The Block 37 Saga
Jan 1, 2010 12:00 PM
On Jan 22., a judge ordered the handover of the 285,000-square-foot retail component of the Block 37 mixed-use project in Chicago from Joseph Freed & Associates LLC to the court-appointed receiver, CB Richard Ellis Inc. For its part, Freed is looking to regain control of the project by lining up investors that will allow it to “relieve Bank of America of its current Block 37 financial obligation.”
The changeover came about two months after Bank of America, the lead lender of the project, appealed for a receiver after Freed defaulted on the $205 million construction loan and the two parties had clashed over the leasing at the project. As a result, the Bank refused to release more than $70 million in funds necessary to complete the construction of the partially-opened project.
The saga even featured an odd scene with Freed securing the certificate of occupancy and opening a segment of the project to the public on the same day that the court appointed CB Richard Ellis executive Karen Pence Hollan as the receiver.
The move is just the latest dramatic turn in the decades' long saga surrounding Block 37's development. Through the years Block 37, which derives its name from its status as one of the original 58 blocks on an 1830 survey of Chicago, has seen its fair share of firms come and go without being able to advance anything meaningful on the site. The site has sat vacant since 1989.
Below are some highlights in the twists and turns around the project.
August 1988: Cook County judge allows condemnation of the block to make way for an office and retail project featuring a skyscraper designed by Helmut Jahn.
October 1989: Demolition begins.
January 1992: An ice rink opens on the site that stays in operation for about nine years.
September 1998: Macy's pulls out of a plan to open a store after failing to win a $55 million subsidy.
January 2001: A plan is approved to build a Lord & Taylor, Marriott Suites and a 50-story condo tower.
November 2002: Frustrated by the lack of progress on the project, the city pays $32.5 million to buy the site from a venture led by JMB Realty.
October 2004: Mills Corp. is selected to develop the site and buys the land for $12.3 million.
August 2006: Mills, under pressure from an SEC filing and other corporate debt issues, sells the office and residential portions of the project to Golub & Co.
November 2006: Mills sells the stake in the retail and transit portions to Joseph Freed & Associates.
October 2007: Muvico signs on to operate a multiscreen cinema and four other major tenants, including David Barton Gym, are soon announced.
March 2008: Freed defaults on its construction loan.
June 2008: The Chicago Transit Authority halts plans to build a “superstation” for high-speed trains because of $100 million in overruns.
July 2008: Freed says the retail portion is 50 percent pre-leased.
November 2008: David Barton Gym pulls out of the project.
March 2009: Lululemon pulls out of the project.
June 2009: Muvico pulls out of the project.
September 2009: Loews Hotels scraps its plans to build a hotel on the site.
October 2009: Muvico signs a new lease at lower terms, which Bank of America rejects. Soon after, Bank of America and other lenders foreclose on the property.
November 2009: A judge rules to name CB Richard Ellis receiver of the project on the same day the first tenants open their doors.
January 2010: After several delays, the handover of the project is pushed through.
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