Without BMO Harris Bank uprooting from Chicago’s historic financial district on LaSalle Street, Mike Reschke might have missed his chance to build Google a spanking new compound in the middle of the Loop.
Reschke, who has a penchant for surprises, blew up his own $70 million purchase of Chicago’s Thompson Center from the state of Illinois so Google could instead buy it for $105 million and pay the longtime developer to overhaul the building and develop a 1.2 million-square-foot complex for it over the next three years.
The deal is being celebrated by Mayor Lori Lightfoot as a step toward revival for the pandemic-battered Central Loop office market. And BMO’s exit from 115 South LaSalle for its 500,000-square-foot lease in its newly built namesake tower next to Union Station paved the way.
That bludgeoned the LaSalle building’s owner, a venture of South Korea-based Samsung Life Insurance. The property’s value took another hit when law firm Chapman & Cutler followed the bank to the new 50-story BMO Tower, and forced Union Bank, lender of $191 million against the LaSalle parcel, which also includes the tower at 111 West Monroe Street, to sell the loan at a loss.
Reschke was ready to pounce: He placed a bid on the debt at a big discount, he said, declining to disclose how much he paid to assume control of the property.
“It was somewhat of a miracle the BMO building was available at a very attractive price,” Reschke said Wednesday, after Governor JB Pritzker announced the state’s sale of the Thompson Center to Google.
Reschke initially intended to buy the Thompson Center on LaSalle and Randolph Street from the state for $70 million and put another $280 million into renovations, with half of that funding coming from the state, which would have moved back into a little more than 400,000 square feet at the rejuvenated Thompson Center.
As he was showing off his planned redesign for the longtime Chicago offices of the state government to tech firms, Google decided it wanted the whole thing.
To accommodate the tech giant’s demand, Reschke worked out a deal where the state will move into 115 South LaSalle rather than back into the Thompson Center.
“We were always interested in bidding and competing to buy the BMO building, which we did at a price that would be attractive with or without the state moving in,” Reschke said.
While other investors have shied away from the Loop as its office vacancy soared to record highs, with LaSalle Street vacancies hitting 24 percent as of earlier this year before BMO’s departure was completed, Reschke has been aggressive.
He’s retaining 111 West Monroe Street, and its 611,000 square feet connected to the former BMO building. He acquired it through buying out the property’s $191 million loan at a reduced cost, and plans to keep offices on the first 12 floors and convert the rest into as many as 500 apartments. But he’s still on the hunt for more property in the Loop.
“We believe values are at a record-low point in the city’s history,” Reschke said.
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