Michael Reschke is tired of rehashing his past — and what a past it’s been.
The veteran developer was once chairman of three public companies, including the nation’s largest mall owner, before experiencing a tumultuous period that saw his exit from Prime Group Realty Trust’s office empire following a memorable clash with Steve Roth. Then Reschke came up short with a bid to take back the Prime office holdings after David Lichtenstein’s Lightstone Group made a winning offer.
Yet 20 years later, at 66, the Houdini of Chicago real estate is back on top as CEO of the now-separate Prime Group and facing what may be his biggest challenge yet: the $350 million renovation of the 1.2 million-square-foot Helmut Jahn-designed Thompson Center, a gamble on a post-pandemic Loop renaissance amid record office vacancy rates. The only other bidder for the deteriorating state-owned building had proposed demolishing it.
Jahn designed a large atrium and open offices to signify transparency in government — a look that also proved the spaceship-shaped building’s downfall. Single-paned glass walls made for poor insulation in both summer and winter, costing taxpayers $17 million annually to operate it. Drainage issues rusted the building’s pillars: Scaffolding frequently engulfed the property as stone cracked and fell.
Reschke is undaunted, counting on the state of Illinois’ promise to buy back a third of the building and move the Attorney General’s Office back in. He says he’s already fielding interest from potential tenants who could lease as much as 300,000 square feet, though no pre-leasing has been completed.
The tightrope walker
These days, Reschke shuns the reference to the magician in favor of being compared to Nik Wallenda, who in 2014 set two world records by traversing the Chicago River on a tightrope from the top of the Marina City west tower to the Leo Burnett building and then, blindfolded, walking from one Marina City tower rooftop to the other.
“People look at him and say, ‘You’re taking a huge risk, you’re fucking crazy,’” Reschke said in an interview at the Roanoke, his restaurant at the base of his 384-unit Residence Inn at 11 South LaSalle Street. “Well, Wallenda would tell you, ‘I’ve been doing this since I was six months old, and for me, it’s like walking in the park.’”
Thompson Center, which Reschke intends to keep entirely offices, contrary to previous reports, is just part of his decade-old effort to revive LaSalle Street, the major north-south corridor whose Loop section includes the city’s financial district. He’s trying to convert the “canyon” hemmed in by former financial institutions into a lively tourism destination with apartments and rejuvenated workplaces.
Urban experts convened by the city have urged the conversion of offices into housing. The cost may be prohibitive, they acknowledge, and new development across the river in the West Loop — specifically Fulton Market — is a growing threat for landlords seeking tenants for top-tier offices or new apartments.
“There is going to be a time and place for people to embrace Mike’s vision of a renaissance, but I wouldn’t want to be the first person to bet on it,” said West Loop and Fulton Market developer Philip Denny.
Reschke’s Thompson Center project has sparked recollections of his big appetite for risk and his ability to wriggle out of skirmishes with lenders and competitors. He’s in the midst of closing a deal right now to resolve a $50 million battle with a lender.
“I don’t want to delude the significance and importance of what we’re doing today with anything from 20 years ago,” he said. “Right now, I’m interested in the renaissance that’s going to happen with Chicago.”
In addition to reviving the Thompson Center, Reschke will raise his wager if he closes on a $191 million loan against nearby connected 37-story and 23-story office buildings along Monroe Street that face LaSalle and Clark streets.
He hopes to pay a discount to the loan’s face value, giving him funding to enliven the LaSalle Street portion, where 900,000 square feet was left vacant by the exits of BMO Harris Bank and law firm Chapman & Cutler for the new BMO Tower on Canal Street. The mostly empty building left its owner, a venture of South Korea’s Samsung Life Insurance, and lender Union Bank in jeopardy. Reschke plans to convert part of the Clark Street portion’s upper floors into as many as 500 apartments.
The developer also plans to bid for the soon-to-be mostly vacant former Bank of America building next door to the former BMO building if, as many expect, owner AmTrust hands it back to its lender. He’s counting on success with those properties as well as The LaSalle, a 234-room luxury hotel at 208 South LaSalle converted from offices on five floors above his 610-room JW Marriott hotel, a project he touts as having “spurred the revolution of bringing people back to downtown 24-7.”
Another venture Reschke leads has also signed an agreement to resolve a $50 million foreclosure attempt by Midland National Life Insurance on other office floors at the building, and he plans to refinance the space in the “very near future.” He’s confident he’ll hold onto it and convert it into 280 apartments, which he said will lease “like popcorn” to residents attracted by the amenities and services associated with the hotels.
“For me it’s not a risk, because I do it. I know how to do it,” Reschke said. “The timing couldn’t be better to buy buildings. I’ve been in business over 40 years. I’ve never seen values this low.”
The long view
Reschke’s willing to give projects some extra time to blossom before calling it quits, just as he did for his son, who signed a contract promising to maintain a B average or better at the University of Colorado in Boulder instead of aiming for the Naval Academy, as his father had hoped. The son turned in a single B-minus as a freshman, but Reschke let him stay another year, after which he transferred to St. Regis University in Denver.
Reschke graduated in 1972 from Arlington High School in Chicago’s northwest suburbs, working from the age of 16 as a tile setter for his father’s small business. He majored in accounting at Northern Illinois University and received a law degree from the University of Illinois Law School, shifting to real estate after stints at Arthur Andersen and Winston & Strawn.
He’s still focused on details: While touring the 21st floor of 208 South LaSalle, where a crew of workers was putting the finishing touches on the hotel lobby and bar, he marveled at the African eucalyptus wood finishes before griping to a contractor that a door behind a lobby desk wasn’t closing smoothly.
“I’ve always been on construction sites,” Reschke said.
He’s also got a knack for overcoming poor timing. Reschke started the JW Marriott project just as the Great Recession was crushing financial markets.
“What Mike did with the JW Marriott is plant a very high-end flag of over 600 rooms in the heart of the Loop when there were a lot of skeptics,” said Rich Curto, a former partner of Reschke’s at Prime Group before the Steve Roth ordeal. “The JW Marriott was a classic case of people suggesting that maybe that wasn’t a good thing to do, but if you look at it, it was effectively successful even though there was a downturn in the economy.”
Shortly after Reschke moved the project forward, two more luxury hotels — the Kimpton Gray and Hyatt Centric — opened on Monroe, just off LaSalle. “They followed me,” he said.
He remains dismissive about rivals. “They’re all jealous,” he said. “They don’t understand risk like I do.”