Station Plan Off Again as REIT Sharpens Focus

"I'm doing everything possible to thwart new development," Conforti tells GlobeSt.com. "I don't want any more additions to the denominator…In this cycle, we've all been restrained somewhat. We're in relative supply-demand equilibrium."

That could change, however, if cranes start popping up in the Central Business District, especially on Wacker Drive. Not only have crews been seen taking soil bearings at The John Buck Co.'s site at Madison Street and Wacker, cars are no longer being parked a block south, where Prime Group was once involved in a joint venture with the Pritzker family on a project is expected to become their Hyatt Hotel chain's headquarters.

"It's up to developers to exercise a modicum of restraint," Conforti insists.

Meanwhile, Prime Group is finishing construction of its $355-million Dearborn Center, with is just under 60% pre-leased, Conforti says, with Bank One expected to take delivery of its space by the end of the year. Prime Group's leasing team is focused on filling that development, begun under the reign of ousted chairman Michael W. Reschke and president Richard S. Curto, as well as taking proactive steps on finding potential tenants for nearly 700,000 sf of space now occupied in two buildings by Andersen.

"We're chatting with people," Conforti tells GlobeSt.com, in addition to talking with someone at the accounting giant on a daily basis. "We don't want to be surprised…I'm not paid to be reactive."

So what about a $220-million project atop Union Station that would add 480,000 sf of office space to a West Loop submarket in addition to 200 condominiums, 400 hotel rooms and 65,000 sf of retail space? The REIT had to planned start construction by next summer, as well as seek $17.5 million in tax increment financing from the city. Forget about it, at least for now.

"If it becomes a build-to-suit, then we'll build it," the 37-year-old top executive tells GlobeSt.com. "Otherwise, I should be tar-and-feathered, drawn-and-quartered. Everybody knows we're not building it. Is it a project that has a prospective future? Sure it is. But you tell me when the next cycle is."

Even if a joint venture partner were found, Conforti explains, the market would still need to support it. And given the project's scope, market means the hotel, retail, multifamily as well as office sector.

And while Conforti concedes disciplined capital markets and increasing securitization of real estate has kept the lid on overbuilding, he would like to see more restraint, even if it means fewer buildings in the 500,000-sf neighborhood in the West Loop. "You've had several what I would call peripheral buildings, but it still adds to the denominator, and I don't like it," Conforti says.

A taller, mixed-use building was what famed architect Daniel Burnham had in mind for Union Station but various economic downturns and inability of more than one developer to pull it off has kept it in the dream state.