Sterling Bay Launches Remake of Post Office

CHICAGO—A lot of rumors have swirled around the eventual fate of the city's old Main Post Office Building, but yesterday officials from Sterling Bay Companies said they would partner with owner Bill Davies, chair of International Property Developers North America, to redevelop the property. The partners envision that the first phase will cost $500 million and transform the hulking structure, which arches over the Eisenhower Expressway, into 2.7-million-square-feet of modern office space and retail amenities.

“This will be a total gut rehab, but we've been buying up a lot of older buildings like this and successfully filling them up,” Andy Gloor, managing principal of Sterling, tells GlobeSt.com, and that experience has allowed the company to gauge the level and type of demand in the submarket. The building's vintage character will make it appealing to a host of companies looking for downtown space, and the massive floor plates will serve the needs of large users.

Walgreens, which currently occupies about 1.7-million-square-feet in north suburban Deerfield, has already checked out the space, according to media reports. And Gloor says that just yesterday he had several meetings with possible tenants. “We're under confidentiality agreements with all of the potential users, but we think this is going to be occupied by one or two large office users; at most four or five.”

"I'd be surprised if there wasn't a hotel," he adds. Some of the potential office tenants have even required that the developers include a hotel on the property, primarily because it would give visiting business travelers a convenient place to stay.

“Bill has already done an enormous amount of work on the building,” Gloor says. “And we'll bring fresh capital to the deal as well as secure the bank debt at the appropriate time. We hope to begin initial construction by the end of the year.”

Sterling's many ongoing rehab jobs on the Near West Side include the Fulton Market Cold Storage Building at 1000 W. Fulton. Sterling has been converting the 550,000-square-foot structure, now called 1K Fulton, into modern office space and signed Google, Inc. as its anchor tenant. And in March, Sterling completed the $22 million acquisition of Fulton West, a portfolio of existing and partially completed office, retail and parking facilities a few blocks away. It hopes to transform this property into about 270,000-square-feet of office space and a 750-space parking facility.

“Sterling Bay has had great success transforming large, underutilized properties into highly desirable office destinations,” said Davies in a prepared statement. “The firm has played a significant role in transforming Chicago's West Loop, and we feel that their knowledge of the city and current market trends will lead us to initiate the first phase of one of the most notable projects in Chicago in the last 50 years.”