• Posted: January 8, 2020
• Community Building

Some of Chicago’s biggest and most complicated real estate projects took flight in 2019. By comparison, 2020 is shaping up to be the year of the unknown.

Rebirth of the long-dormant Old Post Office, zoning approval of Lincoln Yards and The 78, two multibillion-dollar megadevelopments on the river, completion of NEMA, the city’s tallest all-residential tower and the opening of the world’s largest Starbucks on North Michigan Avenue punctuated a year to remember in Chicago development.

Left for 2020 — and perhaps beyond — are the fates of the James R. Thompson Center in the Loop, the Obama Presidential Center, and massive development parcels including the former South Works and Michael Reese Hospital sites south of downtown. The location for a proposed Chicago casino also could be determined this year, if questions over its viability are resolved.

Meanwhile, investors are bracing for expected large property tax increases, as well as potential policy changes that could decrease real estate values. Some Chicago developers already are turning their focus to other cities because of their investors’ concerns about property taxes and other issues, such as soaring pension obligations for the city and state.

Here’s what to watch for in Chicago’s real estate and development scene in 2020:

After more than two decades of dormancy, the redeveloped Old Post Office welcomed its first office tenants in the fall. The project by New York-based 601W Cos. is one of the biggest transformations of an existing U.S. building in years, with an expected 15,000-plus employees headed to the 2.8 million-square-foot structure at 433 W. Van Buren St.

The largest lease in the ultrawide building is a two-floor, 463,000-square-foot deal by Uber, which said it plans to move there in late 2020 with space for 2,000 Chicago employees. The Old Post Office space will include the company’s Uber Freight headquarters.

Uber is among a growing list of technology companies driving an expansion of the downtown office market in recent years.

Construction is set to begin in March on Salesforce Tower, the third and final building on the Wolf Point site that Hines and the Kennedy family are developing on the river near the Merchandise Mart. Salesforce has leased 500,000 square feet, with plans to add at least 1,000 Chicago employees in the next few years. The new skyscraper is expected to open in 2023.

Also likely to start construction this year are two new buildings for Google in the Fulton Market district near its existing Midwest headquarters. Sterling Bay will develop the buildings, totaling about 800,000 square feet.

That would increase Google’s footprint in Chicago to about 1.3 million square feet — enough room for thousands of workers.

Notable buildings expected to be completed in 2020 include the 101-story Vista Tower hotel and condo building along the south side of the Chicago River near Lake Michigan. When it opens in September, Vista Tower will become Chicago’s third tallest skyscraper at 1,191 feet — trailing only Willis Tower (1,451 feet tall) and Trump International Hotel & Tower (1,389 feet).

The Jeanne Gang-designed building is being developed by Chicago’s Magellan Development Group and Chinese investment partner Dalian Wanda Group.

Other anticipated completions include the $500 million expansion of the lower floors of Willis Tower to include new restaurants, retail and entertainment space by New York-based Blackstone Group, set to wrap up in the third quarter; and Bank of America Tower, the 55-story, 815-foot-tall structure at 110 N. Wacker Drive that this fall will become the tallest office building completed downtown in 30 years. It is being developed by Chicago’s Riverside Investment & Development and Dallas-based Howard Hughes Corp., anchored by the namesake bank.

Two of the biggest developments ever proposed along the river, Related Midwest’s The 78 between the South Loop and Chinatown and Sterling Bay’s Lincoln Yards along Bucktown and Lincoln Park on the North Side, won city zoning approval in 2019.

Now the heavy lifting begins, as the developers seek office tenants large enough to get construction started this year on the massive mixed-use projects. The 78, a $7 billion project, is zoned for up to 13 million square feet of buildings, while the $6 billion Lincoln Yards is zoned for as much as 14.5 million square feet.

Other projects remain conceptual as they seek city approval.

Lightfoot’s newly appointed planning director, Maurice Cox, formerly of Detroit, has expressed interest in the city helping kickstart the redevelopment of the former Michael Reese Hospital site along Lake Shore Drive in Bronzeville.

A group of developers led by Farpoint Development and Draper and Kramer plans a multibillion-dollar mixed-use project on the 49-acre site and adjacent land, in a development called the Burnham Lakefront.

Just north of there, along the sprawling McCormick Place convention center and Soldier Field, Wisconsin-based developer Bob Dunn has floated a complex plan to create a row of skyscrapers atop a proposed new transit center serving CTA, Metra and Amtrak trains.

Dunn’s firm, Landmark Development, wants the state to help fund, and eventually own, the $3.8 billion transit center that would include a large block of revenue-generating retail and entertainment space. The developer would make its profit by constructing mixed-use high-rises on the site, which would be a 34-acre platform built over existing train tracks.

Ald. Pat Dowell, 3rd, has spoken out against the plan.

Other projects that could have a major impact on the South Side include the Obama Presidential Center, which has been delayed by a debate about its placement within Jackson Park; and a proposal to redevelop the massive former U.S. Steel plant along with south lakefront, a promising but challenged site where several previous development efforts have failed.

In the latest plan for U.S. Steel’s former South Works site, Chicago rapper Common and a group of real estate developers envision an audacious, 415-acre plan to bring a movie production campus, residential buildings, hotels, retail, entertainment and other attractions to the jobs-starved area on the southeast side. Soon after the Tribune reported the plan, Pritzker in August signed legislation extending state tax credits for film production, saying the move could boost the South Works proposal.

The Michael Reese and South Works sites are among several that have been discussed for a Chicago casino.

As Vista Tower’s opening approaches, there are yet to be any visible signs of two other skyline-altering developments proposed nearby. Their developers seek the blessing of 42nd Ward Ald. Brendan Reilly.

Chicago’s Golub & Co. and Los Angeles-based CIM Group in November made a second public presentation for what would become the city’s second-tallest building, behind Mag Mile landmark Tribune Tower.

The revised plan is a key step toward gaining zoning approval to build the 1,422-foot-tall residential and hotel skyscraper, which would be just 29 feet shorter than Willis Tower.

Tweaks to the 96-story plan have addressed issues such as traffic flow, loading and public space, but the design by Chicago-based supertall architects Adrian Smith and Gordon Gill does not appear to face strong opposition to its height.

Just east of there, Related Midwest seeks the alderman’s backing for a bold plan of its own.

The firm early next year is expected to unveil its revisions to a two-tower plan for the Chicago Spire site, where a previous developer — Ireland’s Garrett Kelleher — once envisioned a 2,000-foot-tall, Santiago Calatrava-designed condo building that would have been the tallest in the Western Hemisphere.

Related in May 2018 unveiled plans for a two-tower residential and hotel development on the 2.2-acre site at 400 N. Lake Shore Drive, atop a shared podium, designed by One World Trade Center architect David Childs of Skidmore, Owings & Merrill.

A few months later, citing concerns from neighbors about issues such as traffic, the height of the podium on which the towers would be built and security along the river, Reilly sent Related back to the drawing board.

The city last year granted Related another year to begin construction on the project, preventing the planned development from expiring. Related could make its next public presentation as soon as the first quarter of the New Year.

Preservationists want to see Helmut Jahn’s glassy, futuristic design repurposed. But the opportunity to demolish and replace the inefficient structure, or perhaps even connect a new high-rise onto one side of it, could generate a larger sale price for the cash-strapped state.

Either way, a Thompson Center redevelopment is an opportunity to launch a broader revitalization of the city center on and around the LaSalle Street canyon, which once was the go-to address for big business.

The Central Loop faces a wave of large office vacancies, though, as older buildings struggle to keep pace with new towers along the river and in the Fulton Market district.