Waterview Hotel project on the market
(Crain's) — CB Richard Ellis Inc. is taking on one of the toughest jobs in today's languishing downtown real estate market: finding a buyer for the stalled Waterview Tower and Shangri-La Hotel project on Wacker Drive.
The Chicago office of the Los Angeles-based brokerage firm has been hired to sell the development, now just a 26-story concrete monument symbolizing the excesses of the real estate boom. The firm plans to scour the globe for potential investors, a necessary step amid a credit crisis that has made financing big, risky real estate projects virtually impossible.
The unfinished Waterview Tower at 111 W. Wacker Drive, shown in November. |
A sale could help resolve the financial mess surrounding the project at 111 W. Wacker Drive, which was halted last year after its developer, an affiliate of Chicago-based Teng & Associates Inc., ran out of money. The developer is tangling in court with the Bank of America, which is trying to collect on a $20-million loan, and construction firms that claim they're owed a combined $85 million.
Related story: B of A files foreclosure suit on Waterview Tower
But Teng and the project's creditors have all signed off on the decision to sell the property, says CB Richard Ellis First Vice-president Peter Greene, who is handling the assignment.
"All the players are in agreement," he says. "It's a group effort."
A Teng executive did not return a phone call, and Bank of America spokeswoman declines to comment.
in March, Hong Kong-based Shangri-La Hotels & Resorts backed out of an agreement to run a 200-unit hotel in the tower.
CB Richard Ellis hasn't put an asking price on the project, but it's clear that any sale won't generate enough proceeds to make its creditors whole. Some observers familiar with the property have said it's worthless.
Mr. Greene offers a brighter assessment, noting that the completed structure already includes space for a 492-car garage, and that the concrete for all but one floor of the hotel has been poured.
Teng envisioned a 220-suite hotel, but a new developer could replace some of the suites with conventional hotel rooms, boosting the room count to 260 units, he says. Current zoning would allow for a 90-story building, Teng's original plan.
"The value is there because of the entitlements and views you get at 90 stories," he says.
Yet 90 stories don't have much value if there's no one to occupy them. With the condo and hotel markets both in a severe slump, the city already has more empty condos and hotel rooms than it needs.
While acknowledging the current market challenges, Mr. Greene says the Waterview project will appeal to investors that want to position themselves for the next cycle.
"Markets come back," he says. "Everything comes back."
