New owner of failed Mandarin Oriental Hotel development will keep prime site vacant

A downtown Chicago site with a history of failed redevelopment efforts that included a Mandarin Oriental Hotel and a 50-story skyscraper finally has a new owner.

Patrick Hotung, chief executive of Main Place Liberty Group, paid $31 million for the 40,600 square foot site at 130 E. Lake Street last month. Bordering the Buffalo, New York-based firm’s two Michigan Avenue office towers, Hotung said he will keep the site’s hole-in-the-ground status for now to keep his office tenants happy.

It’s not the right time to think about new developments, Hotung said, referring to the city’s record vacancy rates and uncertainty about the resurgent coronavirus.

“We really don’t have any plans at the moment,” he said. “But we control it now and I don’t have to worry about someone putting up a 100-story building 10 feet from our property lines.”

The site’s saga goes back to the early 1980s, when developers proposed a three-tower office complex known then as Michigan Boulevard, a nod to Michigan Avenue’s original name, according to Mark Buth, an MBRE broker who has worked at the site for many years. The 25-story tower at 225 N. Michigan was built in 1982, and 205 N. Michigan, at 44 stories, was completed in 1986. Both are now Hotung’s properties and are called Michigan Plaza.

A 50-story third tower was part of the design for the full block bounded by Michigan Avenue, Lake Street, South Water Street and Stetson Avenue. But the plans were scrapped after the stock market crash of 1988 and economic after-effects the following year. The site, which sits at the corner of Lake and Stetson streets, has been vacant ever since.

The East Loop location is still considered a prime piece of property because of its easy access to Michigan Avenue, Lake Michigan and Grant Park as well as the Aon Center. The zoning is still in place to develop a massive office or residential tower if and when the market can bear it.

Most Chicagoans remember it best as the site of the planned 74-story Mandarin Oriental hotel and luxury condominiums. Another economic downfall – the Great Recession – put the kibosh on that project and the developer’s major creditor, iStar Financial, started a messy foreclosure proceeding that took seven years to complete.

In 2019, CA Ventures, the Chicago-based firm, known for its student housing and apartment developments, looked at redeveloping the site but never proceeded. Hotung bought the property from iStar, according to Cook County records.

Hotung said his tenants became antsy every time a new development proposal popped up, fearing they would lose their views. However, he’s not totally ruling that out.

“If we come up with a good idea or if someone else does and wants to partner, we’ll certainly entertain it,” said Hotung, who is part of the Hong Kong Ho Tung family real estate dynasty. “But right now is not a time to be putting up any new buildings, either residential or commercial with the COVID Delta.”