Chicago's tallest building could get wider, too, now that Blackstone Group has finalized its $1.3 billion acquisition of 110-story Willis Tower today.
After closing on its anticipated purchase this afternoon, the New York-based private equity firm is drawing up plans for dramatic changes to the 42-year-old tower.
A Blackstone spokesman confirmed that it completed the deal but did not disclose a price, which has previously been reported as $1.3 billion.
Even after plunking down a record price for a U.S. office building not in New York, Blackstone could spend tens of millions of dollars in each of the next few years on long-needed repairs, adding new attractions and signing new office and retail tenants.
LOW-RISE ADD-ONS
Among changes in the works are a likely low-rise extension of the building into the south plaza, according to the brokers who will take over leasing for Blackstone. Although exact plans for the plaza are unclear, it likely will include adding a new structure in the plaza that could include some combination of food, retail and entertainment, the brokers said.
“It will involve a combination of working within the existing superstructure as well as adding on to the building's fooprint,” said Todd Siegel, a Chicago-based first vice president for Los Angeles-based CBRE, which will handle retail leasing.
Chicago-based boutique firm Telos Group has been awarded office leasing, Telos President Brian Whiting said. Other Telos brokers will will work on the project include Joy Jordan, Jamey Dix and Matt Pistorio.
Blackstone plans changes throughout the West Loop property, which has 3.8 million square feet of office space. Upgrades could include improvements to the 103rd-floor Skydeck observatory, office spaces and amenities, including changes to the existing retail, Whiting and Siegel said. The entire project could take years to complete, although renovations of outdated office space is likely to begin immediately, Whiting said.
An architect has not been chosen, and planned changes are preliminary, the brokers said.
SKYDECK'S CONTRIBUTION
Willis Tower's previous ownership, a group that includes New York investors Joseph Chetrit and Joseph Moinian and Skokie-based American Landmark Properties, bought the then-Sears Tower for $840 million in 2004. They boosted tourists visits by adding the Ledge—glass boxes protruding from the tower, offering unobstructed views to the ground—in 2009.
The Skydeck is expected to generate nearly $29 million in operating income in 2015, according to materials New York-based Eastdil Secured presented to potential buyers. Eastdil brokers, including Chicago-based senior managing director Stephen Livaditis, represented the Chetrit-led venture in the sale.
By adding a variety of additional attractions at the 1,451-foot-tall tower, Blackstone could keep visitors on site and spending money longer, allowing them to further monetize the building's appeal as a tourist attraction.
“We'd like to create a grand sense of arrival on that plaza,” Siegel said. “The building certainly has a huge presence on Chicago's skyline. Our job is to create a similar presence on the ground floor. “We're going to be very mindful that we're an office building, but we also have 2.8 million visitors to the Skydeck annually. We have a unique audience to capture.”
EATALY-LIKE?
The new entry-area space could be one large, wide-open attraction similar in layout to Italian food emporium Eataly, or it could be a combination of several places to eat, drink, shop and be entertained, Siegel said.
“Whoever we work with, whether it's one concept that master leases it or a variety of users, we'll want it to be free-flowing and organic,” Siegel said.
Blackstone is exploring options to update the Skydeck, as well as changes to existing retail areas, Siegel said.
An upgraded visitors' entrance would be on Jackson Boulevard, separate from the office lobby on Wacker Drive, which also will be renovated, Whiting said.
In order to attract tenants ranging from professional services to techies, the tower will be reconfigured with a variety of common areas where workers can congregate.
“It's going to include a lot of areas for tenants to move around the building and use those areas as an extension of their workplace,” Whiting said. “It will be like a campus within the building that makes it a community with neighborhoods, as opposed to a monolithic office building.”
Related:
• The roller-coaster story behind Willis Tower's billion-dollar payday