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Canadian developer Onni Group is willing to bet almost $350 million that Chicago's pandemic-stung downtown office market has a bright future—thanks to a tool meant to preserve the city's past.
The real estate firm is slated to go before the City Council this month with a plan to revive the outdated, soon-to-be empty Loop office tower at 225 W. Randolph St. and refill it with tenants, a major downtown investment during a COVID-19 crisis that has virtually paralyzed the city's urban core. But whether Onni moves forward with the project hinges on a key step: the city naming the 30-story New Formalist-style building a landmark and approving a lucrative property tax break that comes with it.
That incentive, known as a Class L designation, has been around for more than two decades in Cook County, fueling face-lifts for properties like the Wrigley Building, the former IBM Building and Chicago Athletic Association hotel, among others. But Onni's plan for it follows an increasingly popular blueprint in a central business district rife with old, architecturally significant office buildings: using the tax savings as a leasing advantage to undercut the rest of the market with cheaper rents.
It's the same strategy used recently at the Old Post Office, where New York-based developer 601W turned a dilapidated behemoth into a modern office building and leased up more than three-quarters of the property before it opened its doors in 2019. The firm now turning the upper floors of the Marshall Field Building into 630,000 square feet of offices is taking the same tack with its Class L...