Post Office.

I'd feel better if the Post Office owner was more of a known commodity.

This could signal the end of ( at least in metro Chicago ) fortune 500 headquarters in the outer suburban ring, in lieu of downtown.

If this happens,

That

Will be

The

Shit.

@LVDW: Can the Takeda Tower at Ashland/Roosevelt be far behind?

This would be a big fish for Rahm for sure... He needs to be giving the full court press to Walgreens and Bill Davies so they reach a deal.

Sucks for Deerfield; they could try to land a big pharma tenant or do housing on the site, but Walgreens contributed a boatload of tax revenue and demanded relatively little in services. They also lost the Bulls last year, which is too bad... For a suburb, Deerfield is actually pretty nice, unlike say Schaumburg. With all this decline, when will IDOT wise up and stop spending so much money in the suburbs? The Tollway mortgaged billions on the continued expansion of suburban jobs/housing, but I don't see the momentum apart from some odd ducks like Zurich.

Deerfield is wealthy. Maybe not as wealthy as its actual North Shore neighbors but still definitely wealthy. Highland Park, Glencoe, Winnetka, etc. do a pretty great job without any tax revenue from enormous international headquarters. What were those tax dollars supporting I wonder?

Fox Chicago just said that Walgreens has no plans to move into the city.

WELL...... we all know Fox NEVER lies!! anyways...i would much rather them be the major tenant in that new Fifield west loop supertall! 8)

Yeah - the mayor / city manager / whatever is saying that Walgreens assured him that they weren't looking to relocate. Who was Crain's source for the relocation story?

Walgreens Denies Move to South Loop; Fioretti Says it Would Boost Area

http://www.dnainfo.com/chicago/20140...uld-boost-area

We were all so excited there for a couple hours when we thought this project had a chance.:sly:

I believe the Crain's reporting more than I believe those ensuing vague denials.

One key thing here is the Main Post Office's proximity to Union Station and also Ogilvie -- the current Walgreens HQ is close to the Milwaukee District North Line, which runs to Union Station. It would ease retention of employees if they were told they'd end up with short commutes to a Metra station somewhere, and then a short (and "happy and healthy") walk to the new HQ. I think this has been a relatively common pattern in recent suburb-to-downtown relocations.

Didn't Sullivan Center get Walgreens internet operations as one of its launch tenants several years back? Presumably those staffers also might relocate to this new HQ.

Here's hoping that corporations are like college football coaches who issue denials ... just prior to changing teams.

Yep, I believe Crains but what is a bit concerning is Walgreens' outright denial, instead of saying "we have no definitive plans, but are reviewing our options". The fact that they are sending letters to their employees outright denying a HQ move suggests that such a move may end up being far less likely.

Companies always cover their tracks before making a big decision, like moving their HQ. And there are a million reasons they might deny such a move. Someone at Walgreens thought about the issue. That doesn't mean they're going to do it yet of course...

Companies always cover their tracks before making a big decision, like moving their HQ. And there are a million reasons why they might deny such a move. The rumor seems to suggest someone at Walgreens thought about the issue. That doesn't mean they're going to do it yet of course...

Yeah, companies almost never want their employees to know what is going on until they are ready to make the "big announcement". Rumors have a tendency to spread really fast in an office environment and "we are moving downtown" can quickly turn into "we are moving downtown and laying off 1,000 people". No executive wants stuff like that flying around. So if they haven't finalized everything for a move downtown, then they don't want people whipping up misinformation, they want to be able to make one big statement telling everyone exactly who is moving, when, and where. For an announcement like this it will inevitably done in phases so it is even further complicated. The logical response to a leak like this is to deny deny deny.

It seems to me that the intitial Crains story reads this way "JLL is definitely shopping a 1 mil + SF tenant, and we have a hunch/some reason to believe that it's Walgreens"

In either case, it sounds like somebody huge is looking at the old post office. Walgreens would be great - but I'd be happy with just about anybody. Just because Walgreens is denying it does not mean the entire story is based on nothing, it could always be somebody else.

It is also possible that Walgreens is just in denial. In either case - I think we still have plenty of reason to be excited. Sounds like potentially the biggest news in the downtown office market in a decade.

Wait, I must have missed that, I didn't realize that JLL was involved?? :???:

I met someone today who works for Unilever. They said that Unilever is planning on spending millions of dollars to locate to Deerfield in order to be closer to Walgreens, who they work directly with. It seemed like the entire Chicagoland presence of Unilever was just for sales and logistics support for Walgreens.

So if Walgreens is planning on a move downtown, Unilever would be pretty pissed. That could help explain the denial, or it could help refute the move.

Well how about Unilever and Walgreens both move downtown? Come on Rahm, deal of the century here! Make it rain, baby

Trust me, if Walgreen moves downtown, then there will be a flood of other businesses following them. Half the non-Walgreen office space in the Deerfield market is leased to companies catering to Walgreen. There are a crap ton of vendors who have sales offices in that market specifically to cater to Walgreen. They would all relocate either immediately or over time if Walgreen were to migrate South.

^ Very interesting, it makes sense but I had no idea of that; was it common knowledge? Anyway it's all the more reason for that quick but narrowly-worded (and hopefully temporary) denial by Wag's.

I've been gone for quite some time, has this proposal become more then a pipe dream?

^. No

Just refer back to page 17 to be caught up on all that has happened.

So now we're relying on rumors/absurd speculation? :???:

I suppose, or if something ever did get built it would be scaled down immensely.

Even Chicago Spire would be built before this thing :haha:

I would tend to think that a giant company like that would like to have its own signature building like Kirkland and Ellis did leasing at 300 North LaSalle.

K&E used 650,000 feet at 300 moving from the Aon Building all in the same building. I would think Wallgreens would want to be all in one building and not spread out across the city. I wonder if they would keep some operations in Deerfield or make the complete move but The PO is ideal for the Metra commuters. I just wonder about the building and the current owner holding out for more than what the building is worth.

They should move to the new Buck building on Franklin and Lake since its replacing an old Walgreens anyways.

I think it would be okay to consider this project to be a, "stale proposal" at this point :dead:

Teaming up
 

http://www.chicagobusiness.com/reale...ld-post-office

^^^ Now the Walgreens rumors make sense, I was skeptical Davies had any firepower to get a deal like that done, but Sterling Bay has proven to be the most innovative downtown office developer in a LONG long time. This gives me hope that the Walgreen rumor was actually true. Even if Walgreen does not move down there, I can see Sterling Bay poaching other big fish from the suburbs with the Old Post Office. Now that Fulton Cold Storage is done, they need another flagship project and the Post Office makes perfect sense for them!

Sterling Bay has been on fire lately.

Yeah, this announcement of their involvement is almost more exciting to me than the Walgreens rumor was. Sterling Bay is the PERFECT team for the job and I KNOW they will execute and fill this building.

wow...500 million just to remodel the post office...I've only seen the insides from pics and from Dark Knight, but the inside looks pretty glamorous honestly. 500million sounds like they're gonna tear it a part.

Yeah, that's a ridiculously high number, that's $185/SF which is a bunch of malarkey. They can probably get it done for less, but if they tell everyone it is costing $500,000,000 then they can go around charge new construction rents which will make Sterling Bay obscenely wealthy. The fact is that they are going to be competing with new construction buildings, so they will just under cut them by a few bucks a SF/YR, secure the tenants, and then only spend like $100/SF or something and collect the difference between a loan on $100/SF and a lease contemplating new construction which generally costs around $200/SF for Class A highrises.

This is basically the equivalent of both 444 W Lake and 150 N Riverside and then some. It's a HUGE development.

How much does asbestos removal cost per/SF?

Also, if there are structural issues in the concrete like there were at Fulton Cold Storage, that could add months to the timeline and millions to the cost.

Either way, I'm really hoping this partnership means the building can be renovated without resorting to massive TIF subsidies or casino gambling. Either way is pretty sub-optimal.

I was also wondering, why would a company choose the old post office over a nice shiny tall tower if the rent is similar. The only benefit I know for a very large foot print building is for retail space, but the location of the post office is not as well situated as chicago's other shopping areas like mich ave which is lined with hotels and river north which has many residential towers. Further I'm not sure Chicago can support that much extra retail space.

I guess the news doesn't rule out a possible high rise dev, but it doesn't seem like that's in the more immediate plans then for the post office area?

Holy shit. This is exciting. So much confidence in Sterling Bay. Completely agreed with LVDW - this makes the Walgreens thing sound much more possible.

This is great news, Sterling Bay seems to be the perfect fit, I can't wait to see what they accomplish.


They never said "remodel", they said "redevelop". And redevelop would likely include much more than just a upgrade of the Old Post Office building itself. It could include new construction on adjacent parcels controlled by Davies (with recent PD amendments), infrastructure work, and river walk work.

And yes, the main lobby of the building is quite nice, but the rest is just a concrete loft space.

Awesome news, and yeah asbestos removal costs a lot of $$$

You might be surprised. Asbestos can be expensive, but really is not that pricey when you look at it in the scheme of things. It depends a lot on how much asbestos there is and what kind it is (insulation, tile, wallboard, etc), but it's generally fairly reasonably priced for environmental remediation especially in an unoccupied structure. The real pain in the ass that makes it pricey is when you have active uses directly adjacent and have to be ten times as care about isolating it. At the Post Office they can basically just seal the whole building off and tear it all out instead of sealing one little area off at a time if there were active users in the building.

Actually, the large floor plates can be extremely functional for modern office layouts. The new trend is open office with almost no partitions. This means having vast, wide open spaces is the most efficient layout because you can allow the light to filter all the way into the space for everyone to enjoy. This is often coupled with loft-style buildouts (see Merchandise Mart Moto buildout) which again keeps costs low. For a user like Walgreen or Moto, a building with massive floorplates makes a ton of sense. These companies are looking for huge cubicle farms and a 150,000 SF floor plate doesn't sound that unreasonable.

Ironically this is kind of the same reasoning behind the Sears Tower. Sears was looking for a vast amount of space with enormous floor plates and limitless expansion possibilities. The same thing applies to Montgomery Ward, Merch Mart, Fulton Cold Storage, and now the Post Office. I made an extensive post about this a while back with more reasons why it makes sense.

That could be the the reason for the high number. Sterling Bay might even want to get into the hotel or residential game at a site like this as 2.7 million SF of office space is bound to generate huge demand for both uses. Maybe they are thinking about building the smallest tower adjacent to the Post Office proposed by Davies as a part of that $500 million number? It's almost a "why not" proposition if you are going to draw this kind of office density to one location.

New York managed to do something similar at 111 8th Ave with Google. These large buildings are super desirable. The post office is wider and shorter, but maybe they can cut some light courts.

http://files.doobybrain.com/wp-conte...Eighth-Ave.jpg

Merchandise Mart doesn't seem to be having trouble filling its massive floor plates in its old building. Same with 600 W Chicago. I think much of the post office has high, warehousey ceilings and large rooms used for sorting and distribution equipment. Old warehouses and factories cater well to modern style office layouts and are easier to retrofit with new plumbing, hvac, and wiring than older office buildings must be.

Wow I'm imagining that Sears could be a possible tenant. Honestly with a 500 million dollar budget they could have easily build a new super tall, so it does sound a lot more sense if the 500 million includes some sort of new residential tower which may also justify utilizing retail space in the post office.

The $500 million is just for the redo of the current building. It's been languishing for nearly 20 years. None of the info that's come out has included the site along the river edge, nor the Holiday Inn site along Canal. Remember, we're talking about a renovation of 2.7 million square feet.

The Rosenwald development along 47th & Michigan itself is going to cost $100M.

Correct, the Crain's article mentioned that Sterling/Davies used a $500MM figure only for the Post Office, and explicitly stated that budget was NOT to be used for any of the nearby parcels for high rise development and that their "partnership" only extended to the Post Office, not any further development (although that may change in the future).

^ Yeah, this is just for the post office building itself. This is precisely what Sterling Bay does - only this is by far their largest project yet. The $500 mil. price tag quoted actually doesn't surpise me. Redevelopment (this does not necessarily mean any new construction, this word is also often used in the adaptive reuse/complete rehab sense) of a 2.7 mil sf building into modern office space - this is going to take an awful lot of work. But, to LVDW's point, $500 mil. is the approximate construction cost (maybe just slightly higher), than the 1.1-1.2 mil sf new office towers that are about to begin construction. So you have the cost basis difference for your rental rate advantage - however, at the same time, the new towers and projects like these (the gut rehab of older industrial and/or unique extra large floor plate structures) are not - for the most part (obviously there are some exceptions) - attracting the same types of tenants, with the latter attracting technology and mainly old-line consumer product corporations, and of course the former your traditional law, financial, professional and business services firms that typically anchor or otherwise locate in new Class A tower construction.

^^^ Sears - I guess anything is possible, but that would probably be the most unexciting large corporate relocation to downtown ever - a company that is in the midst of its painful, slow-motion and likely irreversible death spiral....

Funny how something can change overnight from being a pipe dream to a very real project. Super excited about this now. Sterling Bay is not only the perfect - but maybe also the only - developer that I have a high level of confidence in to take on this project. Hopefully Davies' actual involvement in the redevelopment is quite passive, and he just collects his negotiated return from his contribution of the property. Sterling Bay needs to completely run this show. Of course just talking about the actual Post Office building itself. Any new construction is still firmly in the "concept/pipe dream" category. However, when the redevelopment of the Post Office is completed and occupied, and generating a lot of activity and new energy into this corner of downtown that sorely needs it - large new construction on the adjacent parcels could be entirely feasible.

So 500 million just for the re-do but it never said the deal doesn't include the new tower so, it will come with time.

accidental double post

Was thinking that besides a corporate or technology space this would of been a good site for a large government agency (but I don't know of one that is looking for new space). What comes to mind is the recent move by the IRS who moved into the old post office site in Philly.