John Murphy is making a big bet on Chicago’s downtown hotel market recovery.
The developer is leading a venture to revamp the Holiday Inn Wolf Point, Crain’s Chicago Business reported. The deal is said to total nearly $23 million for the leasehold interest in the 522-room hotel, which occupies the top floors of an office building in River North.
Murphy plans to purchase the interest from a partnership connected to the estate of Edward Ross, the late Chicago developer who built the hotel in 1976. Murphy will execute a 99-year ground lease with Blackstone Group, which now owns the building. He’s “in a position to close,” he told The Real Deal, but declined to comment in more detail.
The hotel has been closed since the start of December, according to its answering machine.
But it’s gained some new neighbors during its dormancy, as Houston-based developer Hines finishes up a trio of towers near the hotel. These include two residential towers and a 1.2-million-square-foot, 60-story office tower designed by Pelli Clarke Pelli and anchored by software company Salesforce.
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Little is known about his plans for the Wolf Point Holiday Inn, but Crain’s reports that he intends to redevelop the hotel with a different brand from the IHG Resorts & Hotels family, indicating it could be headed in a more upscale direction.
Murphy has a penchant for redeveloping aging downtown properties into hotels and luxury residences. He recently overhauled the former Cook County Hospital into a Hyatt Place and Hyatt House hotel.
The move comes at an uncertain time for Chicago hotels. In May, the Illinois Hotel & Lodging Association asked Mayor Lori Lightfoot to set aside $75 million to help hotels battle back from their pandemic malaise. While some of the city’s hotels, like the Westin Chicago River North and Sheraton Grand have reopened, others have recently hit the market.
Downtown hotels reached 42 percent occupancy in the closing week of May, a peak since the pandemic began, though still far lower than in pre-pandemic times, when 80 percent of rooms were typically filled.
[Crain’s] — Joe Lovinger