Prime Group Sells 12 Floors of Former IBM Building for New Chicago Hotel
- Mar 19, 2008
Twelve floors of Chicago’s 330 N. Wabash Ave.–the former IBM building–have been sold by Prime Group Realty Trust to Modern Magic Hotel L.L.C., a joint venture of an affiliate of Oxford Capital Group L.L.C. and LaSalle Hotel Properties.The JV plans to develop the approximately 375,000-square-foot space into a super-luxury hotel featuring up to 335 rooms and suites, as well as 17,000 square feet of conference and meeting facilities, including a 5,000-square-foot ballroom; a 9,000-square-foot restaurant; fitness center; indoor pool; and destination spa. The sale was based on a vertical subdivision, Jeffrey Patterson, Prime’s president & CEO, told CPN.“We just split the building into two pieces,” with floors 2–13 being sold and the rest being retained, Patterson explained. About 1.1 million square feet of the 52-story, Class A building remain office space. Although Patterson wasn’t at liberty to discuss which hotel brands the purchasers are in discussions with, he told CPN that comparable hotel flags would be Peninsula, Four Seasons or Ritz. The purchasers, he said, will be spending approximately $185 million, or more than $500,000 per key, to develop the hotel. Because of the building’s location on the Chicago River, the hotel will offer excellent views, but another factor in the exceptional views is the building’s design. Completed in 1971, the building was the last and largest designed in North America by minimalist architect Ludwig Mies van der Rohe. The southeast portion of the existing lobby, Patterson explained, will have a separate entrance off Wabash Avenue for the hotel, whose check-in area will be on the second floor. The hotel, to be designed by The Gettys Group Inc., is scheduled to open in 2010. The purchasing joint venture is aiming for Silver LEED certification for the hotel. Such a large block of space being available in a major city’s CBD is unusual. In this case, Patterson said, almost all of the vacated space had been occupied by IBM, which moved into considerably downsized quarters on Wacker Drive about a year ago. Partly because of that, Patterson said, “The building hasn’t really been in the market.” But not only will the hotel’s development help put the building back on the map, he said, its restaurant, meeting facilities and health club are all potential amenities to the office tenants. The rest of the building is also undergoing a $10 million-plus renovation program that includes asbestos remediation, a green roof and improvements to the elevator cabs, HVAC, security systems and lobby lighting. Owned by The Lightstone Group, one of the nation’s largest private real estate owners, Prime Group Realty Trust is a self-administered, self-managed REIT that owns, manages, leases, develops and redevelops office and industrial real estate, primarily in metropolitan Chicago.