“The owner of a vintage 16-story office building on LaSalle Street is facing a $21 million foreclosure lawsuit, adding to a wave of distress on the historic-but-vacancy-ridden thoroughfare and teeing up a potential conversion of the property into a residential or other use.
“The lawsuit is one of many like it that have battered office landlords since the start of the COVID-19 pandemic, which fueled the rise of remote work and weakened demand for offices—particularly those in older Loop office buildings. Space-shedding has pushed downtown office vacancy to a record high, dwindling the bottom lines for many office building owners. Rising interest rates this year have made it even more difficult for landlords to sell or refinance their mortgages, forcing a number of them in the Loop to face foreclosure lawsuits or surrender their properties to their lenders without a fight.
“The financial pain has been severe along and near LaSalle Street, where Mayor Lori Lightfoot’s administration is now hoping investors will buy outmoded office buildings at big discounts and convert them into residential uses. City planners are counting on such redevelopment to help bring much-needed foot traffic and vitality to the heart of the central business district.
“The William LeBaron Jenney-designed building was originally known as the Central YMCA Association Building when it opened in 1893. The building’s largest tenant today is the Law Offices of Jeffery Leving, which has a lease for 15,642 square feet set to expire in July 2023, Bloomberg data shows.
“The building is rated ‘orange’ by the Chicago Historic Resources Survey, a city report completed in 1995 to analyze the historic and architectural importance of all buildings in the city constructed before 1940. The orange rating is for properties that are not landmarked but “possess some architectural feature or historical association that made them potentially significant in the context of the surrounding community,” according to the survey. That makes them likely candidates to receive tax credits or other public subsidies earmarked for historic properties if a developer would restore them as part of a renovation or conversion to a new use. Other historic, distressed properties nearby include the former Bank of America offices at 135 S. LaSalle St., the majority of an office tower at 105 W. Adams St. and a block of offices above the JW Marriott Chicago hotel at 208 S. LaSalle St.
“Incentives could come into play at 19 S. LaSalle through the city’s new ‘LaSalle Reimagined’ initiative, which is dangling tax-increment financing and other public subsidy sweeteners to get developers to convert old LaSalle office buildings into apartments with affordable units.
“The 19 S. LaSalle property is separated by a pedestrian alley from the building at 29 S. LaSalle St., the only former office building on the corridor to be converted into apartments. That building, now dubbed Millennium on LaSalle, includes 216 units and debuted last year.” (Ecker, Crain’s Chicago Business, 11/2/22)