Talk of World’s Tallest Teardown Surrounds Chicago Office Deal

A 65-story office tower in Chicago’s southwest Loop would make history as the tallest building ever voluntarily demolished if industry speculation about a deal in the works is realized.

Murphy Development Group and InSite Real Estate are in talks to expand their partnership with Houston-based developer Hines to include the tower’s possible demolition and redevelopment, CoStar News reported.

The tower, at 311 South Wacker Drive, is under contract to be sold to the two developers for $70 million, or $53 per square foot. That’s a fraction of the $230 per square foot that Zeller Realty Group and Chinese investor Cindat Capital Management paid for the 1.3 million-square-foot building in 2014.

Investors John Murphy and Gerald Kostelny have previously collaborated with Hines on potential development projects for vacant sites adjacent to the tower, at 301 and 321 South Wacker Drive.

Due to the building’s 39 percent vacancy rate and an outdated design, it has become less competitive in Chicago’s evolving office market. Demolishing the structure would pave the way for multiple high-rises with over 4 million square feet of combined space.

Tearing down the skyscraper, designed by Kohn Pedersen Fox and completed in 1990, would cost tens of millions of dollars, potentially bringing the developers’ total investment to over $100 million.

Tearing down the 961-foot-tall building would be the biggest voluntary demolition in the world, making runners up of New York’s former 707-foot-tall JPMorgan Chase building and Singapore’s 770-foot-tall AXA Tower, which were voluntarily torn down to make way for redevelopment.

Large-scale demolitions are becoming more common globally, said Shawn Ursini, a senior manager at the Council on Tall Buildings and Urban Habitat. Aging office buildings often require significant upgrades, and some are no longer viable for modern tenants or conversions, he said.

While the idea of tearing down the office tower is still in its early stages, the potential redevelopment has the real estate community buzzing.

If successful, it could reshape the southwest Loop, which has seen significant investment in recent years, including the redevelopment of the Old Post Office and the ongoing plans for The 78, a $7 billion Near South Side megadevelopment proposed by Related Midwest.

— Andrew Terrell