CHICAGO—As reported in GlobeSt.com last August, Aaron Paris and his partners in Chicago-based 4K Diversey Partners, LLC were then ready to take over the giant Macy’s warehouse campus on the city’s northwest side. Several other prospective buyers that had wanted to replace it with either residential units or tear it down and put in big box retail had already bailed.
“Neither of those plans was going to fly with the city,” says Paris, even though those groups were willing to pay significantly more than 4K Diversey, since local government officials wanted to see uses that would provide an abundance of good jobs.
And this week, the 4K Diversey partners closed a $10 million acquisition from Macy’s Inc. of the approximately 1.5 million-square-foot complex at 4000 W. Diversey Ave.
The new owners believe they can turn the property, which has two warehouses of about 71,000-square-feet and 100,000-square-feet and a 1.3 million-square-foot main building along Diversey, into a multi-use destination for manufacturers, distributers, warehouse users, retailers and call centers. Macy’s shut down its operations there in 2008.
“We have two tenants in the buildings now,” Paris says. One is Lou Silver, a partner in 4K Diversey and the owner of Studio 41 and ClimateGuard Windows, both neighborhood businesses headquartered nearby that now occupy about 70,000-square-feet for warehouse operations. In addition, a local food manufacturer occupies about 60,000-square-feet, also as a warehouse. “The food guys were there as an interim tenant for Macy’s but they want to stay.”
Preserving the Macy buildings has already had a wider economic impact on the neighborhood, Paris adds. By using this campus as their warehouse, for example, both tenants have freed up space in their other neighborhood buildings which can now handle additional manufacturing operations. “That’s the story of the day.”
The list of possible users for the rest of the space is long. “There have been a couple of health clubs sniffing around Logan Square,” a gentrifying neighborhood just to the east, Paris says, “but they’re not going to find any buildings large enough there.” Furthermore, “we’re also working on a self-storage opportunity for the building and we’re talking to a big grocery store.” He hopes the store will take up about 60,000-square-feet amongst a retail component that could take up as much as 100,000-square-feet.
The partners say they can accommodate users who need as little as 20,000-square-feet. Since 1928, the 21-acre campus has only had three owner-occupiers. First the Olson Rug Company, then Marshall Field & Company, and finally Macy’s Inc., used it primarily for distribution. And Paris hopes that distributors getting pushed out of the West Loop will find its private truck courts and proximity to area expressways appealing.
But before any of that happens, the main building will require significant investment and the partners need a Planned Development zoning designation from the city, which requires it for significant institutional and campus-oriented projects, among others. The Chicago Plan Commission and the City Council Committee on Zoning will hold public hearings on the partners’ plans prior to a vote by the full City Council. Paris expects to have the necessary designation by early summer.
Council members should be comforted by the new team’s level of experience. Paul Fishbein, the third major partner, for example, was part of the acquisition, design and redevelopment of the former 2.5 million-square-foot Montgomery Ward campus at 600 W. Chicago Ave. He was responsible for leasing and marketing the project and helped fill the 1.6 million-square-foot technology center. The building was sold in 2007 for $300 million and in 2011 for $390 million.
Once they get their PD designation, Paris says, “we’ll really be off to the races.”