Hines, Blair kill deal for proposed tower

(Crain's) — William Blair & Co. won't be moving to a proposed riverfront office tower.

Rendering of proposed River Point tower.

Developer Hines Interests L.P. said Wednesday it worked out a "mutual termination" of Blair's lease to anchor a skyscraper proposed for a site along the Chicago River, forcing the real estate firm to push back construction and consider cutting the size of the 1.1-million-square-foot tower.

Blair is already looking at alternatives, including a renewal at 222 W. Adams St., the Chicago-based investment firm's current headquarters.

Amid the stagnant market for big construction loans, a Hines joint venture didn't make a Blair-imposed deadline earlier this month to obtaining financing for the $536-million project, but had asked for additional time to work on the deal. Instead, the two sides have reached a "mutual termination" agreement of Blair's lease for 340,000 square feet, Hines announced.

Related story: Hines misses financing deadline for proposed tower

Now Houston-based Hines says it is "exploring adjusting the size of the tower" and is pushing back the completion date to 2012, when legal giant Baker & McKenzie is scheduled to move to the new building, proposed for a site at 444 W. Lake St. Baker has a lease for 300,000 square feet and "remains committed" to the project, Hines said in a press release.

The financial terms of the agreement with Blair were not disclosed, but Blair's lease called for Hines to pay a multimillion-dollar penalty if the developer canceled the project.

"Due to the challenging capital markets, we were unable to meet Blair's required occupancy date in 2011," C. Kevin Shannahan, CEO of Hines Midwest region, said in the release.