Illinois would save $800 million in long-term lease and maintenance costs under a proposed deal in the works to sell the state’s downtown Chicago headquarters buildint.
Gov. J.B. Pritzker said the state has entered exclusive negotiations with The Prime Group, which is expected to lead to a sale that would provide the state with an upfront payment of $70 million for the Thompson Center. The state would purchase a 30% ownership stake in the building for $148 million after renovations are completed in two years.
State of Illinois
The developer plans a gut rehabilitation of the interior and exterior improvements in a $280 million redevelopment that would transform the architectural landmark into a mixed-use space with office, retail, and a hotel.
The savings for the state would come from eliminating the need to spend about $525 million in estimated deferred maintenance costs expected to accumulate by 2026 and $20 million in long-term lease expenses and lower operating costs in the coming years.
“We are taking a massive step forward with a plan that will result in the sale of the Thompson Center,” Pritzker said. “This sale marks the advancement in the fiscal comeback of the state of Illinois. Fiscal success means finding efficiencies whether it’s our real estate footprint or in our use of technology or in our healthcare cost savings.”
Pritzker listed the sale as among accomplishments that are part of the state’s broader improved fiscal picture, which has driven several rating upgrades.
Chicago and local taxing bodies will also benefit from the sale.
“By returning vital real estate in downtown Chicago to private ownership, tens of millions in revenue will be generated for Chicago Public Schools and taxpayers” through the property tax levy, Pritzker said.
The state has long talked about selling the building and Pritzker’s predecessor Bruce Rauner began pursuing a sale that he estimated could generate $300 million for the state. It hit road bumps along the process and got dragged into Democratic lawmakers’ and Chicago’s fiscal and policy battles with the Republican governor.
The building had many critics since opening in 1985.
It drew complaints from state workers over the noisy open-atrium style of the building and the exterior glass made controlling temperatures difficult.
But preservationists pressed to preserve the building because they feared a new buyer would bulldoze the building named for former Gov. James R. Thompson and designed by famed architect Helmet Jahn, who died in bicycle accident earlier this year. His firm will work on the redesign.
Pritzker signed legislation in 2019 laying out a two-year timeline for the sale although the timeline was later extended to April 2022 as the COVID-19 pandemic delaying planning and hurt sale prospects as the pandemic depressed downtown property values.
The Chicago City Council cleared the path for a sale in May by approving zoning changes for the property that provided greater leeway for redevelopment. The state launched a request for proposals in May and in October said it was reviewing two bids.
The state and Prime Group are aiming to finalize a deal by the April 5 deadline.