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CHICAGO-The Art Institute is exiting Jewelers Row, putting three office buildings it owns along Wabash Avenue on the market. The Art Institute paid more than $9 million for the properties in 1999 and 2000, according to property records, but the school on Michigan Avenue has scrapped plans to add classrooms at 21-29 S. Wabash Ave.

Newcastle Limited won the assignment to conduct a sealed-bid sale of more than 175,000 sf of office and retail space, with bids due July 15 on the entire package or individual five- and six-story buildings.

“Although significant capital improvements would be required to achieve the upside potential of these buildings, they are diamonds in the rough, and they are in one of Chicago’s best locations in close proximity to Millennium Park, Lake Michigan and the State Street shopping area,” Newcastle Limited president Michael R. Haney says. He suggests the package of properties is a redevelopment play, as the current B6-7 zoning could allow nearly 500,000 sf to be built on the 28,400-sf site.

“The key to unlocking the value of these facilities is either the development of the 27,200 sf of street-level retail space with creative reuse of the upper floors, or the redevelopment of the entire parcel,” Haney says. Redevelopment could include another building owned by the Art Institute at the corner of Wabash Avenue and Monroe Street, he adds.

However, the buildings are in the “Jewelers Row District,” designated by the Chicago Commission on Landmarks in 2003, which requires historical elements of the buildings, constructed as early as 1872, to be preserved. A buyer could get help, though, from tax increment financing as well as Cook County’s “Class L” incentive program to historic preservation. Besides developers, Haney is pitching the property to not-for-profit organizations, retail property investors, and owners of similar and nearby properties.

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