WIN: Project Hercules Could Rescue Two Vacant Loop Skyscrapers; Thompson Center and 115 S. LaSalle

Harris Bank Addition II, 1974, Skidmore, Owings and Merrill, 115 S. LaSalle Street. Photo Credit: LoopNet

“In the middle of a pandemic, Michael Reschke and Quintin Primo signed onto a massive rehab project, buying the James R. Thompson Center, a hulking building that had deteriorated from icon to eyesore.

“Their plan was to overhaul the building—home to 2,500 government workers and the city’s busiest mass transit stop—with hundreds of millions in renovation that would effectively strip it down to its steel frame and rebuild it. Reschke and Primo would sell back one-third of it to the state and hunt for new tenants for the rest, a task that appeared monumental at a time when companies are slashing office space to adjust to the rise of remote work.

“Plans changed after Primo reconnected with an old friend from Atlanta, Michael Tabb, whom he’d met as part of a national professional group for minority real estate executives formed nearly 20 years earlier. Tabb had recently joined Google’s real estate team. ‘He said they were looking to expand significantly in Chicago,’ Primo said.

“The result was Project Hercules, a suitable code name for the heavy lift required to rework an already massive transaction on a very short timeline. Google, one of the world’s biggest companies, wanted to take over the entire Thompson Center.

“It was a dream scenario for Reschke and Primo—but only if they could move fast and get the state on board with a new plan as a July closing date approached.

“As it happened, Reschke was bidding to buy adjacent office buildings that BMO Harris Bank is vacating at 115 S. LaSalle St. and 111 W. Monroe St., distressed properties he could buy at a fraction of the value of the debt tied to them, part of a broader bet he was making on the future of LaSalle Street.

“‘That’s when the light bulb went off,’ Reschke said.

“If he could get the state to throw out its plan for staying in the Thompson Center and instead agree to take space at 115 S. LaSalle, he could fill up two prominent-but-outmoded buildings at once.

“‘We had a choice to make,’ Gov. J.B. Pritzker said. ‘We said, if you want to change the deal, and you’ve got a tenant who eventually wants to buy the whole thing, we’re open to that—especially because it’s Google. If Google wants to expand in the center of Chicago, that’s a tremendous development for everybody.’

“‘Thank God the BMO building was available,’ said Reschke, who signed a letter of intent to buy the loan tied to the properties in May and brought up the Google idea with the state. “The miracle of the transaction was how fast it came about and how all the pieces fit together,’ he said. “It was a little bit like putting together a Swiss watch to make it run. . . .I haven’t had much sleep.”

“In the end, Reschke and Primo ended up with two old buildings and two very different clients who had one thing in common: a desire to be downtown. The resulting deals, involving 2 million square feet of office space, are a leap toward stabilizing the vacancy-ridden core of the Loop. It’s the most significant real estate deal in the city in a generation.

“‘I don’t know what kind of magic dust Mike had,’ Chicago developer John Murphy said of the reconfigured deal. He thought any developer would be hard-pressed to fix the Thompson Center’s inefficiencies through a renovation and have a tough time leasing up the building, “but Google is a different tenant entirely. It’s almost like a (co-working) environment with so many diverse business units. That type of tenant would probably fit very well within the (Thompson Center) configuration,’ Murphy said.

“Whatever the payoff, Reschke acknowledges his good fortune. ‘I do believe I’d rather be lucky than good,’ he said. While he didn’t anticipate Google in his original plan, ‘where you are with timing and market forces around you sometimes are more important.'” (Pletz and Ecker, Crain’s Chicago Business, 7/28/22)

Read the full story at Crain’s Chicago Business

Inside the deal that brought Google to the Thompson Center; The developers behind the complicated deal called it Project Hercules—a heavy lift that also required a bit of luck, John Pletz and Danny Ecker, Crain’s Chicago Business, 7/28/22

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