Wacker Drive Office Development Along Chicago River Lands $665 Million in Construction Financing
As seen Chicago Tribune
Wacker Drive’s next trophy office tower has taken a key step toward reality, with its developers securing almost $665 million in construction financing.
Howard Hughes Corp. and Riverside Investment & Development on Monday said they have a $495 million construction loan from a group of lenders led by Bank of America and JPMorgan Chase to build a 53-story office tower at 110 N. Wacker Drive.
The $761 million project, on the site of the recently demolished former GGP headquarters building, also includes a preferred equity investment of $169.6 million from USAA Real Estate, almost $10 million in cash from Riverside and $87 million in equity, including the value of the land, from Howard Hughes. Details of the financing were included in Securities and Exchange Commission filings by Howard Hughes.
Bank of America last year confirmed it will be the tower’s namesake tenant, taking about 500,000 square feet in the building’s low-rise portion.
Financing was the last big step for the development, which will add 1.4 million square feet of some of Chicago’s highest-priced office space along the Chicago River.
Construction is scheduled for completion in late 2020. Work recently began on the foundation for the new tower, after the five-story GGP building was razed.
The Wacker Drive tower is kicking off years into a development cycle that has already added two towers more than 50 stories high to the downtown Chicago market. There are several other office buildings under construction or in advanced planning.
But Riverside Investment & Development, led by veteran Chicago developer John O’Donnell, recently completed a nearby 53-story tower at 150 N. Riverside Plaza, and the firm believes there will continue to be demand for high-end space with river views.
“I think this cycle has a ways to go, barring some type of black swan event,” O’Donnell said. “Most cycles come out roaring, but this one was very gradual (in the initial years). Because of that, we hope this cycle will be longer than others.”
Besides Bank of America’s lease, the developers recently announced a 60,000-square-foot lease for the headquarters of Chicago-based investment bank Lincoln International.
It is the first Chicago development for Dallas-based Howard Hughes.
“We are very impressed with the depth of the leasing market” in Chicago, said Paul Layne, president of the central region for Howard Hughes. “The leasing market is very strong for Triple-A quality office space. We have been engaging in conversations with tenants of all shapes and sizes, and I believe we’ll be able to continue the success that we’ve had so far.”
Construction financing was arranged by Hamilton Realty Finance.
The tower is expected to include a Bank of America retail branch, a tenant lounge with outdoor seating overlooking the river, and a two-level, high-end restaurant, O’Donnell said. There also will be a half-acre public park along the river.
The tower is designed by Goettsch Partners and is being built by Clark Construction.
Twitter @Ryan_Ori