Big tech company buys office space in IL for $105 million

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After years of fruitless efforts that spanned multiple administrations, the state has completed the sale of Chicago’s controversial James R. Thompson Center to a company that will make it the new Chicago home of tech giant Google.

Governor JB Pritzker made the announcement during a press conference at the building, along with Chicago Mayor Lori Lightfoot and officials from the development company and Google. Pritzker said the sale will save the state millions in deferred maintenance costs.

“After the project is complete, the first Googlers will enter this atrium for a completely redesigned and truly beautiful experience, one that comes as Google continues to significantly expand its footprint in Illinois,” Pritzker said.

Designed by architect Helmut Jahn, the 17-story structure opened in 1985, featuring a large atrium, food court and 1.2 million square feet of office space that currently houses the offices of 50 agencies of state.

But its unique, postmodern design, which some have likened to a spacecraft, has long been the subject of praise and criticism, and its high maintenance and operating cost, estimated at $17 million a year, has drained state resources.

In 2003, then governor. Rod Blagojevich, a Democrat, offered to sell the building, but that deal never came to fruition and with state funding cuts it began to fall into disrepair. Former Gov. Bruce Rauner, a Republican, also offered to sell it in 2015 and again in 2017, but lawmakers at the time couldn’t agree on a plan amid the current budget stalemate. two years, resulting in further deferred maintenance of the building.

A 2016 cost study estimated that it would take $300 million to restore the building to good condition, and the governor’s office said the cost would increase to more than $525 million if maintenance needs don’t. are not satisfied by 2026.

In 2019, Pritzker signed legislation which had originally passed the General Assembly two years earlier authorizing a new process of trying to sell the building through a bidding process. And in January 2021 those responsible announced plans to begin moving Thompson Center employees to another building the state had purchased for $73.5 million at 555 W. Monroe.

Then in December 2021, officials announced tentative plans to sell the building for $70 million to JRTC Holdings LLC, a company run by real estate developer Michael W. Reschke and the Capri Investment Group. Under the deal, the state would have repurchased 425,000 square feet of newly renovated office space and paid $148 million for its share of the renovations.

Thompson Center in Chicago.jfif
After years of fruitless efforts that spanned multiple administrations, the state has completed the sale of Chicago’s controversial James R. Thompson Center to a company that will make it the new Chicago home of tech giant Google. Illinois Capitol News

Learn more about the agreement

Under the new deal announced Wednesday, however, the state will sell the entire building for $105 million and use $75 million to purchase another nearby building in the central Loop area at 115 S. LaSalle, currently the headquarters of BMO Harris Bank which is planning to move.

JRTC Holdings will complete renovations to the LaSalle building to accommodate state operations after BMO Harris Bank vacates the building. Improvements are expected to take 18 months with partial occupancy expected within eight months of the closure, the governor’s office said in a news release.

“This trade was a huge win-win for everyone,” Reschke said. “Google was able to secure 100% of this iconic building for future headquarters and the state will now own 50% more space on LaSalle Street at 50% less cost.”

Google, headquartered in Mountain View, Calif., has had a presence in Chicago since 2000. It currently employs about 2,000 employees in the city’s Fulton Market neighborhood.

“The Thompson Center is more than just a building”

Karen Sauder, President of Global Customers, Google and agency solutions, said the company is eventually considering buying the building itself in order to bring its employees downtown.

“From our perspective, the Thompson Center is more than just a building,” she said. “Establishing a presence here in the loop allows us to step into the ground floor of revitalization and breathe new life into the very heart of the city. Just as we’re proud of the role we’ve played in making Fulton Market one of the city’s most vibrant and vibrant neighborhoods, we have the opportunity to start all over here.

The state’s actions are part of a larger effort to optimize its real estate holdings in downtown Chicago.

Prior to these efforts, the state owned three buildings in the area, including the Thompson Center, and leased office space in seven other buildings. Together, according to the Department of Central Management Services, those properties exceeded 2.3 million square feet.

The deputy director of CMS intervenes

Cathy Kwiatkowski, deputy director of CMS, said in an email that the state only needs about 1.7 million square feet, a need that could be met by buying two buildings, terminating six leases private and maintaining leases only in public buildings.

CMS believes the optimization effort will shrink its downtown area Chicago real estate portfolio over 475,000 square feet by 2024.

The governor’s office estimated that consolidation would save the state nearly $1 billion over 30 years.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

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Capitol News Illinois is a nonprofit news service that provides coverage of Illinois state government to members of the Illinois Press Association. The Belleville News-Democrat is a member of the IPA. The BND publishes articles from Capital News Illinois and The Associated Press to supplement our staff’s state affairs coverage, which focuses on Southern Illinois lawmakers and regional issues.

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