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CHICAGO-A local development team may build a 1.5-million-sf mixed-use development on the southwest corner of Madison Street and Des Plaines Avenue, a two-acre site between Presidential Towers and the Kennedy Expressway. MR Properties, LLC has agreed to pay $16 million, 34% more than the city’s most recent appraisal for the site, and may increase the price by another $4 million depending on the ultimate size of an office, hotel and retail project likely to be worth about $200 million.

Although cash-strapped city officials had hoped for a 2003 closing, it likely will happen in January, developers say. “We have an $800,000 letter of credit on the table,” Colin Regan says. “We’re serious about developing this property.”

The $16-million purchase price is based on Phil Mappa and Regan building up to 800,000 sf, says department of planning and development project manager Nori Bleiman. A deal approved by the community development commission Tuesday calls for MR Properties to pay $20 for each additional sf the company is allowed to build, up to $4 million, or another 200,000 sf. However, current zoning allows for up to 1.5 million sf on the site, Bleiman notes.

Although Bleiman says MR Properties does not have a design ready for the plan commission to see, the developers have commissioned one. They are clear that their project will include a hotel, at least one office tower, retail space and parking, Regan says.

“It’s conceivable we can have the hotel portion started next year,” Mappa says, adding the timing is right to think about adding a significant chunk of office space in the West Loop. “If someone needed space in 2007 or ’08, we’d have to start next year.”

Office prospects are looking at space coming available within that time frame, Mappa adds. While Jones Lang LaSalle has been hired to lease the office space, Mappa says negotiations have begun with a hotel developer. In addition, construction financing is close at hand, Mappa says.

Visibility from the Kennedy Expressway is a selling point for the initial prospects, Regan says. “It’s an important ingredient to the people we’re talking to,” he adds.

The land was once slated to be part of the Presidential Towers multifamily rental project, Bleiman says, until it was determined four buildings were enough.

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