Freed Signs Intent for Block 37 Retail, Rail

CHICAGO-Palatine, IL-based Joseph Freed & Associates has signed a letter of intent to investigate the purchase of the retail portion of 108 N. State St. from the troubled Mills Corp. Mills sold the land and air rights at the property for office and residential last week to a joint venture between Chicago-based Golub & Co. and the New York-based BlackRock investment firm. If the Freed deal goes through, Mills, which started the multiuse project on the property known as Block 37 two years ago, would be completely removed from the development plan.

Paul Fitzpatrick, Freed's managing director, told GlobeSt.com that the deal has not yet closed. "We're going to do our due diligence, and hope to close by the end of the year," he says. He could not go into detail about the terms of the deal, or whether the company would stick to the 265,000 sf of planned retail space, but said the underground CTA station is a part of the plan.

The company may soon face some stiff competition for retail tenants – itself. A block away, Bon-Ton Stores closed its Carson Pirie Scott unit on One South State St. in Chicago. Freed, the owner, plans to re-tenant the 600,000-sf Carson space.

Since its financial troubles became public last year, Mills has encountered the same doubt that's been attached to the site for years. Developers have tried and failed numerous times to build on the block bounded by State, Randolph, Dearborn and Washington, the vacant site of a former mixed-use development torn down decades ago.

The Golub/BlackRock venture plans to build a 17-story office building, a 416-unit apartment building and a 381-unit condominium tower. Michael Newman, Golub's president and chief executive officer, would not divulge the purchase price, but said the complex the company plans to build will cost more than $450 million. Golub plans to build the residential units on top of the retail building on the site. Golub officials could not be reached for comment on the Freed interest.

Golub told GlobeSt.com that the company is ready to go on the 440,000-sf office building, which is already 80 percent pre-leased to CBS 2 for a broadcast center, and the offices of Morningstar Inc. A Mills spokeswoman did not return a call for comment on the Freed and Golub purchases.