Zell considering building new tower in W. Loop
(Crain's) — Sam Zell, who just five years ago called downtown Chicago office developers "idiots," may become one himself.
The billionaire investor is considering building an office tower along the Chicago River next to 2 N. Riverside Plaza, the longtime headquarters of his financial empire.
 2 N. Riverside Plaza. (CoStar Group Inc. photo.) |
Mr. Zell's private holding company, Equity Group Investments LLC, has hired Chicago-based architecture firm Solomon Cordwell Buenz & Associates Ltd. to draw up preliminary designs for a tower that would replace a public plaza between the 26-story 2 N. Riverside and the west bank of the river, people familiar with the plans say.
Chicago office leasing boutique J. F. McKinney & Associates Ltd. has also been hired to conduct a feasibility study, those sources say.
"We are considering numerous options to improve our building," says a spokeswoman for Mr. Zell, who declines further comment. McKinney is also reviewing ways to reposition 2 N. Riverside, an Art Deco structure that was built in 1929 and was once home to the Chicago Daily News.
More recently, the 547,000-square-foot building was the headquarters of Equity Office Properties Trust, which was acquired last year by New York-based Blackstone Group L.P. Equity Office's space is now mostly vacant. As a result, the available space in the building has shot up to nearly 34%, compared to just 3% during the second quarter of 2007, according to real estate research firm CoStar Group Inc.
The size of any potential office tower has not been determined, although some sources speculate that it could be about 850,000 square feet. Construction of an office tower would likely depend on signing a lease with an anchor tenant.
Any new development probably would require the demolition of two low-rise bustles that extend from 2 N. Riverside to the river's edge.
Some sources say the initial planning stage isn't likely to be completed until sometime this spring. Equity Group considered a possible residential tower for the site more than seven years ago but dropped the plan.
Mr. Zell has never been a fan of new development, preferring instead to buy existing assets. But his views about office developers may have changed since he was chairman of Equity Office, which was the largest landlord in the downtown office market.
At a conference nearly five years ago, Mr. Zell once complained that "three idiots are building 4.5 million square feet of office space in Chicago," according to a June 6, 2003, story on GlobeSt.com.
