic climate has stalled the project. Delays in completion have caused the project to lose major tenants.
Both Block 37 and The Mills Corporation have histories of financial difficulties. Block 37 had been demolished in 1989 for a hotly contested redevelopment plan under the then new Chicago Mayor Richard M. Daley
. The debates included the demolition of the Chicago Landmark
McCarthy Building
, which proceeded after the Illinois Supreme Court decided private preservation groups did not have standing to challenge the city's decision. Once the site was cleared, the initial redevelopment plan fell through, as did several subsequent plans, leaving the block vacant and undeveloped for nearly a generation. The Mills Corporation has itself been in financial difficulty in the past. This reputation and changing financial climate caused a delay in 2006 as contractors feared not getting paid. During the construction, cost overruns and delays have forced the city of Chicago and the Chicago Transit Authority
to make up for a shortfall of over $100 million. In November, the developer was declared in default and CB Richard Ellis
was named receiver.
According to plans, it will be composed of three united structures: a 21-story residential condominium tower called 108 North State Condominium Tower at North State Street and West Randolph Street, a 20-story hotel tower called 108 North State Hotel Tower at West Randolph Street and North Dearborn street, and a 17-story tower called CBS Broadcast Center at North State Street and West Washington Street (for WBBM-TV, CBS 2
). At one point, there was talk that the hotel tower has been abandoned in favor of a second residential tower. However, more recently it seems that the hotel tower is still anticipated. These structures will rise above lower level retail space. It is expected to have a very eclectic mix of shopping, entertainment, and dining in its lower retail floors. There were plans for an underground CTA
transit station providing express service to O'Hare
and Midway airports via the "L
," as well as local connections via the CTA Blue
and Red
line subways (connecting the Washington/Dearborn and Washington/State stations, respectively). The CTA superstation has been mothballed due to $100 million cost overruns & limited interest in private operator of the express service. In November 2008, the city proposed new financing to enable Loews Hotels
build the 354-room planned hotel.
Architecturally, the main floor will feature transparent cornered project fascades and clear glass street level views. The multiple structures will feature approximately 400,000 square feet (40,000 m²) of retail, entertainment and dining space; 200,000 to 450,000 square feet (42,000 m²) of office space; a 354-room hotel; a 200- to 300-unit residential tower; and a state-of-the-art CTA transit station providing service to and from Chicago’s O’Hare and Midway airports.
It will be flanked to the west by the Richard J. Daley Center
and to the east by the former Marshall Field and Company Building
. It is part of the central business district
that includes Chicago City Hall
and the James R. Thompson Center
(the State of Illinois office building) within 2 blocks.
approved its demolition to erect a multi-use skyscraper with retail, hotel, office, and residential spaces. The McCarthy Building, a Chicago Landmark
, was even stripped of landmark status over the objection of preservationists and public interest groups in order for the block to be cleared. Due to Block 37's central location in the downtown loop, its history is a microcosm of the city's history. Block 37 was a nearly vacant city block from 1989 until 2005 after several attempts at redevelopment failed due to Chicago politics and insufficient funding of several past developers. The single remaining building from the 1989 Block 37 architecture is an active Commonwealth Edison
transformer
building that distributes power to a great portion of the Loop.
In 1988, Chicago Mayor Harold Washington
approved a $24 million subsidy to FJV Venture to develop Block 37. There were a series of subsequent alternate redevelopment plans. Among the prior redevelopment plans for the block were the original Block 37 Towers, for which the original block was demolished and which included a 47-story tower designed by Murphy/Jahn
, Inc. Another failed plan was a Solomon Cordwell Buenz plan including a 711 foot 66-story residential tower and a 12-story Marriott Hotel towering over a 4 story retail base. This had followed the 39-story Kohn Pedersen Fox Associates design scheduled for 2004 completion. The developments fell through, which put the property back into the city's possession. In 2002, the city initiated a competition for the development rights to the property. In 2004, the city sold the property to Mills Corp. at a $20 million dollar loss. Mills sold the development rights to Joseph Freed and Associates in 2005, when the city committed $42 million in tax-increment funding. In 2007, the city learned the development was $150 million over budget. The complex was originally being developed by commercial real estate developer Mills Corporation
, best known for its ownership of numerous super-regional shopping malls. However, Joseph Freed and Associates LLC has inherited the development rights.
Mills' troubles began in November 2005, with revelations of large losses on failed projects, a cash crunch and a U.S. Securities and Exchange Commission investigation into its accounting. The SEC inquiry was upgraded to a formal investigation in March 2006. The reclassification as a formal investigation allows for the use of additional techniques such as subpoenas. On April 6, 2007 Simon Property Group, Inc. announced the joint acquisition of Mills Corporation
along with Farallon Capital Management for $25.25 per share of common stock
.
(located at 1 South State Street) that closed in early 2007.
Golub and Mills are now in a legal entanglement over certain leases to Morningstar for 211000 square feet (19,602.5 m²). Golub claims Mills knew the measurements of the floors actually totalled 237000 square feet (22,018 m²) although they contracted for 211000 square feet (19,602.5 m²). Golub claims a Morningstar affiliate "...induced Morningstar to agree in the lease to be bound by an after-the-fact re-measurement of the space." Additionally, Golub claims that Mills has acted without Daley administration authorizations for plans such as elimination of a proposed hotel in favor of a second apartment tower, as required by an agreement between Golub and Mills. In addition, Golub has sued over the residential portion of the project, which was given to Freed. Golub claims to have accepted the office space part of the project at a low profit with the expectation of making a larger profit on the residential portion. However, a court ruling has paved the way for Mills to terminate its contract with Chicago-based Golub & Co. to develop the project’s two residential towers and to sell the residential portion of the Block 37 project in the Loop to developer Joseph A. Freed & Associates LLC.
, moved to foreclose on the retail and transit portion of the mixed-use development on October 19, 2009 because the developer, Joseph Freed and Associates LLC, ran out of money. Freed technically defaulted in March. With cost overruns exceeding $34 million as of August 25, Freed owes $128.5 million on a $205 million construction loan, according to a lawsuit filed in Cook County Circuit Court. On November 3, the developer announced it had landed 13 new tenants to open within the succeeding few months. On November 20, a circuit court
judge stripped Freed of the development rights and turn the responsibility over to CB Richard Ellis
. On the same day a partial occupancy permit for the underground pedway connecting the red line
and the blue line
as well as the first floor retail space was granted. Freed claimed that the loan payments were current and that the default was based on a technicality. As receiver, CB Richard Ellis was scheduled to file a status report with the court December 8 and a full report, including financials, on January 15.
has signed a lease to occupy about 210,000 square feet (20,000 m²) across eight floors, making it the largest tenant in the office tower. In April 2005, Mills had announced a lease commitment with WBBM-Channel 2 for about 100,000 square feet (10,000 m²) of space for offices and a showcase television studio. In February 2008, developer Joseph Freed & Associates announced Club Monaco
, a Muvico Entertainment LLC
theatre, a David Barton Gym, a Rosa Mexican restaurant, a coffee shop and a yet-to-be-named Lettuce Entertain You Enterprises Inc. restaurant will be located in the State Street complex. In June 2008, Puma confirmed it is opening a two-level flagship store on Block 37. Also, the Muvico Theatre will have an eight screen multiplex
. In October 2008, Spanish clothing store Zara
signed a lease for Block 37 along with German athletic-wear company Puma athletic wear
and British clothing label Ben Sherman
. Other confirmed retailers include clothier Steve Madden
, Godiva Chocolatier, sporting apparel seller Lululemon Athletica Inc.
, hair and skin products retailer Aveda
as well as body and bath products retailer Sabon
. Other stores rumored to be considering Block 37 at that time were Apple Computer
and Crate & Barrel home furnishings
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On July 31, 2006, the retail and CTA construction began. The retail portion entails the construction of the CBS 2 Broadcast Center building at North State Street and West Washington Street. The building will also serve as the corporate headquarters of Morningstar, Inc.
This 17 story building will be 276 feet (84.1 m) in height. After a series of previous failures on this project, this marks the first time redevelopment has gone past ground breaking to the construction phase. The construction of the condominium Tower at State Street and Randolph was visible on May 2, 2007.
The first phase of construction (Phase II) had been contracted to be completed by March 2008. This would enable Morningstar, Inc. to move before its early 2009 lease expiration at its present location, 225 W. Wacker Drive. However, financial troubles have caused delays that have necessitated that Morningstar who had intended to occupy over half of the building seek lease proposals from other downtown office towers. Morningstar would suffer holdover penalties and other damages if it were unable to move before its lease expires. Morningstar is hesitant to pursue other opportunities because their lease at 108 North State Street is at a below market price in the low $20s/square foot.
On June 11, 2008, the CTA board was scheduled to hear the city's plan of a three-phase bailout of the construction of the rapid transit
station under block 37. The plan includee $20 million in additional tax-increment financing. This comes on top of an extra $60–70 million in excess of its budgeted amount that the CTA has been forces to expend. The building developer, Joseph Freed & Associates, has agreed to accept $19 million of cost overruns. This round of assistance only covers costs that have been incurred to date. No further funds have been committed and the station's development is being halted until such funds arise. The original budget was $213 million ($173 from CTA) and costs to date have been $320 million. As of last year the costs were $150 million over budget and the city is seeking private investment. Construction will not begin on the third building, the hotel and residences until the end of 2009.
During construction, 100 local artist created cutout wood
block letters to place on the temporary construction wall. They were posted on the wall adjacent to the temporary pedestrian walkway next to the construction site. The phrase "You Are Beautiful" is spelled out in various languages.
building held its ribbon cutting ceremony
. The CBS studio includes a 30 by outside video display, which has been a controversial addition to the Loop community. Morningstar has moved its global headquarters into the building. Also, the world's first luxury shared office will host 100 individual workspaces for rent on the 15th floor in a space that includes a spa, pool hall
, recording studio
, graphic design
shop, audio-visual board room, penthouse
suites and concierge.
The shopping center is expected to include Bebe
, Coach and J.Crew
. Lettuce Entertain You who also operates the food court at Water Tower Place
will operate a cafe, food court and market. The top floor was to be occupied by Muvico Theaters
, however they pulled out in 2009. The David Barton Gym, the first and largest tenant of the Block 37 project, has pulled out of the project favoring, instead, the Roosevelt Collection in the south loop. The reason the gym opted out was the delayed opening of the mall, which is scheduled for fall 2009 opening rather than fall 2008 as scheduled. In March 2009, Apple Inc. also withdrew from its leasing agreement, and less than a month later it signed an agreement to develop a new storefront in the Clybourn Corridor on property bounded by North Avenue, Halsted Street
and Clybourn Avenue. After Apple backed out of its lease, Lululemon backed out of its lease to be located next to Apple. Other March 2009 tenant signings included Chicago's haberdashery Bigsby & Kruthers, Sunglass Hut, crystal jewelers Swarovski
, Starfruit Cafe, and Fast-casual eatery Tahini. Also, in the face of declining advertising revenue, CBS sought to sublease part of its studio. A Loews Hotels
will be built in forthcoming years.
On November 20, 2009, the underground pedway connecting the blue line and the red line opened. The following day Steve Madden shoes, opened the first retail establishment in the structure.
Chicago Loop
The Loop or Chicago Loop is one of 77 officially designated Chicago community areas located in the City of Chicago, Illinois. It is the historic commercial center of downtown Chicago...
community area
Community areas of Chicago
Community areas in Chicago refers to the work of the Social Science Research Committee at University of Chicago which has unofficially divided the City of Chicago into 77 community areas. These areas are well-defined and static...
of downtown Chicago, Illinois, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The 3 building structure is being developed by Joseph Freed and Associates LLC, as a project inherited from the Mills Corporation
Mills Corporation
The Mills Corporation was a publicly traded real estate investment trust headquartered in Arlington, Virginia, United States, acquired on April 3, 2007 by an investment group composed of Simon Property Group and Farallon Capital Management. The company developed, owned, and operated major...
. Retail development responsibilities have been undertaken by Joseph Freed and Associates LLC. It will be located on the square block bounded clockwise from the North by West Randolph Street
Randolph Street (Chicago)
Randolph Street is a street in Chicago. It runs east-west through the Chicago Loop, carrying westbound traffic west from Michigan Avenue across the Chicago River on the Randolph Street Bridge, interchanging with the Kennedy Expressway , and continuing west. It serves as the northern boundary of...
, North State Street
State Street (Chicago)
State Street is a large south-north street in Chicago, Illinois, USA and its south suburbs. It begins on the Near North Side at North Avenue. For much of its course, it lies between Wabash Avenue on the east and Dearborn Street/Lafayette Avenue on the west...
, West Washington Street and North Dearborn Street that is known as "Block 37", which was its designated number as one of the original 58 blocks of the city. The project broke ground on November 15, 2005. On July 31, 2006, the construction phase began. July 2008 marked the opening of the first of the three structures and the shopping center opened in November 2009.
The Mills Corporation has also been contracted to develop an underground transit center beneath Block 37 that will be jointly funded by the City of Chicago, the Chicago Transit Authority
Chicago Transit Authority
Chicago Transit Authority, also known as CTA, is the operator of mass transit within the City of Chicago, Illinois and some of its surrounding suburbs....
and The Mills Corporation. The planned project includes a new subway station, track connections and a common downtown airport check-in facility for train service to both O'Hare
O'Hare International Airport
Chicago O'Hare International Airport , also known as O'Hare Airport, O'Hare Field, Chicago Airport, Chicago International Airport, or simply O'Hare, is a major airport located in the northwestern-most corner of Chicago, Illinois, United States, northwest of the Chicago Loop...
and Midway airports. Since the purchase in April 2007 the project has stalled. The CTA has pulled out of the project and the current economic climate has stalled the project. Delays in completion have caused the project to lose major tenants.
Both Block 37 and The Mills Corporation have histories of financial difficulties. Block 37 had been demolished in 1989 for a hotly contested redevelopment plan under the then new Chicago Mayor Richard M. Daley
Richard M. Daley
Richard Michael Daley is a United States politician, member of the national and local Democratic Party, and former Mayor of Chicago, Illinois. He was elected mayor in 1989 and reelected in 1991, 1995, 1999, 2003, and 2007. He was the longest serving Chicago mayor, surpassing the tenure of his...
. The debates included the demolition of the Chicago Landmark
Chicago Landmark
Chicago Landmark is a designation of the Mayor of Chicago and the Chicago City Council for historic buildings and other sites in Chicago, Illinois, United States. Listed sites are selected after meeting a combination of criteria, including historical, economic, architectural, artistic, cultural,...
McCarthy Building
McCarthy Building
McCarthy Building was a five-story Chicago Landmark building in the Loop community area of Chicago, Illinois. The building, designed by John M. Van Osdel had been erected in 1872, but was demolished in 1989 during the clearing of what is known as Chicago's Block 37. In order to make way for...
, which proceeded after the Illinois Supreme Court decided private preservation groups did not have standing to challenge the city's decision. Once the site was cleared, the initial redevelopment plan fell through, as did several subsequent plans, leaving the block vacant and undeveloped for nearly a generation. The Mills Corporation has itself been in financial difficulty in the past. This reputation and changing financial climate caused a delay in 2006 as contractors feared not getting paid. During the construction, cost overruns and delays have forced the city of Chicago and the Chicago Transit Authority
Chicago Transit Authority
Chicago Transit Authority, also known as CTA, is the operator of mass transit within the City of Chicago, Illinois and some of its surrounding suburbs....
to make up for a shortfall of over $100 million. In November, the developer was declared in default and CB Richard Ellis
CB Richard Ellis
CBRE Group, Inc. , a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm . The Company has approximately 31,000 employees , and serves real estate owners, investors and occupiers through more than 300 offices worldwide...
was named receiver.
Details
WBBM-TV
WBBM-TV, virtual channel 2 , is the CBS owned-and-operated television station in Chicago, Illinois. WBBM-TV's main studios and offices are located in The Loop section of Chicago, as part of the development at Block 37, and its transmitter is atop the Willis Tower.-History:WBBM-TV traces its history...
). At one point, there was talk that the hotel tower has been abandoned in favor of a second residential tower. However, more recently it seems that the hotel tower is still anticipated. These structures will rise above lower level retail space. It is expected to have a very eclectic mix of shopping, entertainment, and dining in its lower retail floors. There were plans for an underground CTA
Chicago Transit Authority
Chicago Transit Authority, also known as CTA, is the operator of mass transit within the City of Chicago, Illinois and some of its surrounding suburbs....
transit station providing express service to O'Hare
O'Hare International Airport
Chicago O'Hare International Airport , also known as O'Hare Airport, O'Hare Field, Chicago Airport, Chicago International Airport, or simply O'Hare, is a major airport located in the northwestern-most corner of Chicago, Illinois, United States, northwest of the Chicago Loop...
and Midway airports via the "L
Chicago 'L'
The L is the rapid transit system serving the city of Chicago and some of its surrounding suburbs. It is operated by the Chicago Transit Authority...
," as well as local connections via the CTA Blue
Blue Line (Chicago Transit Authority)
The Blue Line consists of a long trunk line in the Chicago Transit Authority's rapid transit system which extends through Chicago's Loop from O'Hare International Airport at the far northwest end of the city, through downtown via the Milwaukee-Dearborn subway, and across the West Side to its...
and Red
Red Line (Chicago Transit Authority)
The northern terminus of the Red Line is Howard Street in the Rogers Park neighborhood of Chicago , on the City Limits farthest north. The Red Line extends southeasterly on an elevated embankment structure about a half-mile west of the lakefront to Touhy Avenue then turns south along Glenwood...
line subways (connecting the Washington/Dearborn and Washington/State stations, respectively). The CTA superstation has been mothballed due to $100 million cost overruns & limited interest in private operator of the express service. In November 2008, the city proposed new financing to enable Loews Hotels
Loews Hotels
-About Loews HotelsHotels:Loews Hotels currently owns and/or operates 18 hotels and resorts in the United States and Canada:-United States locations:*Loews Annapolis Hotel - Annapolis, Maryland*Loews Atlanta Hotel - Atlanta, Georgia...
build the 354-room planned hotel.
Architecturally, the main floor will feature transparent cornered project fascades and clear glass street level views. The multiple structures will feature approximately 400,000 square feet (40,000 m²) of retail, entertainment and dining space; 200,000 to 450,000 square feet (42,000 m²) of office space; a 354-room hotel; a 200- to 300-unit residential tower; and a state-of-the-art CTA transit station providing service to and from Chicago’s O’Hare and Midway airports.
It will be flanked to the west by the Richard J. Daley Center
Richard J. Daley Center
The Richard J. Daley Center, also known by its courtyard Daley Plaza and named after longtime mayor Richard J. Daley, is the premier civic center of the City of Chicago in Illinois. Situated on Randolph and Washington Streets between Dearborn and Clark Streets, the Richard J. Daley Center is...
and to the east by the former Marshall Field and Company Building
Marshall Field and Company Building
Marshall Field and Company Building or Macy's at State Street is the former flagship location of the former Marshall Field's department store and the current location of the Chicago flagship of Macy's...
. It is part of the central business district
Central business district
A central business district is the commercial and often geographic heart of a city. In North America this part of a city is commonly referred to as "downtown" or "city center"...
that includes Chicago City Hall
Chicago City Hall
Chicago City Hall is the official seat of government of the City of Chicago in Illinois. Adjacent to the Richard J. Daley Center and the James R...
and the James R. Thompson Center
James R. Thompson Center
The James R. Thompson Center is located at 100 W. Randolph Street in the Loop, Chicago, Illinois and houses offices of the State of Illinois. The building opened in May 1985 as the State of Illinois Center. It was renamed in 1993 to honor former Illinois Governor James R. Thompson...
(the State of Illinois office building) within 2 blocks.
History
Block 37
In 1829, the legislature appointed commissioners to locate a canal and layout the surrounding town. The commissioners employed James Thompson to survey and plat the town of Chicago, which at the time had a population of less than 100. Historians regard the August 4, 1830 filing of the plat as the official recognition of a municipalitely known as Chicago. Block 37 is one of the city's original 58 blocks in the layout of the town, and there was much consternation when it was demolished in 1989, after Mayor Richard M. DaleyRichard M. Daley
Richard Michael Daley is a United States politician, member of the national and local Democratic Party, and former Mayor of Chicago, Illinois. He was elected mayor in 1989 and reelected in 1991, 1995, 1999, 2003, and 2007. He was the longest serving Chicago mayor, surpassing the tenure of his...
approved its demolition to erect a multi-use skyscraper with retail, hotel, office, and residential spaces. The McCarthy Building, a Chicago Landmark
Chicago Landmark
Chicago Landmark is a designation of the Mayor of Chicago and the Chicago City Council for historic buildings and other sites in Chicago, Illinois, United States. Listed sites are selected after meeting a combination of criteria, including historical, economic, architectural, artistic, cultural,...
, was even stripped of landmark status over the objection of preservationists and public interest groups in order for the block to be cleared. Due to Block 37's central location in the downtown loop, its history is a microcosm of the city's history. Block 37 was a nearly vacant city block from 1989 until 2005 after several attempts at redevelopment failed due to Chicago politics and insufficient funding of several past developers. The single remaining building from the 1989 Block 37 architecture is an active Commonwealth Edison
Commonwealth Edison
Commonwealth Edison is the largest electric utility in Illinois, serving the Chicago and Northern Illinois area...
transformer
Transformer
A transformer is a device that transfers electrical energy from one circuit to another through inductively coupled conductors—the transformer's coils. A varying current in the first or primary winding creates a varying magnetic flux in the transformer's core and thus a varying magnetic field...
building that distributes power to a great portion of the Loop.
In 1988, Chicago Mayor Harold Washington
Harold Washington
Harold Lee Washington was an American lawyer and politician who became the first African-American Mayor of Chicago, serving from 1983 until his death in 1987.- Early years and military service :...
approved a $24 million subsidy to FJV Venture to develop Block 37. There were a series of subsequent alternate redevelopment plans. Among the prior redevelopment plans for the block were the original Block 37 Towers, for which the original block was demolished and which included a 47-story tower designed by Murphy/Jahn
Helmut Jahn
Helmut Jahn is a German-American architect, well known for designs such as the US$800 million Sony Center on the Potsdamer Platz, Berlin, the Messeturm in Frankfurt and the One Liberty Place, formerly the tallest building in Philadelphia, Pennsylvania, and Suvarnabhumi Airport, an international...
, Inc. Another failed plan was a Solomon Cordwell Buenz plan including a 711 foot 66-story residential tower and a 12-story Marriott Hotel towering over a 4 story retail base. This had followed the 39-story Kohn Pedersen Fox Associates design scheduled for 2004 completion. The developments fell through, which put the property back into the city's possession. In 2002, the city initiated a competition for the development rights to the property. In 2004, the city sold the property to Mills Corp. at a $20 million dollar loss. Mills sold the development rights to Joseph Freed and Associates in 2005, when the city committed $42 million in tax-increment funding. In 2007, the city learned the development was $150 million over budget. The complex was originally being developed by commercial real estate developer Mills Corporation
Mills Corporation
The Mills Corporation was a publicly traded real estate investment trust headquartered in Arlington, Virginia, United States, acquired on April 3, 2007 by an investment group composed of Simon Property Group and Farallon Capital Management. The company developed, owned, and operated major...
, best known for its ownership of numerous super-regional shopping malls. However, Joseph Freed and Associates LLC has inherited the development rights.
Corporate difficulties
Mills Corporation
The Mills Corporation was a publicly traded real estate investment trust headquartered in Arlington, Virginia, United States, acquired on April 3, 2007 by an investment group composed of Simon Property Group and Farallon Capital Management. The company developed, owned, and operated major...
along with Farallon Capital Management for $25.25 per share of common stock
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
.
Block 37 troubles
In March 2006, contractors halted construction because of fears that they will not be paid. This caused Morningstar to reconsider their lease commitment. As a result, the value of the project declined, which made the resale of the project rights difficult. Mills was close to a deal with German investment firm, Deutsche Immobilien Fonds A.G. prior to the difficulties. DIFA had outbid Chicago developer Golub & Co., which then became the frontrunner. Golub, an international real estate investment company headquartered in Chicago, has closed on the office space portion of the project. Mills eventually sold the retail space rights to Chicago developer Joseph Freed & Associates, who had previously purchased the nearby Carson, Pirie, Scott and Company BuildingCarson, Pirie, Scott and Company Building
The Sullivan Center, formerly known as the Carson, Pirie, Scott and Company Building or Carson, Pirie, Scott and Company Store, is a commercial building at 1 South State Street at the corner of East Madison Street in Chicago, Illinois. It was designed by Louis Sullivan for the retail firm...
(located at 1 South State Street) that closed in early 2007.
Golub and Mills are now in a legal entanglement over certain leases to Morningstar for 211000 square feet (19,602.5 m²). Golub claims Mills knew the measurements of the floors actually totalled 237000 square feet (22,018 m²) although they contracted for 211000 square feet (19,602.5 m²). Golub claims a Morningstar affiliate "...induced Morningstar to agree in the lease to be bound by an after-the-fact re-measurement of the space." Additionally, Golub claims that Mills has acted without Daley administration authorizations for plans such as elimination of a proposed hotel in favor of a second apartment tower, as required by an agreement between Golub and Mills. In addition, Golub has sued over the residential portion of the project, which was given to Freed. Golub claims to have accepted the office space part of the project at a low profit with the expectation of making a larger profit on the residential portion. However, a court ruling has paved the way for Mills to terminate its contract with Chicago-based Golub & Co. to develop the project’s two residential towers and to sell the residential portion of the Block 37 project in the Loop to developer Joseph A. Freed & Associates LLC.
2009 Foreclosure
Lenders, including Bank of AmericaBank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
, moved to foreclose on the retail and transit portion of the mixed-use development on October 19, 2009 because the developer, Joseph Freed and Associates LLC, ran out of money. Freed technically defaulted in March. With cost overruns exceeding $34 million as of August 25, Freed owes $128.5 million on a $205 million construction loan, according to a lawsuit filed in Cook County Circuit Court. On November 3, the developer announced it had landed 13 new tenants to open within the succeeding few months. On November 20, a circuit court
Circuit court
Circuit court is the name of court systems in several common law jurisdictions.-History:King Henry II instituted the custom of having judges ride around the countryside each year to hear appeals, rather than forcing everyone to bring their appeals to London...
judge stripped Freed of the development rights and turn the responsibility over to CB Richard Ellis
CB Richard Ellis
CBRE Group, Inc. , a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm . The Company has approximately 31,000 employees , and serves real estate owners, investors and occupiers through more than 300 offices worldwide...
. On the same day a partial occupancy permit for the underground pedway connecting the red line
Red Line (Chicago Transit Authority)
The northern terminus of the Red Line is Howard Street in the Rogers Park neighborhood of Chicago , on the City Limits farthest north. The Red Line extends southeasterly on an elevated embankment structure about a half-mile west of the lakefront to Touhy Avenue then turns south along Glenwood...
and the blue line
Blue Line (Chicago Transit Authority)
The Blue Line consists of a long trunk line in the Chicago Transit Authority's rapid transit system which extends through Chicago's Loop from O'Hare International Airport at the far northwest end of the city, through downtown via the Milwaukee-Dearborn subway, and across the West Side to its...
as well as the first floor retail space was granted. Freed claimed that the loan payments were current and that the default was based on a technicality. As receiver, CB Richard Ellis was scheduled to file a status report with the court December 8 and a full report, including financials, on January 15.
Progress
Phase I construction
The Mills Corporation purchased the property for the project from the city on November 11, 2005. Phase I of the project, the groundbreaking, began formally on November 15, 2005. This followed winning the competition to be master developer and having their plan approved by the city. The Mills Corporation has letters of intent from CBS 2 Chicago Broadcast Center, Boggi Milano, Sisley, Andrew’s Ties, Banana Republic, Rosa Mexicano, David Barton Gym and new concepts by Steve Lombardo, creator of Gibson's Steakhouse and Hugo’s Frog Bar, and Steven Foster, creator of Lucky Strike Lanes in Hollywood as future tenant commitments. Morningstar, Inc.Morningstar, Inc.
Morningstar, Inc. is an independent investment research company based in Chicago, Illinois, USA.-Businesses:Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for...
has signed a lease to occupy about 210,000 square feet (20,000 m²) across eight floors, making it the largest tenant in the office tower. In April 2005, Mills had announced a lease commitment with WBBM-Channel 2 for about 100,000 square feet (10,000 m²) of space for offices and a showcase television studio. In February 2008, developer Joseph Freed & Associates announced Club Monaco
Club Monaco
Club Monaco is a mid-priced, high-end casual clothing retailer owned by Polo Ralph Lauren. With more than 69 stores in North America, the retailer has locations in Canada, Hong Kong, Macao, Taiwan, South Korea, China, the United Arab Emirates, Malaysia, Indonesia, Singapore, Saudi Arabia, United...
, a Muvico Entertainment LLC
Muvico Theaters
Muvico Theaters is a movie theater chain. Its headquarters are in Oakland Park, Florida, near Fort Lauderdale.Based in Fort Lauderdale, Florida, Muvico has seven complexes in Florida. Muvico has also expanded out of the state of Florida to include complexes in the Chicago Metropolitan Area , and...
theatre, a David Barton Gym, a Rosa Mexican restaurant, a coffee shop and a yet-to-be-named Lettuce Entertain You Enterprises Inc. restaurant will be located in the State Street complex. In June 2008, Puma confirmed it is opening a two-level flagship store on Block 37. Also, the Muvico Theatre will have an eight screen multiplex
Multiplex (movie theater)
A multiplex is a movie theater complex with multiple screens, typically three or more. They are usually housed in a specially designed building. Sometimes, an existing venue undergoes a renovation where the existing auditoriums are split into smaller ones, or more auditoriums are added in an...
. In October 2008, Spanish clothing store Zara
Zara (clothing)
Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group; the fashion group also owns brands such as Massimo Dutti, Pull and Bear, Oysho, Uterqüe, Stradivarius and...
signed a lease for Block 37 along with German athletic-wear company Puma athletic wear
PUMA AG
Puma SE, officially branded as PUMA, is a major German multinational company that produces high-end athletic shoes, lifestyle footwear and other sportswear. Formed in 1924 as Gebrüder Dassler Schuhfabrik by Adolf and Rudolf Dassler, relationships between the two brothers deteriorated until the two...
and British clothing label Ben Sherman
Ben Sherman
Ben Sherman is a British based clothing company, designing shirts, suits, shoes, accessories and other items that are, in common with many British brands, now made overseas, largely in the Far East. Their designs sometimes feature the Royal Air Force roundel which is often called the mod target...
. Other confirmed retailers include clothier Steve Madden
Steve Madden
Steve Madden is the founder and former CEO of Steve Madden Ltd., a footwear company.Born in Far Rockaway, Queens, Madden grew up in adjoining Lawrence in Nassau County, New York....
, Godiva Chocolatier, sporting apparel seller Lululemon Athletica Inc.
Lululemon Athletica
Lululemon Athletica Inc. , styled as lululemon athletica, is a self-described yoga-inspired athletic apparel company, produces a clothing line and runs international clothing stores from its company base in Vancouver, British Columbia, Canada....
, hair and skin products retailer Aveda
Aveda
Aveda Corporation is a company headquartered in Blaine, Minnesota, that manufactures skin care, cosmetics, perfume, hair care products, and trains students in cosmetology and esthiology at the Aveda Institutes in Minneapolis, New York City, Washington, DC, Vancouver, Calgary, Toronto and many other...
as well as body and bath products retailer Sabon
Sabon
Sabon is the name of an old style serif typeface designed by the German-born typographer and designer Jan Tschichold in the period 1964–1967...
. Other stores rumored to be considering Block 37 at that time were Apple Computer
Apple Computer
Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad...
and Crate & Barrel home furnishings
Phase II construction
Morningstar, Inc.
Morningstar, Inc. is an independent investment research company based in Chicago, Illinois, USA.-Businesses:Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for...
This 17 story building will be 276 feet (84.1 m) in height. After a series of previous failures on this project, this marks the first time redevelopment has gone past ground breaking to the construction phase. The construction of the condominium Tower at State Street and Randolph was visible on May 2, 2007.
The first phase of construction (Phase II) had been contracted to be completed by March 2008. This would enable Morningstar, Inc. to move before its early 2009 lease expiration at its present location, 225 W. Wacker Drive. However, financial troubles have caused delays that have necessitated that Morningstar who had intended to occupy over half of the building seek lease proposals from other downtown office towers. Morningstar would suffer holdover penalties and other damages if it were unable to move before its lease expires. Morningstar is hesitant to pursue other opportunities because their lease at 108 North State Street is at a below market price in the low $20s/square foot.
On June 11, 2008, the CTA board was scheduled to hear the city's plan of a three-phase bailout of the construction of the rapid transit
Rapid transit
A rapid transit, underground, subway, elevated railway, metro or metropolitan railway system is an electric passenger railway in an urban area with a high capacity and frequency, and grade separation from other traffic. Rapid transit systems are typically located either in underground tunnels or on...
station under block 37. The plan includee $20 million in additional tax-increment financing. This comes on top of an extra $60–70 million in excess of its budgeted amount that the CTA has been forces to expend. The building developer, Joseph Freed & Associates, has agreed to accept $19 million of cost overruns. This round of assistance only covers costs that have been incurred to date. No further funds have been committed and the station's development is being halted until such funds arise. The original budget was $213 million ($173 from CTA) and costs to date have been $320 million. As of last year the costs were $150 million over budget and the city is seeking private investment. Construction will not begin on the third building, the hotel and residences until the end of 2009.
Wood
Wood is a hard, fibrous tissue found in many trees. It has been used for hundreds of thousands of years for both fuel and as a construction material. It is an organic material, a natural composite of cellulose fibers embedded in a matrix of lignin which resists compression...
block letters to place on the temporary construction wall. They were posted on the wall adjacent to the temporary pedestrian walkway next to the construction site. The phrase "You Are Beautiful" is spelled out in various languages.
Completion
In September 2008, the mixed-use 16-storyStorey
A storey or story is any level part of a building that could be used by people...
building held its ribbon cutting ceremony
Ribbon cutting ceremony
]A ribbon cutting ceremony is a public ceremony conducted to inaugurate the opening to the general public of a new building or business.Often, the ceremony is conducted in just the manner the name suggests: by tying a ceremonial ribbon across the main entrance of the building, which is then cut in...
. The CBS studio includes a 30 by outside video display, which has been a controversial addition to the Loop community. Morningstar has moved its global headquarters into the building. Also, the world's first luxury shared office will host 100 individual workspaces for rent on the 15th floor in a space that includes a spa, pool hall
Pool hall
A billiard/billiards, pool or snooker hall is a place where people get together for playing cue sports such as pool, snooker or carom billiards...
, recording studio
Recording studio
A recording studio is a facility for sound recording and mixing. Ideally both the recording and monitoring spaces are specially designed by an acoustician to achieve optimum acoustic properties...
, graphic design
Graphic design
Graphic design is a creative process – most often involving a client and a designer and usually completed in conjunction with producers of form – undertaken in order to convey a specific message to a targeted audience...
shop, audio-visual board room, penthouse
Penthouse apartment
A penthouse apartment or penthouse is an apartment that is on one of the highest floors of an apartment building. Penthouses are typically differentiated from other apartments by luxury features.-History:...
suites and concierge.
The shopping center is expected to include Bebe
Bebe stores
bebe stores are an American clothing retailer founded in 1976. The name was inspired by, and is pronounced as in, the phrase "to be or not to be" from the play Hamlet. Manny Mashouf, who emigrated to the United States in the early 1970s, opened the first bebe store in San Francisco during a time...
, Coach and J.Crew
J.Crew
J.Crew Group, Inc. is a multi-brand, multi-channel, specialty retailer. The company offers an assortment of women's, men's and children's apparel and accessories, including swimwear, outerwear, loungewear, wedding, bags, hair accessories, belts, jewelry, and shoes. As of January 30, 2010, it...
. Lettuce Entertain You who also operates the food court at Water Tower Place
Water Tower Place
Water Tower Place is a large urban, mixed-use development comprising a shopping mall and 74 story skyscraper in Chicago, Illinois, United States. The complex is located at 835 North Michigan Avenue, along the Magnificent Mile. It is named after the nearby Chicago Water Tower...
will operate a cafe, food court and market. The top floor was to be occupied by Muvico Theaters
Muvico Theaters
Muvico Theaters is a movie theater chain. Its headquarters are in Oakland Park, Florida, near Fort Lauderdale.Based in Fort Lauderdale, Florida, Muvico has seven complexes in Florida. Muvico has also expanded out of the state of Florida to include complexes in the Chicago Metropolitan Area , and...
, however they pulled out in 2009. The David Barton Gym, the first and largest tenant of the Block 37 project, has pulled out of the project favoring, instead, the Roosevelt Collection in the south loop. The reason the gym opted out was the delayed opening of the mall, which is scheduled for fall 2009 opening rather than fall 2008 as scheduled. In March 2009, Apple Inc. also withdrew from its leasing agreement, and less than a month later it signed an agreement to develop a new storefront in the Clybourn Corridor on property bounded by North Avenue, Halsted Street
Halsted Street
Halsted Street is a major north-south street in the American city of Chicago, Illinois.-Location:In Chicago's grid system, Halsted street marks 800 West, one mile west of State Street, from Grace Street in Lakeview south to the city limits at the Little Calumet River in West Pullman...
and Clybourn Avenue. After Apple backed out of its lease, Lululemon backed out of its lease to be located next to Apple. Other March 2009 tenant signings included Chicago's haberdashery Bigsby & Kruthers, Sunglass Hut, crystal jewelers Swarovski
Swarovski
Swarovski is the brand name for a range of precisely-cut crystal and related luxury products produced by Swarovski AG of Wattens, Austria...
, Starfruit Cafe, and Fast-casual eatery Tahini. Also, in the face of declining advertising revenue, CBS sought to sublease part of its studio. A Loews Hotels
Loews Hotels
-About Loews HotelsHotels:Loews Hotels currently owns and/or operates 18 hotels and resorts in the United States and Canada:-United States locations:*Loews Annapolis Hotel - Annapolis, Maryland*Loews Atlanta Hotel - Atlanta, Georgia...
will be built in forthcoming years.
On November 20, 2009, the underground pedway connecting the blue line and the red line opened. The following day Steve Madden shoes, opened the first retail establishment in the structure.