Bob Clark’s construction, development and design conglomerate Clayco is no longer just a tenant of Chicago’s historic Jewelers Building — it’s about to become its owner, as well.
Chicago-based Clayco’s development arm CRG is teaming up with longtime developer Mike Reschke’s Prime Group to buy the 40-story office building at 35 East Wacker Drive out of distress, the companies confirmed. The deal is set to end a more than year-long foreclosure proceeding after its last owner, the Canadian firm Dorchester Corporation, defaulted on $51 million in debt against the building when it reached its maturity last year.
Reschke was reported to be nearing a deal to purchase the building last year and considering hotel conversion for part of it. But with Clayco’s involvement, the building is set to remain as offices for now.
The exact price Clayco and Prime have agreed to pay the building’s lender John Hancock Life Insurance couldn’t be determined, but it’s said by people familiar with the deal to be well below the loan balance but above $30 million. Several other Chicago-area office buildings that have traded hands amid foreclosure lawsuits in recent months have fallen short of clearing their previous mortgage debts with the buyers they’ve drawn.
Clayco is also set to expand its footprint within the 556,200-square-foot building, another rarity in an office market where many tenants are shedding space on the sublease market. The firm had previously leased about 70,000 square feet, and it’s set to add another 20,000 to 30,000 square feet, according to people familiar with the property.
“Clayco’s expansion within the Jewelers Building is a testament to our belief in Chicago’s enduring appeal and economic vitality,” said Clark, Clayco’s founder and executive chairman. “This venture is an opportunity to add value to one of the city’s architectural crown jewels and to foster economic growth and job creation in the heart of Chicago.”
The deal is set to close in the coming days. The property is 70 percent leased, according to the buyers. Jahn, formerly its second-largest tenant, moved across the Chicago River to the Wrigley Building about a year ago.
The Jewelers Building is at the center of local lore tied to notorious gangster Al Capone. The 1920s building, designed by a mentee of Daniel Burnham, is said to have previously featured Prohibition-era speakeasy atop the tower. Despite lacking documented evidence, the connection persists. Historians refute the claims, noting the speakeasy, called the Stratosphere Club, opened after Capone’s era. The tower also once boasted an innovative car-parking system for jewelers’ security, with elevators that could lift vehicles as high as the 22nd floor, but it has since been removed.
Although the buyers said no office-to-residential conversion is imminent, they’re not taking it off the table in the future, and they’re open to considering ways to welcome some members of the public into the building, such as by putting in a restaurant featuring panoramic views of the city on an upper floor.
It’s also possible the buyers will determine the highest and best use of the property in the future would include adding some luxury residences or hotel rooms, including extended stay rentals, into portions of the property. Reschke’s firm is known for converting old offices to new uses, while various Clayco divisions are at the forefront of construction techniques and technology.
Read more
Commercial
Chicago
The Closing: Mike Reschke
Commercial
Chicago
John Hancock hits Jewelers Building owner with foreclosure suit
Commercial
Chicago
Dorchester selling Jewelers Building as office-to-resi play
The building was completed in 1926 and designated a Chicago landmark in 1994. A Newmark team led by Jim Postweiler was selected by John Hancock as the receiver of the property in the foreclosure case and handled its marketing and the sale to the Clayco-Prime venture.
“We welcome the opportunity to continue to be a good steward of this historic asset and to preserve and maintain the building for decades to come,” Reschke said.