Hong Kong firm plans hotel at former IBM Plaza
(Crain's) — A Hong Kong real estate company has acquired the lower floors of the former One IBM Plaza, with plans to open just the third upscale Langham Hotel in the country.
Langham Hotels International is a unit of Great Eagle Holdings Ltd., which on Wednesday bought the second through 13th floors of the 52-story building at 330 N. Wabash Ave. from a joint venture that included LaSalle Hotel Properties and Chicago-based Oxford Capital Group LLC.
“We love the waterfront location and iconic building,” David Hennefer, president of Great Eagle's U.S. subsidiary, said of 330 N. Wabash in a statement provided by Oxford.
The new hotel, of roughly 330 rooms, is expected to open during the summer 2012, says developer John Rutledge, president and CEO of Oxford Capital Group, which is remaining with the project. The project also includes principals with Gettys Group Inc., a Chicago hotel design firm.
Named after a London hotel that opened in 1865, Langham has 22 locations worldwide, including Boston and Pasadena, Calif.
Langham's average room rate was $224 a night in Pasadena and $213 a night in Boston during the first six months of 2010, according to according to a Great Eagle financial report.
Bethesda, Md.-based LaSalle Hotel Properties put the project at 330 N. Wabash on hold in October 2008 amid the financial crisis and the downturn in travel. As recently as July, company executives said the downtown Chicago market couldn't support another 300-room hotel.
Related story: Hotel firm sells its floors at former IBM Plaza
But Mr. Rutledge disagrees, saying, “Our view is that Chicago has a good long multi-year growth cycle ahead of it.”
Standard rooms will average about 525 square feet, large compared to the rest of the market, Mr. Rutledge says. When it is completed, the hotel with have nearly 20,000 square feet of meeting space, including a 5,000-square-foot ballroom with a 20-foot ceiling.
By renovating former office space, the Langham will cost about half what it would cost to construct a new hotel, giving the project an added cushion, he notes.
He declined to comment on the transaction, the project's cost or the terms of the deal with Great Eagle. Great Eagle's chairman is Dr. Lo Ka Shui, a Cornell University-trained physician who in the 1970s was a researcher with the University of Michigan Hospital in Ann Arbor.
Mr. Hennefer, president of San Ramon, Calif.-based Pacific Eagle Holdings Corp., could not immediately be reached for comment.
330 N. Wabash, constructed in 1971, was designed by Ludwig Mies van der Rohe. The upper floors are owned by Chicago-based Prime Group Realty Trust, which originally sold the lower floors to the LaSalle-Oxford venture.
About 372,000 square feet of office space at the top of the building is vacant.
The Langham's health club, meeting rooms and restaurants will make that space more attractive to potential tenants, says Jeffrey Patterson, Prime Group's CEO.
