Chicago incentives for LaSalle Street makeover yield $1B in proposals

With some prodding from the city, owners of some of Chicago’s most troubled office buildings, including AmTrust Realty, took the first step on a potential path out of distress this month through Mayor Lori Lightfoot’s “LaSalle Street Imagined” initiative.

New York-based AmTrust along with longtime Chicago developers John O’Donnell and Mike Reschke were parts of separate teams that pitched two Loop properties apiece for office-to-residential conversions in response to the city calling for proposals to turn LaSalle Street into a hotbed of housing, the Sun-Times reported.

In all, the initiative yielded proposals totaling more than $1 billion in redevelopment costs for seven buildings in the Loop that mostly aim to turn aging office space into a total of 2,000 units of housing.

Lightfoot launched the program in September in response to the pandemic sapping demand for vintage office buildings, leaving landlords along and near LaSalle — the city’s longtime home of the financial sector that hosts some of the world’s oldest skyscrapers — in dire financial straits. The city promised to provide financial incentives such as tax increment financing and other perks to get projects over the finish line by developers who dedicate at least 30 percent of new housing units created to affordable pricing for households making 60 percent of the area median income, or $62,520 for a family of four.

AmTrust partnered with O’Donnell’s firm Riverside Investment & Development on the priciest of the proposals, which targets the AmTrust-owned former Bank of America offices at 135 South LaSalle for a $258 million project to the turn the 1.3-million-square-foot office building into 430 residences.

O’Donnell’s firm is responsible for luring Bank of America out of its longtime Chicago home with Riverside’s project at 110 North Wacker Drive, which landed a massive lease with the financial institution several years ago and led to AmTrust staring down a big hole on LaSalle that’s proved difficult to fill amid the pandemic. That’s resulted in speculation the landlord would let its lender take over control of the building.

AmTrust also submitted a housing conversion proposal for 30 North LaSalle, an office building hit this fall with a foreclosure lawsuit alleging the landlord owes $186 million in debt against the nearly 1-million-square-foot property.

Reshke and partner Quintin Primo — who purchased debt against a distressed office building at 115 South LaSalle this year to make space for state workers to leave the Thompson Center and allow Google to buy it in one of the most important Loop deals ever — also made pitches for Lightfoot’s consideration. The developers paid $120 million to take over the loan and ownership of 115 South LaSalle and 111 West Monroe Street, keeping the LaSalle-facing portion an office asset with plans to turn the Monroe portion into apartments with help from the city.

Promising he can work out a settlement with the lender, Reschke also put forward a separate plan to turn five floors of offices at 208 South LaSalle that are currently facing foreclosure into apartments.

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— Sam Lounsberry