Illinois may sell Thompson Center for $70M, buy back part for $148M

Illinois may sell Thompson Center for $70M, buy back part for $148M

Has Illinois Gov. J.B. Pritzker got a deal for you: Sell a whole state building in downtown Chicago for less than half of what taxpayers will pay to get back one-third of it.

After selling the beleaguered James R. Thompson Center to a developer for $70 million, Gov. J.B. Pritzker said he plans to buy back one-third of the state office building for $148 million.

After multiple delays, Pritzker announced Dec. 15 the state is in final discussions over selling the building in the heart of downtown Chicago to a developer. After the developer renovates the neglected property, Illinois will buy back one-third of the building, bringing the net cost to $78 million.

Despite the red ink, Pritzker contends the plan will save taxpayers millions when the cost of purchasing or leasing a different space for state workers is considered. The center has 1.5 million square feet, with 2,200 state employees occupying about 60% of it.

“We are taking a massive step forward with a plan that will result in the sale of the Thompson Center and it will save taxpayers $800 million,” Pritzker said in a press conference.

The sale of the center has been authorized by law since April 2019. However, the pandemic has plummeted demand for commercial properties downtown with the rise in remote work. Vacancy rates in Chicago’s central business district hit 17.7% this year, the highest since 2010.

“State employees will be there to support the Loop’s continued economic revitalization for years to come,” Pritzker said.

Selling became the only option once the state couldn’t afford the repairs, which come to an estimated $325 million. Part of the reason the building is so expensive is its massive glass atrium, which has sprung leaks thanks to neglected maintenance. It has little insulation, which drives up heating and cooling costs.

The developer, Prime Group, claims they can circumvent the costs by replacing the exterior with a glass curtain wall, separating offices from the atrium.

Once the building is renovated, Prime Group CEO Michael Reschke said they might include a hotel in the upper levels.

State leaders expect the deal to be finalized in April 2022.

Using revenue projections from a sale of the Thompson Center was once a routine accounting gimmick for state politicians. Lawmakers included between $200 million and $300 million in revenue from a supposed Thompson Center sale in state budgets for fiscal years 2017, 2018 and 2019.

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