In the Thompson Center, Google is making the sort of outsized bet on Chicago that it made in New York, where it now has 12,000 employees and recently bought a 1.3 million-square-foot campus on the Hudson River.
Google shakes up not only the Loop, but also one of the biggest downtown real estate deals in the past decade. Michael Reschke’s JRTC Holdings previously struck a deal with the state to buy the Thompson Center for $70 million and overhaul the dilapidated, Helmut Jahn-designed building with modern features and amenities, sell a portion back to the state for its offices and market two- thirds of the building to new office, retail and other users.
Under the new plan, Reschke’s venture with Capri Capital Partners will pay $105 million for 100% of the Thompson Center, which it would renovate and ultimately sell to Google. Reschke said today that he has reached an agreement with Google to renovate the property for the company.
Google’s investment in Chicago is a huge win for the city and state at a time when both are struggling to regain their mojo, losing the headquarters of Boeing, Caterpillar and Citadel. It’s also a boost to Chicago’s image as a rising tech center. And the deal is a win for Gov. JB Pritzker as he tries to sell the Democratic National Committee on the merits of holding its 2024 convention here.
“Today is another very good day for the city of Chicago and the state of Illinois,” Pritzker said during a news conference announcing the deal.
He reiterated the savings the state will realize by getting the outmoded Thompson Center off of its books and the importance of Google’s new commitment to the heart of the city. “We’re saving taxpayers money, we’re growing high-paying jobs, we’re adding vitality to the Loop,” Pritzker said.
Tech has been a major focus for Pritzker, a former venture capitalist who launched 1871 a decade ago in an effort catalyze the startup community, since before he became governor in 2019. The deal burnishes the city’s image and his own as he heads for re- election in November.
“Google put down roots in Illinois when others weren’t sure this city could sustain the needs of a big tech player. The naysayers said Chicago could never establish itself as a tech hub … . We beat the skeptics.”
In planting its flag at the Thompson Center, Google extends its reach beyond Fulton Market, a neighborhood that it turned into the city’s hottest real estate market. But it would stabilize the Loop, particularly LaSalle Street, an historic stretch of downtown but one that has fallen out of favor as many of its longtime financial denizens have moved to new office towers along the Chicago River.
COVID emptied out offices, accelerating the decline of LaSalle Street’s south end, which threatens to become a drag on the Loop at a time when Chicago, like other cities, desperately needs to bring workers back to its urban core. LaSalle Street’s aging buildings are struggling to compete with new properties.
“The way we see it, the Thompson Center is more than just a building,” Karen Sauder, Google’s top loca executive, said today. “Establishing a presence here in the Loop allows us to get in on the ground floor of revitalizing and breathing new life into the heart of the city. Just as we’re proud of the role we played in turning Fulton Market into one of the most vibrant and energetic neighborhoods in the city, we have the opportunity to do it all over again here.”
Under terms of the deal with the state, the $105 million purchase price includes $30 million the state will receive in cash, with the rest coming via title to the office building at 115 S. LaSalle St., which the both parties agreed is worth $75. million. Reschke is under contract to purchase that building—which BMO Harris Bank is vacating as part of a relocation to a new tower next to Union Station—and the state will ultimately own and occupy it.
Reschke is under contract to purchase that building—which BMO Harris Bank is vacating as part of a relocation to a new tower next to Union Station—and the state will ultimately own and occupy it. Reschke’s venture will renovate 115 S. LaSalle St. for the State’s offices after BMO vacates the building, with renovation work expected to take 18 months, the State said in the news release. Reschke will own adjacent buildings to the east of the tower with the shared address of 111 W. Monroe St.
At 1.2 million square feet, Reschke says the Thompson Center redevelopment deal is the largest downtown deal since his 600,000-square-foot Chase Tower project in 2000.
“It’s a major vote of confidence in downtown Chicago,” said Reschke, who predicts a full Thompson Center would reduce the vacancy rate in the Central Loop to 16% from 22%.
Mayor Lori Lightfoot said the Google deal is the largest corporate announcement in Chicago in 10 years, “a milestone in Chicago’s history.”
Chicago, which is one of four cities where the tech giant is in the midst of adding 10,000 employees by 2025 in an effort to improve the diversity of its workforce.
Google has been on a buying binge lately, with plans to spend $9.5 billion this year on offices and data centers. And it likes old buildings: The company bought the massive 2.9 million square-foot former Port Authority Building in New York in 2010 for $1.9 billion.
The Thompson Center, designed by Jelmut Jahn, is a hulking structure across the street from City Hall. It’s also a major public-transit hub, which has been a key ingredient in Google’s success in Fulton Market.
“The Thompson Center will provide employees with unparalleled public transit access as the only building in the city where six L train lines converge, easily connecting Chicago’s South, West and North sides,” Sauder said.
Reschke says he expects to complete the renovation of the Thompson Center by 2025. Demolition will start in February. The overhaul will keep the building’s signature atrium and glass exterior, although both will be upgraded. The Thompson Center also will get some signature features found at Google’s other buildings, such as exterior terraces on three floors and potentially one on the roof.