An office-to-residential conversion in Chicago’s Loop is getting a boost from a $98 million taxpayer subsidy.
Tax increment financing will support the redevelopment of 135 South LaSalle Street into a mixed-use space with residential, retail and a grocery store, Crain’s reported.
Developed by Riverside Investment & Development, DL3 Realty and AmTrust RE, the project will transform the historic 45-story building, constructed in 1934, into 386 apartments, including 116 affordable units.
The building, previously occupied by Bank of America, has been mostly vacant since the bank relocated in 2021, leaving it more than 80 percent empty. The conversion will also add 92,000 square feet of retail space, with the grocery store serving as a key amenity for both residents and the surrounding area. The project’s market-rate apartments are expected to rent for $3.55 per square foot.
The proposed TIF funds, which would cover 40 percent of the project’s $241 million cost, are part of the LaSalle Street Reimagined program, aimed at converting underutilized office buildings into residential and mixed-use properties in the wake of rising remote work trends that have contributed to record-high office high vacancy.
The vacancy rate in downtown Chicago was 25.8 percent in the third quarter of 2024, up from the 13.8 percent at the start of the pandemic, according to CBRE. With 11 consecutive quarters of increasing vacancies, the city’s investment in converting office spaces into mixed-use environments is seen as a critical move to restore vitality to the area.
If approved by the Chicago Community Development Commission next week, the project will move closer to a formal City Council vote, paving the way for construction to begin.
Supporters of the revitalization initiative have praised the allocation of tax-increment financing funds to introduce new uses in the Loop. However, critics have raised concerns about the appropriate use of public resources to revitalize downtown, highlighting the broader challenge of making the Loop a more attractive place to live.
Campari Group and R2’s office-to-residential project at 79 West Monroe Street has already gained full approval from the City Council. Mike Reschke’s Prime Group and Quintin Primo’s Capri Investment Group are spearheading conversions at 30 North LaSalle Street, 208 South LaSalle Street, and 111 West Monroe Street, which are awaiting city approvals.
— Andrew Terrell