A $184 million proposal to convert a historic office tower in Chicago's Loop into 400 apartments has received preliminary approval for landmark status from a key city panel. The decision moves the project forward, but it faces significant legal challenges from a hotel owner within the building and a rival development group.
On October 9, the Commission on Chicago Landmarks granted the preliminary designation for the 41-story Art Deco tower at 105 W. Adams St. This approval is a critical step for developers Primera Group and Marc Calabria, who need the landmark status to access nearly $68 million in potential city subsidies for the conversion.
Key Takeaways
- A $184 million plan to convert the upper floors of 105 W. Adams St. into 400 apartments has received preliminary landmark approval from a Chicago commission.
- The landmark status is essential for developers to secure a potential $67.9 million tax-increment financing (TIF) subsidy from the city.
- The project faces two major legal obstacles: a lawsuit from rival developers claiming the idea was stolen, and opposition from the hotel operator on the lower floors.
- The conversion is part of Chicago's larger "LaSalle Street Reimagined" initiative, which uses public funds to encourage the transformation of vacant office space into residential units.
Landmark Approval Paves Way for City Council Vote
The decision by the Commission on Chicago Landmarks sends the proposal to the full Chicago City Council, which could grant final approval as early as this month. Securing landmark status is not just a matter of preservation; it is a fundamental requirement for the project's financial structure.
The development is one of the largest projects under the city's LaSalle Street Reimagined program. This initiative was launched in 2022 to address high office vacancy rates in the Loop by incentivizing conversions to residential use. The goal is to bring more residents and consistent foot traffic to the central business district, which has struggled since the shift to remote work.
The LaSalle Street Reimagined Program
Launched by the previous mayoral administration and continued by Mayor Brandon Johnson, this program uses TIF funds to bridge the financial gap for complex office-to-residential conversions. To qualify for these subsidies, developers must designate at least 30% of the new apartments as affordable housing for households earning an average of 60% of the area median income.
The developers, a partnership between Chicago's Primera Group and investor Marc Calabria, plan to transform the largely empty floors from 11 to 40 into modern apartments. The landmark designation would unlock the nearly $68 million in TIF funds needed to make the project viable.
Legal Battles Threaten to Derail Project
Despite the positive step from the landmarks commission, the project's future remains uncertain due to two separate legal disputes.
Dispute with Hotel Operator
The first major challenge comes from the owner and operator of the Club Quarters Hotel, which occupies floors three through ten of the same building. Affiliates of Blackstone Group and CWCapital Asset Management argue that an existing easement agreement prevents any part of the building from being rezoned without their consent.
Attorneys for the hotel have stated that the residential conversion would require such a zoning change, giving them the power to block it. They have threatened to file a lawsuit if the project moves forward, potentially causing significant delays.
"The landmark commission is not in the business of deciding which owners rights matter more. It shouldn't be in the business of green-lighting development plans by steamrolling over property owners' rights." - Debra Lefler, attorney for Blackstone, stated in a previous hearing.
This conflict is complicated by a recent city ordinance. In July, an amendment was passed that specifically allows large, multi-owner landmarked buildings to pursue zoning changes for one portion of the property without the consent of other owners. The hotel's legal team has argued this ordinance was created solely to benefit the 105 W. Adams project and unfairly strip them of their contractual rights.
Rival Developers Allege Idea Theft
A second legal front opened in September when developers Celadon Partners and Blackwood Group filed a lawsuit against Primera and Calabria. The lawsuit alleges that the current development team effectively stole their original proposal for converting the building.
According to the court filing, Celadon and Blackwood had previously submitted a similar conversion plan that was shortlisted by the city for the LaSalle Street Reimagined program. They are seeking $15 million in damages and a court order that would allow them to take control of the redevelopment. A hearing in Cook County Circuit Court is scheduled for November 4.
Project by the Numbers
- Building Height: 41 stories
- Year Completed: 1927
- Total Project Cost: $184 million
- Proposed Apartments: 400
- Potential TIF Subsidy: $67.9 million
- Affordable Units Required: 120 (30% of total)
A Storied Building at a Crossroads
The tower at 105 W. Adams Street, originally known as the Bankers Building, is a significant piece of Chicago's architectural history. Completed in 1927, it was designed by the architectural firm Graham, Anderson, Probst & White, which included sons of the legendary Chicago architect Daniel Burnham.
The landmarks commission determined that the building met three of the seven criteria required for landmark status. These included its connection to prominent architects, its distinctive Art Deco architectural style, and its value as a representation of Chicago's commercial heritage.
Liz Butler, an attorney representing the development team, argued during the commission meeting that the designation aligns with the city's goals. She stated that it “advances the landmark ordinance's broader purposes of preserving the character and vitality of the central area, promoting economic development through rehabilitation and conserving and strengthening the city's property tax base.”
A Test for Chicago's Downtown Revitalization
The outcome of the 105 W. Adams project will be closely watched as a test case for the LaSalle Street Reimagined program. In total, six office conversion projects have been proposed under the initiative, which collectively aim to create over 1,800 new apartments with the help of approximately $317 million in TIF subsidies.
These projects are seen as crucial for the long-term health of the Loop. By increasing the residential population, the city hopes to create a more vibrant, 24/7 neighborhood that is less reliant on office commuters.
While one of the six projects, located at 79 W. Monroe St., is already under construction, the legal and financial complexities of the 105 W. Adams proposal highlight the significant challenges involved in repurposing aging downtown skyscrapers. The project's success will depend not only on city approvals but also on its ability to navigate the turbulent legal waters ahead.
