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Copyright © 2013, Michigan Avenue
By Jay Pridmore
If the characters from Mad Men, those aspiring masters of the universe in the 1960s, had survived another decade or so, their wardrobes would have changed to wider ties and (maybe) double-knit. They would have witnessed the onset of word processing. They might have entered real estate, moved to Chicago, and taken an office on the upper floors of Sears Tower, which claimed the title of world.s tallest building when it opened on May 3, 1973.
Few buildings expressed the zeitgeist of the 1970s quite like the building now known as the Willis Tower. When it went up, it housed a modern organizational behemoth. Workplace dramas were conducted in early office pods that stretched across vast color-coordinated floors. The word processing department was permanently air-conditioned, and employees were cautioned against nylons, lest static electricity erase digital mountains of typing. Security cameras, rare at the time, gave a Chicago Daily News reporter .the feeling that a kindly Big Brother is watching you.. We now know that fashions come and go. Names change. But buildings are (virtually) forever, and great buildings become icons, as Willis Tower remains this year on the occasion of its 40th anniversary.
The Tower lost some cachet temporarily after 1992, when Sears Roebuck vacated, but never its boldness. Now its brio is back as many of its floor plates, once considered too vast, are said to be perfect for efficiency-minded tenants. The 103rd-floor Skydeck, a longtime tourist favorite, was renovated with glass ledges, and 1.5 million people visited it last year. Films like The Dark Knight, Transformers 3, and the June 14 release Man of Steel have used Willis Tower.s silhouette for scenes of urban drama. Though Willis Group Holdings, an English insurance giant, got flack for buying the naming rights (and many Chicagoans still refuse to use the new moniker), the tallest building in North America is doing just fine, thanks.
Setting the Foundation
The idea for this remarkable work of architecture began in 1968 when Sears Roebuck and Company, then the nation.s largest retailer, decided to leave its West Side headquarters. That 41-acre campus, opened in 1906, was considered a wonder of its time, too, where unimaginable volumes of merchandise were shipped to every corner of the country. Halcyon days at the old Sears complex ended for many reasons, among them the assassination of Dr. Martin Luther King Jr. and the rage that burned the neighborhoods a few blocks away.
Sears Roebuck might have moved to the suburbs (as it later did), but then Mayor Richard J. Daley intervened. While rust-belt cities all over America were threatened with disinvestment at the time, Chicago dodged downtown decay, with Daley.s immense power paving the way for a veritable renaissance. Construction in the Loop.big modernist projects like the Prudential Building and Daley Center.was largely behind the earnest sobriquet: The City That Works.
To join the trend, Sears chairman Gordon Metcalf brought in Tony and Jim Peters, brash real estate brokers with Cushman & Wakefield in New York. They analyzed development, looked at possible sites, and found that the block bounded by Wacker, Jackson, Franklin, and Adams might be available. The parcel was assembled, then the Peters brothers found a legal team to convince the City Council to approve what the mayor had already blessed: the sale of a stretch of Quincy Street that ran through it. At the time it was described as a sweet .bargain basement. deal. The city even paid to reroute water and sewer lines.
Metcalf had tonier neighborhoods in mind, such as Michigan Avenue beyond the Illinois Central Tracks. Wacker was not fashionable at all at the time, but Sears reasoned that it was close to Union and Northwestern Stations, where many of its 7,000 headquarters employees would march to get to their homes in the suburbs. One of the owners of the eventual site optimistically declared, .Wacker is becoming the Park Avenue of Chicago.. And Wacker did improve, with Sears (a master of critical mass) helping the process considerably.
Reaching New Heights
Sears did not set out to build the tallest building in the world.it set out to build the most efficient. Another player in the project was the world.s largest interior design firm, Saphier, Lerner, Schindler of New York. They conducted what amounted to time-motion studies on all 90 of the departments that would go into the new building. .Design,. principal Lawrence Lerner said at the time, .is the discipline of function, logistics, and economics, carried on in the ambiance of aesthetics..
For Sears.s new headquarters, SLS postulated 2 million square feet, which translated into 50 stories of 40,000 square feet of usable space each. Future needs would require upward of 4 million, so the new Sears building needed to include excess space to grow into. Not too surprisingly, early designs were less than elegant.the worst of which was remembered as two faceless boxes side by side.
At this point the preeminent architecture firm of Skidmore, Owings & Merrill applied the niceties of world-class skyscraper design to the project. SOM was completing the John Hancock Center and had been studying ways to build ever-taller buildings both economically and beautifully. SOM.s structural engineer Fazlur Khan had devised the X-bracing for Hancock, after which he studied an alternative concept, the .tube frame,. which might push the envelope even higher.
Khan and SOM architect Bruce Graham worked together to create what they called .bundled- tube. construction, as multiple tubes shared walls and helped support one another. Sears would have nine such tubes (75 feet by 75 feet each) rising to different heights, two of them to the top. Graham told the story that he was discussing the concept with Khan over lunch at the Chicago Club when he pulled out a pack of Camels. He tapped the pack and several cigarettes came partly out, each to a different level. .This is the form,. said Graham.
SOM.s form-follows-function design developed. When architects had met all of Sears.s space needs, they realized that they were a dozen or so stories short of the world.s tallest building. (That was New York.s 1,368-foot World Trade Center, completed in 1971.) Sears agreed to go to 110 floors, or 1,450 feet. The result was that the first 50 floors had enormous floor plates and offered maximum organizational efficiency. Smaller floor plates above, with plentiful corner offices, would provide desirable rental space for law firms and consultants. Outside, its profile of setbacks made it an .exciting departure from orthodox mediocrity,. wrote Paul Gapp, the Tribune architecture critic at the time.
For Chicago, and especially for those who worked there, the Tower was an amazing vertical city. It had a health club, an infirmary, and a daily population that people enjoyed noting was equal to that of Lake Forest. And like Henry Blake Fuller.s fictional skyscraper The Clifton in his 1893 novel The Cliff-Dwellers, the Tower had its symbols of urban mobility. A ground-floor bar called The Dinghy inspired comparisons at the time to the legendary Division Street singles hangout Butch McGuire.s. Execs aspired to membership in the Metropolitan Club on the 65th floor, which had celery-green carpet, aquamarine velvet divans, and a daily prime beef luncheon. For almost everyone at the time, .Working in the world.s tallest building makes you feel a little bit important,. said a Sears Roebuck record clerk.
Slowly but inevitably, the Tower went from landmark to historic icon. Not long after the building.s opening, Alexander Calder installed his famous mobile sculpture, Universe, in the lobby. In 1981, a climber from Maine donned a Spider-Man suit and scaled the west face of the tower using suction cups. In 1985, a new atrium lobby attracted the kind of street life that the soaring tower deserved. And in 1986.s Ferris Bueller.s Day Off, Ferris and friends visited the Skydeck as part of the most famous day of playing hooky in the history of cinema.
Icons are also measured against bumps along the way. Sears moved out in 1995, selling the tower for $1 billion (against construction costs of $150 million) in a period when the company was losing its leadership in retail. In 1998, the Tower lost its .world.s tallest. title to Petronas Towers in Kuala Lumpur, Malaysia. Anguished recalculating of what really constituted the .world.s tallest. (antennas and highest occupied floor were at issue) ended when the Petronas itself was surpassed by Taipei 101 after six short years (Sears had kept the crown for 25). Then came September 11, 2001, and everyone wondered out loud if the era of the mega-skyscraper was not going the way of... well, old-line retail stores.
A Living Icon
Willis Tower isn.t going anywhere, of course. As prime real estate Willis had rough years rental-wise, but has come around, according to Bob Wislow, CEO of US Equities, managing broker since 2007 for the building now owned by a group that includes American Landmark Properties Ltd. of Skokie. .Timing is everything,. Wislow says. The 9/11 hangover has lifted. Occupancy is now more than 85 percent and rising. With big floor plates that can be configured for maximum productivity (commercial real estate.s new catchword), the Tower competes for big tenants and won United Airlines, which has settled into 860,000 square feet.most on once-hard-to-rent lower floors.
It.s also the intangibles, naturally. .All I have to do around the country is say that we.re in Willis Tower,. says Peter C. John, of the law firm Williams Montgomery & John, adding that the new name is as famous as the building. Then there.s Skydeck, recently refurbished and more popular than ever with its protruding glass floors, and .The Ledge,. suspending visitors over a sheer 1,353 feet drop. .We.re in the memory business,. says Randy Stancik, vice president of US Equities and general manager of the Skydeck Chicago.
As for other skyscrapers, Willis Tower remains the standard against which other super-tall structures must be judged. It will keep the Tallest in North America title until One World Trade Center in New York is completed this year. More important is Willis Tower.s pedigree as a milestone for SOM, still preeminent in skyscrapers worldwide. For Willis Tower, the design process was a classic collaboration of architects and engineers working hand-in-glove. That is how SOM still does it.
But true icons of architecture represent more than feats of engineering or the vagaries of passing trends. They evoke indelible memories. The Empire State Building, once the world.s tallest, is still a striking symbol of the Jazz Age in Manhattan. In Chicago, the Willis Tower symbolizes a period when Chicago asserted itself in the world, when its influence in commerce, in politics, and in culture finally overshadowed the rat-a-tat of Al Capone. Chicago was already a great American city in 1973, when the tower went up, city of big shoulders, the birthplace of the skyscraper, a .city on the make.. But in 1973 Chicago finally got its icon, which still expresses audacity, intelligence, and ambition in a building that, while no longer the tallest, is still one of the most famous in the world.Original Source
Copyright © 2007, Crain's Chicago Business
By Thomas A. Corfman
Sears Tower's owners said Tuesday that U.S. Equities Realty LLC will take over leasing and management of the 110-story skyscraper, as expected.
Veteran broker Jeffrey Barron, a senior vice-president with Chicago-based U.S. Equities, will oversee day-to-day leasing, according to a statement announcing the selection.
But three of the firm's senior executives, Chairman and CEO Robert Wislow, Vice-chairman Camille P. Julmy and Managing Director and Executive Vice-president Katherine K. Scott, will "be directly involved in leasing and management" of the 3.8-million-square foot structure, the statement says.
In the statement, John Huston, one of Sears Tower's owners and an executive vice-president of Skokie-based American Landmark Properties Inc., says: "With its in-depth local market knowledge and international reach, we are confident that U.S. Equities will be successful in executing new leasing strategies and initiatives that will help Sears Tower remain competitive in the marketplace."
U.S. Equities will take over on April 1 from CB Richard Ellis Inc., which has held the assignment since the building was acquired in April 2004 by a group that includes Mr. Huston and New York investors Joseph Chetrit and Joseph Moinian. CB said on Nov. 21 it would resign the assignment.
The building's vacancy rate, not including sublease space, hit 21.8% during the third quarter last year, compared to 9.6% during the same period in 2004, shortly after Sears Tower's current owners bought the building, according to real estate research firm CoStar Group.
But in recent months, the vacancy rate has fallen to 17.7%, thanks in part to expansions by key tenants.
Copyright © 2007, Crain's Chicago Business
By Thomas A. Corfman
Looking for a fresh start, Sears Tower's owners have tapped U.S. Equities Realty LLC to take over leasing and management of the 110-story skyscraper, which has recently seen a new round of high-profile tenant defections.
The Chicago-based real estate firm, which successfully repositioned the 100-story John Hancock Center during the 1990s, is expected to take over management of Sears Tower at end of the month, according to sources familiar with the selection.
"We have no deal to announce at this time," a spokesman for Sears Tower says in a statement. The 3.8-million-square-foot building is owned by Skokie-based American Landmark Properties Ltd. and New York investors Joseph Chetrit and Joseph Moinian.
U.S. Equities Chairman Robert Wislow could not be reached for comment. During its six-year tenure at the Hancock, U.S. Equities led a redevelopment of the building's retail space and a revitalization of its observation deck.
Despite its Hancock experience, the choice of U.S. Equities is a bit of a surprise because the firm is better known for its retail leasing and office tenant representation.
The decision ends a lengthy search for a replacement for CB Richard Ellis Inc., which has continued to handle the assignment on a temporary basis after announcing in November that it would resign.
U.S. Equities' management fee could not be confirmed, but CB charged a below-market $600,000 a year. That fee is on top of management expenses and does not include potentially lucrative leasing commissions.
The building's vacancy rate, not including sublease space, hit 21.8% during the third quarter last year, compared to 9.6% during the same period in 2004, shortly after Sears Tower's current owners bought the building, according to real estate research firm CoStar Group. But in recent months, the vacancy rate has fallen to 17.7%, thanks in part to expansions by key tenants.
And in January, a growing Chicago law firm, Segal McCambridge Singer & Mahoney Ltd., agreed to take nearly 64,000 square feet in a move to Sears Tower, the largest new tenant in the building since the Sept. 11 attacks, when anxiety about terrorism hurt the trophy tower's leasing prospects. While the Sears Tower's owners have hailed that lease, several prominent tenants have recently agreed to move out, such as GTCR Golder Rauner LLC. The private-equity firm's current lease expires in 2010, when another tenant, Citigroup Inc., also plans to move its offices in Sears Tower to another building.
GTCR has about 33,000 square feet at Sears Tower, while Citigroup has about 102,300 square feet.
Copyright © 2007, Crain's Chicago Business
By Thomas A. Corfman
Sears Tower's owners on Wednesday completed the refinancing of the 110-story skyscraper, closing on a $780-million loan from Swiss banking giant UBS A.G., sources say.
The ownership group received a loan commitment in May from the commercial mortgage arm of UBS, and locked in a 6.26% interest rate in early October.
The loan closing was expected last month but was extended. The 10-year UBS loan replaces an $825-million, floating-rate loan from Bank of America that was used to finance the purchase of the massive structure in 2004 by a group that includes New York investors Joseph Chetrit and Joseph Moinian and Skokie-based American Landmark Properties Ltd.
In addition to the UBS loan, Sears Tower's owners have also been seeking an additional equity partner or mezzanine lender; the status of those attempts could not be immediately determined. A Sears Tower spokesman declines to comment.
Efforts to refinance the 3.8-million-square-foot tower were made more complicated in late September, when Standard & Poor's slightly lowered its rating on the building's Bank of America loan. The New York-based credit rating agency cited a 20% decline in net operating income (NOI) from the date of the loan through the end of 2005. S&P's calculation was based on a 2004 NOI of $73.9 million.
Nonetheless, Sears Tower was appraised at $1.2 billion as a part of the loan application process, according to a report Thursday in the Wall St. Journal that noted the new loan had closed.
Copyright © 2007, National Public Radio
By David Schaper ("All Things Considered")
The tallest U.S. building has gained its biggest new tenant since the attacks of Sept. 11, 2001, as a Chicago law firm signs a new 11-year lease. The Sears Tower has been losing tenants, and its vacancy rate has shot above 20 percent in the wake of the attacks, because many saw it as the most likely landmark terrorists would hit in Chicago.
Copyright © 2006, Sun-Times News Group
A WXFT Channel 60 electrical television transmitter reportedly malfunctioned and caused a fire on the Sears Tower's 101st floor early Wednesday.
The Chicago Fire Department called a still-and-box alarm at 2:12 a.m. for a "small" fire on the 101st floor of the Sears Tower, 233 S. Wacker Drive, according to fire media affairs spokesman Richard Rosado.
A still-and-box alarm automatically sends to the scene four fire engines, two fire trucks, one tower ladder, three battalion chiefs, one deputy district chief, one squad company, one command van and one ambulance.
The fire, which was mostly smoke, was contained by 2:30 a.m., fire media affairs director Larry Langford said.
The fire started in a closet when a 100,000-watt WXFT Channel 60 television transmitter malfunctioned, Langford.
"Electrical components in the closet were burning, which caused a lot of smoke," Langford said.
The fire did not generate enough heat to activate the building's fire alarms or sprinklers, but the fire produced enough smoke to activate the building's smoke detectors.
"A lot of smoke was pouring out of the cabinet when crews arrived," Langford said. "It was more smoke than anything else."
Responding firefighters initially believed a row of cabinets were on fire, but soon realized it was the transmitter inside the cabinets that was burning, according to Langford, who said one hose was used to extinguish the fire.
The transmitter was disintegrated after the blaze and was "all fried up inside," Langford said.
An EMS Plan 1 was called for precaution and was secured at 2:52 a.m., Langford said.
Nobody was evacuated or injured in the fire, Rosado said.
Firefighters were still on the scene at 3:15 a.m. ventilating and cleaning up water used to spray the equipment, Langford said.
The smoke did not get into the building's ventilation system and did not spread to other floors, Langford said.
Copyright © 2006, Chicago Tribune
A fire broke out this morning in a television transmitter on the 101st floor of the Sears Tower in downtown Chicago, filling the floor with acrid smoke but causing no injuries, a fire department official said.
The fire was reported at 1:47 a.m. at the landmark 110-story tower, 233 S. Wacker Dr., and crews who responded called for an elevated alarm and five ambulances to the scene as a precaution, Chicago Fire Department spokesman Larry Langford said.
Flames broke out in a malfunctioning 100-kilowatt television transmitter serving Channel 60, Langford said.
"The components apparently broke down and caused a fire. There were not a lot of flames but it did send a lot of smoke through the floor," Langford said. "It's a piercing smoke and we're ventilating with portable fans."
Langford said the floor is a machine level that houses mostly transmitters that connect to rooftop antennae. There are no offices or residences on the floor, and no injuries or evacuations were reported, he said.
Crews remained on the scene until about 4 a.m. making sure the smoke had completely dissipated, he said.
Channel 60 is licensed to WXFT, a Spanish-language broadcast station based in Aurora and owned by Univision. No one answered phone calls to the station this morning.
Copyright © 2006, Crain's Chicago Business
By Thomas A. Corfman
In another sign of turmoil at Sears Tower, CB Richard Ellis Inc. and the investment group that owns the 110-story structure have "mutually agreed to end" the real estate firm's contract for leasing and management after three years, the two firms announced Tuesday.
CB Richard Ellis and Sears Tower's ownership group have had a sometimes tempestuous relationship since 2004, when the prominent skyscraper was acquired by a group that includes Skokie-based American Landmark Properties Ltd. and New York investors Joseph Chetrit and Joseph Moinian.
The owners have often expressed dissatisfaction at CB's leasing efforts, while CB has at times been frustrated by the owners' slow-moving decisionmaking and abrupt about-faces in the midst of lease negotiations.
For example, in 2004, shortly after buying the building, the new owners rejected a deal to renew the lease of a key tenant, law firm Schiff Hardin LLP, that had been endorsed by the prominent skyscraper's former owner, MetLife Inc.
Schiff Hardin later renewed its lease. Last year, Sears Tower's owners came close to a reaching an agreement with CDW Corp. But after bitter negotiations, CDW opted to expand and consolidate its downtown offices at 120 S. Riverside Plaza, taking about 240,000 square feet of space.
In September, the once-popular restaurants on the tower's second floor were unexpectedly closed, seven months after they were taken over by food-service giant Sodexho USA from longtime operator Levy Restaurants Inc.
"Our ownership group and the CB Richard Ellis team have worked well together to lease and manage the building," John Huston, executive vice-president with American Landmark, says in a joint statement.
Citing the pending merger between CB's parent company and Trammell Crow Co., Barbara Carley, managing director of asset services for CB, says in the statement, "We feel this is the appropriate time to re-deploy our Sears Tower talent and resources elsewhere in our portfolio."
Replacement firms are already being interviewed, according to the statement. The change comes as the building faces a new round of leasing challenges.
The vacancy rate in the building shot up to nearly 22% in the third quarter, compared to about 12% during the prior period, according to real estate research firm CoStar Group Inc., largely because of the expiration of leases of tenants who left the building in the wake of Sept. 11.
Massive refi gives owners breathing room as rental income sinks
Copyright © 2006, Crain's Chicago Business
By Thomas A. Corfman
Swiss banking giant UBS A.G. is rescuing Sears Tower with a new, $780-million loan at 6.26% -- about the same as your typical home mortgage, according to sources close to the transaction.
The massive loan arrives as the iconic skyscraper's annual net operating income (NOI) has tumbled 20%, to about $59 million, because of the downturn in the office market and a hangover from the 2001 terrorist attacks.
Such a decline might otherwise spell disaster. But instead, Sears Tower is a high-profile example of how a plentiful supply of cheap mortgage money has allowed landlords to survive falling rents and rising vacancies, and flourish when it comes time to sell.
Sears Tower's owners, a group that includes New York investors Joseph Chetrit and Joseph Moinian as well as Skokie-based American Landmark Properties Ltd., gambled on short-term interest rates -- and won -- when they used $825 million in mostly floating-rate debt to acquire the 110-story skyscraper in April 2004. But this year, with short-term rates rising above long-term rates, they have been under pressure to refinance the massive debt.
That effort has been complicated by a drop in NOI, which does not include debt payments, taxes or certain other expenses. On Sept. 27, New York-based credit rating agency Standard & Poor's slightly lowered its rating on the building's existing debt, sponsored by Bank of America. The New York-based credit rating agency cited a 20% decline in NOI from the date of the loan through the end of 2005. S&P's calculation was based on a 2004 NOI of $73.9 million, a source says.
Nonetheless, during the first week in October, when benchmark long-term rates dipped to their lowest level since the spring, the Sears Tower's owners locked in the UBS loan, which has been pending for months, sources say.
"Intuitively, it seems cheap," says Michael Kavanau, senior managing director with real estate firm Holliday Fenoglio Fowler L.P., which isn't involved in the transaction. "But you never get your absolute best pricing if, at the same time, the existing loan gets downgraded."
The 10-year loan is expected to close later this year, says John Huston, executive vice-president with American Landmark. "This shows how the investment community has confidence in Sears Tower," he says in a written answer to questions.
An offering memorandum circulated to potential investors and lenders earlier this year provides a rare, inside glimpse into the finances of the nation's tallest building. Additional financial information was gleaned from credit rating reports.
Mr. Huston says the NOI drop is "substantially less than 20%," but is "something we've anticipated." The offering memorandum does not disclose historical income figures, but says "in-place" NOI is $64.7 million.
In the last two years, Sears Tower has leased 700,000 square feet, more than a third of that being occupied by new tenants or existing tenants expanding their space, Mr. Huston says. But he acknowledges that Sears Tower is feeling the effects of a marketwide rolldown in rents, as leases signed when the market was tight begin to expire.
The new loan from UBS puts the 3.8-million-square-foot tower on a firmer financial foundation. But challenges remain.
The ownership group is still looking to replace about $45 million in high-interest mezzanine debt, with either a lower-interest loan or a fresh equity investment. The UBS loan isn't contingent on that deal, yet replacing that mezzanine loan is key to a proposed Disneyesque redevelopment of the Skydeck (Crain's, Aug. 14).
Last month, the once-popular restaurants on the tower's second floor were unexpectedly closed, seven months after they were taken over by food-service giant Sodexho USA from longtime operator Levy Restaurants Inc. The tower's ownership group had expected to receive a $500,000 annual boost in revenue under the Sodexho deal, the offering memorandum says. Reopening the restaurants is "a top priority," says a spokesman for the building.
Meanwhile, the vacancy rate in the building shot up to nearly 22% in the third quarter, compared to about 12% during the prior period, largely because of the expiration of leases of tenants who left the building in the wake of Sept. 11, according to real estate research firm CoStar Group Inc.
"The question for a structured finance provider on Sears Tower is, ‘Do you want to bet they are going to be able to lease up that building, given the challenges,' " says Bruce Cohen, CEO of Chicago real estate investment firm Wrightwood Capital LLC.
Copyright © 2006, Chicago Tribune
By Susan Diesenhouse
As the Sears Tower, the nation's tallest skyscraper, grapples with leasing its available space, the credit rating on its $600 million mortgage was downgraded on Tuesday.
Ratings agency Standard & Poor's downgraded the bonds backed by the building's mortgage loan issued by Bank of America in April 2004. The tower's credit rating has fallen as its financial performance has declined since 2004, said John Kemp, a director at S&P. Some blame lingering concerns after the Sept. 11, 2001, attacks, while others point to the difficulty the building is having as an older property competing with new buildings.
While property credit ratings can change from time to time, this case stands out.
"It's a notable asset," Kemp said of the 110-story skyscraper. It is also unique because of "the size of the loan, the size of the property and its location in downtown Chicago."
"The building has been underoccupied and the rents being garnered are a few dollars below the market," Kemp said in an interview. Rent discounts and other landlord concessions have eased recently but, added Kemp, "Concessions are still being offered."
With about 3.8 million square feet of rentable space, approximately 21.3 percent is available for lease, according to CoStar Group Inc., a real estate research firm. Such a vacancy rate is substantial in the downtown market.The eight classes of bonds for Sears Tower were downgraded to levels ranging from A+ to BB, S&P stated. Five classes are in the BBB+ to BB range.
The downgrading does not, however, indicate that the tower's mortgage loan is in default at this time. But a lesser credit rating could lead to more onerous terms should Sears Tower owners refinance the property as they told S&P they intend to do, Kemp said.
Two years ago a group of New York entrepreneurs including Joseph Chetrit and Jeffrey Feil purchased the building for $835 million. Another group member, John Huston, said Wednesday in a written statement that Sears Tower is suffering like other existing office buildings in the West Loop.
"An increased supply of space from newly constructed office buildings and sagging demand have contributed to tougher leasing conditions," he wrote.
Huston, who stated his confidence in the property as an investment, added, "Rising interest rates have also increased mortgage debt costs for the building."
In some ways the landmark structure may well be suffering from its own notoriety as an American icon in the wake of the 2001 attacks.
"More than any other building in the city, 9/11 had an impact on the tower and the public's perception of it, and since then it's struggled to attract new tenants," said Earl Webb, chief executive officer of capital markets at Jones Lang LaSalle Inc.
While Sears Tower has attracted some new tenants and some existing ones have increased their space, discounted rents probably mean "the cash flow is less than the lender had projected when it extended the loan," said Webb.
While it's known in the real estate community here that Sears' owners have been seeking refinancing on their mortgage loan, this credit downgrade would typically mean that if they secure additional funds, "they'll have to pay more," said Webb, who views the S&P move as an "adjustment," not a "collapse."
The property, built in 1973, was renovated 20 years later and has other upgrades under way but is old. It is apparently having a difficult time competing with the new office buildings still opening in a downtown where about 16 percent of the space is available for lease or sublease and rents are still weak. It isn't easy for the Sears Tower to lure the 100,000-square-foot-plus tenants.
As Harvey Camins, president and chief executive of the brokerage Camins Tomasz Kritt, said, "It is an older building and prime prospects for larger space are opting for newer buildings with more modern systems."
Copyright © 2006, Crain's Chicago Business
By Thomas A. Corfman
Trizec Properties Inc. plans to sell the Sears Tower parking garage to a Chicago company for about $67 million, according to sources familiar with the transaction.
The parking garage is the last local asset to be sold off as part of the complicated buyout of Trizec, a Chicago real estate investment trust.
Chicago-based parking garage company InterPark Holdings Inc. has agreed to buy the 1,010-space garage, at 211 W. Adams St., just east of the 110-story Sears Tower, according to the sources.
The planned sale comes after as Trizec is about to close on a deal announced June 5 to sell itself to a joint venture of New York investment bank Blackstone Group and Toronto-based Brookfield Properties Corp.
As a part of that $8.9-billion transaction, Blackstone is separately buying a third of Trizec's 36-million-square-foot national office portfolio in several cities such as Atlanta and Dallas, as well as Chicago.
Blackstone, working with Trizec, has already agreed to sell Trizec's 2.4-million-square-foot Chicago office portfolio to Boston-based Beacon Capital Partners in a roughly $500-million deal. Those buildings are 2 N. LaSalle St., 10 and 120 S. Riverside Plaza and 550 W. Washington St.
Representatives of Trizec, Blackstone and real estate firm Holliday Fenoglio Fowler L.P., which is handling the sales, decline to comment.
The separate asset sales to Blackstone are expected to close at about the same time as the larger transaction, which is now expected to be completed early next month.
In late 1997, a predecessor to Trizec paid $110 million for a controlling interest in both Sears Tower, 233 S. Wacker Drive, and the garage, which at the time was valued at $40 million.
Six years later, Trizec surrendered control of the skyscraper to the lender, MetLife Inc., receiving $9 million but keeping ownership of the parking structure.
An executive with Chicago-based InterPark could not be reached for comment. The company, a unit of GE Real Estate, has extensive holdings in this market, including a 650-car garage at 181 N. Clark St., which it acquired in January for $48 million.
Tourist Destination Seeking A New Look
Copyright © 2006, CBS Broadcsting Inc.
By Jon Duncanson, Reporting
The Sears Tower Skydeck is about to get a makeover.
CBS 2's Jon Duncanson reports the tower is turning to former Disney employees to jazz up the tourist experience.
Crain's Chicago Business reports the Sears Tower has hired a design firm with connections to the Walt Disney Company.
"I think it's part of an effort to improve the building's over all image," said Crain's Chicago Business editor Joe Cahill.
Crain's also lists a special effects theater, a tour of the buildings inner workings, and man-made clouds swirling around the feet of those sky-high gawkers.
The tower's owners are hoping the additions will bring tourists in, lend prestige to building's business tenants, and generate about $20 million dollars annually to the bottom line.
New Design May Bring Hike In Ticket Prices
Copyright © 2006, NBC Universal Inc.
The Sears Tower Skydeck may be about to undergo a major makeover, according to a report on the Web site of Crain's Chicago Business.
A firm founded by a Walt Disney Co. veteran is designing several new attractions, including a glass elevator ride with light effects and a multimedia theater, according to the report.
The theater is slated to include an exhilarating bit of trickery that peeks over the edge of the top of the building, looking down. The redesign would also include a tour of the building's mechanics.
Officials hope the redo will boost revenue, in part from a hike in ticket prices, the report stated.
The company, BRC Imagination Arts, also designed the Abraham Lincoln Presidential Library and Museum in Springfield. Its clients include Disney.
Copyright © 2006, Crain's Chicago Business
By Christina Le Beau
John Hlava, a Sears Tower security official, mans his post at the building's command center.
There's no question Sept. 11 changed the Sears Tower. Security officers are everywhere. Large planters outside are clearly more for protection than decoration. And the 25,000 people who work in and visit the nation's tallest building every day can't enter or leave without being watched, recorded and possibly searched.
Management, meanwhile, has grown accustomed to fielding inquiries about alleged terrorist plots like the one uncovered in Miami in June.
"We don't have terrorism threats every day," says Barbara Carley, managing director of the Sears Tower, which has been managed by CB Richard Ellis Inc. of Los Angeles since 2004. "We do have incidents every day."
Sometimes that's a suspicious person. Other times it's as benign as a visitor getting his fingers caught in an elevator. "There are a lot of things that happen in a building of this size," Ms. Carley says, "and we do talk to the police on a daily basis."
Perhaps because the Sears Tower is such an icon, the 110-story building is one of the most protected properties outside of Washington, D.C.
Trizec Properties Inc., the Chicago real estate investment trust that previously owned and managed the Sears Tower , took a hard look at security immediately after the Sept. 11 terrorist attacks. Major changes included beefing up the security staff — it now numbers about 75, including off-duty Chicago police officers on each day shift — and installing metal detectors, X-ray machines and keycard turnstiles in the lobby. Management also increased the number of security cameras and upgraded many of them from analog to digital.
The Skydeck on the 103rd floor was considered particularly vulnerable, because the structural mass of the tower is thinnest at the top, meaning an explosion there could cause the rest of the building to collapse, as happened with the World Trade Center. So metal detectors and X-ray machines were added there as well. New restrictions and protocols were put in place for the garage and loading docks, too, including explosives detection. Phones and speakers were installed throughout stairwells.
John Risley is deputy superintendent for the Bureau of Strategic Deployment within the Chicago Police Department, which along with the fire department and other agencies conducts periodic threat assessments of the building. He says the Sears Tower now is "one of the safest buildings in the country."
Since CB Richard Ellis took over two years ago, it has moved X-ray machines to the side and relocated metal detectors from the entrances to the elevator banks, so now only visitors are screened.
"We tried to strike the appropriate balance so there's no change in the safety, just in what it looks like and how easy it is for tenants to get through," Ms. Carley says. "Security is going to continue to be a living and breathing area where we look at what's going on and make adjustments. Not just events that develop, but new technologies."
Can't Prevent Everything
CB Richard Ellis also installed an online visitor-registration system (which also lets tenants block someone, like a disgruntled ex-employee) and hired a full-time fire and life safety manager who coordinates tenant fire drills, brings in speakers and provides free tenant training in CPR and other first aid.
Norris Beren, executive director of the Emergency Preparedness Institute Inc., a Mount Prospect company that does preparedness training, describes a recent visit to the building as offering "more scrutiny than airport security."
He likes that visitor information is recorded, not only because it lets security screen potential troublemakers, but also because it generates a list of who's inside at a given time, which could be helpful in a rescue effort.
Even so, some worry it's not enough. "The people at Sears told me that they could not stop a suicide bomber who walked up to the front entrance of the building," says Matthew Lippman, a terrorism expert and professor of criminal justice at the University of Illinois at Chicago. "A sufficiently powerful explosive from the street would result in significant damage."
Copyright © 2006, Crain's Chicago Business
By Thomas A. Corfman
Sears Tower, whose occupancy level has been slowly rebounding after the September 2001 terrorist attacks, faces new challenges attracting tenants after the disclosure of an alleged plot to attack several office buildings in the U.S., including the 110-story skyscraper.
Federal, state and local authorities said again Friday that the Sears Tower was never in any danger because the seven suspects, who were indicted by a federal grand jury in Miami, lacked the ability to carry out their plans.
But downtown office brokers are already assessing any damage to Sears Tower's image.
"After Sept. 11, there were a number of companies that wouldn't even consider Sears Tower, and this is going to reinforce some of their thinking," says Christopher Wood, managing principal in the Chicago office of tenant rep CRESA partners LLC. "It's a real shame."
The recent leasing success at Sears Tower is partly because the building's owners, which include New York real estate investor Joseph Chetrit, have cut rents amid the widespread slump in the office market, Wood says.
But any anxiety about an attack on Sears Tower may be short-lived because of the alleged plot's scant chance of success, says tenant rep Peter Livaditis, a principal in the Chicago office of real estate firm Trammell Crow Co.
Sears Tower is "a great asset … that offers a lot of value in today's market place," he says. Sears Tower executives also predict that prospective tenants won't be discouraged
"There are several deals looking at Sears Tower, and I don't any of that has changed because of what happened yesterday," says Barbara Carley, managing director of asset services at real estate firm CB Richard Ellis Inc., Sears Tower's manager.
"I don't think anybody should be any more concerned about terrorism at the Sears Tower than they are at any other building. Who would have picked Oklahoma City?" she adds, referring to the 1995 bombing of the Alfred P. Murrah Federal Building, which killed 168 people.
In the largest new tenant deal to be signed at Sears Tower since 2001, year, the Chicago Metropolitan Agency for Planning last year signed a lease for 50,000 square feet of space.
Randall S. Blankenhorn, the agency's executive director, praises the building's security, but adds: "These are steps that other buildings certainly might take, but at Sears, they aren't optional.
Sears Tower is owned by an investment group that includes Mr. Chetrit, Joseph Moinian, another New York investor, and Skokie-based American Landmark Properties Ltd. The group paid $840 million for the prominent skyscraper in 2004.
As anxiety about a possible terrorist attack has waned, Sears Tower's vacancy rate, including sublease space, has fallen to a current level of 17 percent, from a high 25.1 percent during the second quarter 2005, according to real estate research firm CoStar Group Inc. In second quarter 2001, the vacancy rate was just 5.1 percent for the 3.8-million-square-foot structure.
Copyright © 2005, Crain's Chicago Business
By Gregory Meyer
Tom Keaty's job entails lighting the highest Christmas ornament in Chicago
They are the two TV masts on the 1,450-foot-tall roof of the Sears Tower. Ordinarily white, they now glow red and green.
Illuminating them is no easy task, says Mr. Keaty, the director of operations for the nation's tallest building. A team of workers climbs out on a late fall day to slide colored discs over two dozen 1,500 Watt lamps ringing the roof of the skyscraper.
Even worse is the cold of early January, when the holiday tint comes off.
But it's all in a day's work for Mr. Keaty, 50, who says colorizing the twin antennas has happened more and more frequently over the years. Around St. Patrick's Day they glow green. And in October the workers clamber onto the roof to install pink discs, in recognition of National Breast Cancer Awareness Month.
"I've got to be honest with you: in the last year, it seems like it's always in color," says Mr. Ke
Lighting up the masts even has a revenue-generating aspect for the building, if a small one. Starting at $10,000, tower management will use the color schemes of selected private or commercial groups.
Topping the Sears Tower with festive lights dates to about 1995, when Mr. Keaty's former employer, John Buck Co., was still managing the building. Chicago's first high-rise ornamental lighting was on the diamond-shaped roof of 150 N. Michigan Ave., now known as the Smurfit-Stone Building, after by U.S. Equities Realty took over management duties in 1987.
In earlier years, Mr. Keaty says the Sears and the Hancock Center used to informally compete to see who would flip on the Christmas lights first.
The Hancock has what it calls the "Crown of Lights" on the 99th floor, a horizontal band of fluorescent bulbs that serve as a beacon for homebound airplane passengers on their way to O'Hare. They too glow red and green this time of year
John Kapp, the Hancock's general manager, says his holiday lights date to 1992. He notes that the Sears' beams are "up lighting," not a horizontal ring. "Quite honestly, ours is a little more prominent," he says
Both buildings switch off their night lights in the spring and fall to avoid confusing birds in migration, the managers say. The Sears Tower also chose to snuff out its antenna lights when the Chicago White Sox made it to the World Series.
An odd way to celebrate? Well, consider the predicament Mr. Keaty says he was in. There was nothing special about white, the regular color of the TV mast lights. But the team uniform's trim is black, and dark color filters "just didn't have the punch," he says. So, "After 11 o'clock, we turned them .
Copyright © 2004, The Wall Street Journal
Two investors who are part of Larry Silverstein's group that owns the World Trade Center lease are among the buyers of the Sears Tower, which MetLife Inc. agreed to sell Thursday for more than $800 million, according to people familiar with the situation.
Lloyd Goldman and Joseph Cayre, New York investors who are among Mr. Silverstein's backers in the Trade Center, are part of a group that agreed to buy the Chicago landmark, these people said. Another New York investor, Jeffrey Feil, was also a participant in the Sears Tower deal, the people said. Names of the other investors couldn't be learned.
MetLife announced the agreement Thursday, but declined to disclose the buyer or the terms, citing a confidentiality agreement. While the insurance company, based in New York, had previously announced its intention to sell the tower, the speed of the deal and the relatively high price caught the real-estate industry off-guard.
MetLife said it would realize an after-tax gain of $90 million on the deal.
Messrs. Goldman and Carye couldn't be reached. Attempts to reach Mr. Feil were unsuccessful. The names of the three investors were reported Thursday on the Slatin Report, a Web newsletter.
Mr. Goldman led a group including Mr. Cayre that put up most of the $125 million of the equity that Mr. Silverstein, a New York developer, used to buy the 99-year office lease on the Trade Center office portion from the Port Authority of New York and New Jersey. The deal, valued at $3.2 billion, including the Trade Center's retail mall, closed in July 2001, weeks before the September terror attacks that destroyed the complex.
Last month, The Wall Street Journal reported that the Port Authority in December had quietly agreed to return all of the $125 million in equity that Mr. Silverstein and his low-profile group originally invested to buy the leases. The full details of that transaction haven't been released to the public. But the deal effectively eliminated the Silverstein group's capital risk in the project, while allowing the group to retain control of 10 million square feet of office space. The Port Authority has rejected a Wall Street Journal request to review the transaction, citing Mr. Silverstein's ongoing lawsuit against his insurers, led by Swiss Reinsurance Co., over how many claims may be collected as a result of the attacks.
Copyright © 2003, Crain's Chicago Business
By Alby Gallun
The new owner of the Sears Tower has had preliminary discussions with real estate brokers to explore its options regarding the 110-story office tower, including a possible sale, sources said.
New York-based insurance company MetLife Inc. and brokers have also considered selling a stake in the building to a joint venture partner or refinancing its debt, among other options, said real estate market sources who asked not to be identified. MetLife took control of the building in August by buying out Trizec Properties Inc.'s interest in the property
Yet it's unclear whether MetLife has decided what to do with the landmark building—the tallest in North America—which has lost several large tenants and seen its market value slide following the Sept. 11, 2001, terrorist attacks.
Chicago-based Trizec, which continues to lease and manage the Sears Tower, has slashed rents in recent months to entice more tenants to stay put (Crain's, Oct. 27). Unicare, a health insurer that leases about 150,000-square-feet in the building, is one tenant that recently decided to extend its lease in the building.
A MetLife spokeswoman declined to comment on whether the company is in discussions to refinance or to sell all or part of the building.
"What you're dealing with is a lot of rumor and we don't comment on rumor."
Copyright © 2003, Crain's Chicago Business
By Kelly Quigley
As expected, Chicago-based Trizec Properties Inc. on Thursday sold its share of the Sears Tower to MetLife Inc. for $9 million, but said it will continue as the skyscraper's building manager and leasing agent under a new contract that takes effect in January.
The much-anticipated deal means Trizec no longer holds the tower's second mortgage, which the company's predecessor TrizecHahn Corp. acquired in 1997 in a transaction valued at $70 million. New York-based MetLife, the largest U.S. life insurer, already holds the first mortgage.
Trizec was scheduled to take full ownership of the 110-story tower this year, a risky transaction that would have added roughly $766 million of mortgage debt to its balance sheet. The firm is selling its stake to avoid defaulting on mortgage payments due in July 2005.
Trizec will have to write off the remaining carrying value—about $23 million—of a second mortgage, according to Merill Lynch & Co. analyst Steve Sakwa (Crain's, July 14). A Trizec spokesman couldn't confirm that amount, but expects it may be lower.
The spokesman said Trizec now earns $2 million to $4 million for managing the tower, but said the new contract will pay slightly less.
The downtown Chicago tower will now be controlled by Metropolitan Insurance and Annuity, a unit of New York-based MetLife.
"It makes us more comfortable with the whole process in terms of having the equity piece and the mortgage piece," said Brian Fox, national marketing director at MetLife's real estate unit. "It allows us more flexibility and operational control."
Trizec said it would retain ownership of the Franklin Garage, a 950-space parking garage located directly across from the Sears Tower.
"Sears Tower is one of the world's premier office buildings," Tim Callahan, Trizec CEO, said in a statement. "The people of Trizec Properties have been proud to be associated with it for the past six years.
Analysts have said Trizec is likely to take a slight hit to earnings as a result of the MetLife transaction. Trizec officials said they still expect 2003 funds from operations (FFO) to be on the higher end of its December 2002 forecast of $1.72 to $1.82 a share.
The firm's FFO, considered a key measure of a real estate investment trust's performance, fell nearly 10%, to $70.5 million, or 47 cents a share, in the second quarter.
Copyright © 2003, Chicago Tribune
By Thomas A. Corfman
Still struggling for tenants nearly two years after the Sept. 11 terrorist attacks, Sears Tower will be handed over to its lender to prevent the skyscraper's owner from defaulting on its massive mortgage, sources close to the deal said Thursday.
Anxiety over a possible terrorist attack on the world's second-tallest building has dramatically reduced the attractiveness of the 110-story tower to some existing tenants and many prospective ones.
As a result, the tower's market value has dropped, and the building now is unlikely to be worth the value of the outstanding loans when they come due, forcing a likely default by owner Trizec Properties Inc.
Chicago-based Trizec plans to transfer ownership of the tower to lender MetLife Inc., the large New York-based life insurance company, sources said. The two sides are expected to announce the deal sometime in August.
MetLife Inc. has praised Trizec's management of the skyscraper during the 22 months since the destruction of New York's World Trade Center. And as part of the building's return, MetLife is expected to retain Trizec as the manager of the 3.7-million-square-foot tower, sources said.
Debt, 9/11 fears shadow landmark
The cloud of 9/11 continues to shadow the tower, located at 233 S. Wacker Drive. Since the attacks, many tenants have talked openly about their fears that the tallest building on Chicago's skyline will become a terrorist target.
"You can completely forget about Sept. 11, but as soon as you go back into that building, you think about it again," said Alain LeCoque, managing principal of the Chicago office of Newmark & Co. Real Estate Inc., which represents tenants looking for office space.
At the same time, continuing softness in the downtown office market has given current and prospective Sears Tower tenants plenty of alternatives that are cheaper and less worrisome.
High-profile companies that plan to move out of the tower include local offices of the Goldman Sachs & Co. investment bank, Fireman's Fund Insurance Co. and Merrill Lynch & Co., which will keep a small office there.
"It's one of the best buildings in the country, but the reality is that after Sept. 11 people look at the building differently," said Michael O'Hanlon, executive vice president of Northbrook-based Grubb & Ellis Co., a real estate firm. "Over time, that perception will change."
But not in time for Trizec, sources said. The building owner's debt, which totals $760 million, including accrued but unpaid interest, comes due July 2, 2005. In a highly leveraged 1997 deal, Trizec paid $70 million to gain control of the tower, subject to MetLife's mortgage.
In November, Trizec wrote down its initial investment in the tower to $23.6 million. Trizec could lose some or all of its investment, depending on its deal with MetLife.
A MetLife spokeswoman declined to comment Thursday. A Trizec spokesman said the firm also would not discuss the status of the talks, adding: "We continue to work with MetLife to reach a resolution that would be good for both parties, and for our tenants."
Sears Tower is generating enough cash to keep Trizec current with its mortgage payments. Many of the tenants, including some that are leaving, have long-term leases. The building was 89.2 percent leased in the first quarter.
Trizec's problems also reflect its decision to buy the tower with a large amount of debt, or leverage. "Any real estate that you buy with 90 percent leverage, if the market goes up, you're a big winner," said analyst Jim Sullivan of California-based Green Street Advisors Inc., who has pressed Trizec to surrender the tower. "And if the market goes down, you get wiped out pretty quickly."
The nationwide downturn in the office market has hurt Trizec more than many office-building companies because of the Chicago firm's high debt level, about 65 percent of total company value. As a result, Trizec investors are likely to be pleased with the return of the tower.
Handing back the well-known tower would be a setback for Timothy Callahan, who became Trizec's chief executive in August and who has been trying to guide the company toward a revival. Callahan had hoped to persuade MetLife to restructure the loan, which charges interest at rates above current levels.
Trizec had threatened to walk away from the tower, betting that the conservative life insurance company would readily renegotiate the debt rather than take title to the tower, given its uncertain value. But MetLife executives are said to have been unmoved.
Nonetheless, the negotiations have been cordial, as shown by the likelihood that Trizec will continue to manage the building. Earlier this year, Trizec said its annual Sears Tower management fees and leasing commission would range from $2 million to $4 million.
The decision to give up Sears Tower also will be a test of Callahan's leadership. Several top Trizec executives believe the massive building would regain its value before the debt came due. And many Trizec employees who work in the tower have become emotionally attached to the skyscraper since the terrorist attacks.
Though Callahan shared that sentiment, his decision to hand back the building reflects a more dispassionate view of the trophy tower. At a June 4 conference with investors, he hinted at Though Callahan shared that sentiment, his decision to hand back the building reflects a more dispassionate view of the trophy tower. At a June 4 conference with investors, he hinted at the outcome of the talks with MetLife.
"For us, fundamentally, it comes down to [do] we believe that over time Sears can regain the value it once had?" he said, according to a transcript of the conversation. "It certainly has been hurt as much as any asset that I'm aware of in regards to post-9/11."
Copyright © 2003, Associated Press
The arrest of 14 undocumented immigrants working at the Sears Tower has immigrant-rights advocates calling for an end to a federal anti-terrorism operation.
The arrests a the nation's tallest building were part of an ongoing investigation into the employment of illegal immigrants at potential terrorist targets. Those arrested have been charged with immigration violations and face possible deportation.
Matthew Albence, action director of the Bureau of Immigration and Customs Enforcement, said Wednesday that the agency plans to conduct similar sweeps at other potential targets.
"The people happen to be employed in a location susceptible to a terrorism attack," Albence said. "It's our responsibility to ensure the people employed within these buildings are who they say they are."
Members of the immigrant rights group Pueblo Sin Fronteras called for an end to the investigations during a news conference Wednesday.
The group's president, Emma Lozano, said the sweeps have disrupted the lives of hard-working people with no connection to terrorism.
"None of those arrested has shown even a remote connection to terrorism," she said.
Copyright © 2002, Associated Press
By Don Babwin
Ever since terrorists crashed commercial jets into the World Trade Center on Sept. 11, Angela McKeel's mother has worried about her daughter going off to work every day in the Sears Tower.
"I still get, 'What the hell are you still doing up there?"' said McKeel, who works in a law firm about two-thirds up the 110-story tower. "She wants me to leave."
It's a small story, told with a smile by someone who has no intention of following her mother's advice.
But it also helps illustrate what happened at the nation's tallest building when two skyscrapers a thousand miles away suddenly vanished from the skyline they once dominated.
The Sears Tower turns into a city of 10,000 "residents" every morning-- the number helping to answer the question about whether companies and workers would flee to lower profile locations in the wake of the attacks.
And with a lease rate-- 94.5 percent-- that's about the same as it was before the attacks, the tower "continues to be one of America's premier office buildings," said Stephen Budorick, senior vice president of Trizec Properties Inc., which manages the tower.
At the same time, though, life at the tower has irrevocably changed. From the concrete barrier ringing its perimeter, to bomb sniffing dogs prowling the loading dock to the airport-like security in the lobby, it's clear that life there is different than it was before that morning a year ago.
Inside, workers say there's not much talk any more about the attacks, but fears that had them keeping a close eye on passing planes in the days after the attacks have not totally disappeared either.
"There's still some nervousness," said Tom Wrona, who works in a law firm on the 63rd floor. "But I think you've got to live your life."
That nervousness is, at least for now, shared by tenants and would-be tenants.
Last month, for example, the Chicago Tribune called Merrill Lynch & Co.'s announced move of most of its offices out of the tower "a major blow to the skyscraper's owner, which has scrambled since Sept. 11 to keep tenants amid worries about terrorist attack and the hassle of additional security procedures."
A spokeswoman for the New York-based investment firm wouldn't discuss the reasons for the move and declined to say whether the attacks factored into the decision to move.
Budorick acknowledged that the planned move of another company, General Reinsurance Corp., out of the tower in favor of 35,000 square feet of space in a nearby building was directly tied to the attacks. "They made a decision after Sept. 11 they would not do business in premier office buildings," he said.
The few moves from the building tell only part of the story, said Michael Conway, president of Officedirectory.com, which helps find offices for companies and tenants for buildings. He said the sublease space-- areas in the tower companies are leasing but no longer need and want to lease themselves-- is growing.
He said the occupancy rate has dropped from 95.3 percent shortly after the attacks to about 86 percent in mid-August. "Our numbers show there's 269,000 square feet of sublease space available," he said. "So an average suburban office building is vacant in the Sears Tower."
To be sure, the struggling economy that has prompted companies to layoff employees and require less space has hurt other office buildings in the city and around the country. The occupancy rate in other so-called Class A buildings in downtown Chicago is slightly lower than the tower, said Conway.
The difference, said Conway is that the tower's occupancy rate has fallen about 9 percent since the attacks and other Class A buildings in the area have fallen about 1 percent.
Budorick says that in time more companies will choose the Sears Tower-- just as more people took in the view of the city from the Skydeck on July 5 than any single day in at least five years.
"Through the end of the year (2001) there was very little chance they would pick the Sears Tower," he said. "With each quarter, interest in the building increases."
Copyright © 2001, Cable News Network LP
The viewing deck atop Chicago's Sears Tower is reopening to the public Monday for the first time since the September 11 terrorist attacks.
Former President George Bush joined Chicago Mayor Richard Daley and other dignitaries at a news conference announcing the reopening of the tallest skyscraper in the United States.
"By reopening this symbol of strength and vitality in America's heartland, you're sending a clear message that the terrorists have failed in one of their objectives," Bush said.
"They thought they could strike fear in our hearts, and for a while, maybe they were successful. No longer."
The Skydeck at the 27-year-old, 110-story building is one of the top tourist attractions in Chicago, drawing 1.3 million annually. It was closed as a precaution while additional security measures were put in place and was scheduled to be reopened Monday afternoon.
Mayor Richard M. Daley called the Sears Tower, which ranks just behind the twin Petronas Towers in Malaysia among the world's tallest, an important part of Chicago history and "a symbol of this great city."
"Now it's time to get things back to normal here and throughout the nation," he said.
Copyright © 2001, Chicago Associated Press
Concrete highway barricades have been installed near doors to the Sears Tower, a move intended to prevent a car from crashing through any of the street-level entrances at the nation's tallest building.
TrizecHahn, the company that co-owns and manages the 110-story building, decided last week to put the barriers in place and they were installed Tuesday night, a spokesman said.
Since the Sept. 11 terrorist attacks, security at the Sears Tower has been heightened. Employees cross lines of blue police barricades to get to work. They also must show identification and pass through a security checkpoint before getting on the elevators.
The barriers reassured some people who work in the tower.
"I think the biggest concern is that somebody drives something in here and has it explode once it gets in," said Chris Kentra, an attorney whose law firm is on the building's 82nd and 83rd floors. "The more safety, the better."
But Julie Welch, a health care consultant who also works in the building, still wonders if it could be a target.
"It's good that they put these up to prevent anything that might be planned, but I don't know if it's going to stop a bad intention. If someone wants to hit it, they'll figure out a way," Welch said today.
The building's observation deck, which has been closed since the attacks, will probably reopen by the end of the month, the spokesman said. When it does, visitors will have to walk through metal detectors and place their bags through X-ray machines similar to those used in airports, the spokesman said.
Those security measures were not in place before the attacks.
Copyright © 2001, Chicago Daily Herald
By David R. Kazak
The FBI Monday dismissed news reports about a thwarted terrorist plot to blow up the Sears Tower as false.
"It's completely unfounded," said FBI Special Agent Ross Rice, reacting to an ABC News report that federal agents found drawings of the Sears Tower in the possession of five men arrested during the government's ongoing terrorist investigation.
"The only aspect of that report that's true is that five people were arrested," Rice said. "But there's no connection between these people and any plot to bomb the Sears Tower."
The five were arrested in Iowa, Chicago and Detroit. Federal documents released last week allege that at least three of the men possessed false documents such as visas and driver's licenses.
Ross' counterpart in the FBI's Detroit office, where the investigation into the five men began, echoed Rice's denial.
"I don't know where it came out that we stopped a plot, because there was nothing to stop," said Special Agent Dawn Clenney.
ABC News spokesman Todd Polkes said late Monday that the network is sticking by its original report, which was reiterated on the evening broadcast "World News Tonight."
"It wouldn't be the first time the FBI has denied one of our reports," Polkes said.
The story, which was picked up by most broadcast news outlets during Monday's morning rush hour, generated unwarranted fear among those working in the nation's tallest building, Ross said.
"The city of Chicago was in a panic today," he said. "I had people calling, workers, all wanting to know if they were in danger."
He called ABC irresponsible for running the story he forcefully labeled false.
Chicagoland Chamber of Commerce President Jerry Roper said the city's business community is still reeling - and reacting - to the Sept. 11 attack, so it's hard to be critical of ABC, even if the story was false.
That's because the public's need for information in "these changed times" is crucial, Roper said.
Still, the media should be a bit more cautious about what it reports, Roper said, noting that Monday's report generated fear not only in the Sears Tower, but at the IBM Building on Wacker Drive and State Street, where he works.
"How many times do we have to go through this before (the media) realizes that Truman really won," Roper said, referring to the famous Chicago Tribune headline from the 1948 presidential elections, in which the newspaper mistakenly reported that President Harry S. Truman's opponent, New York Gov. Thomas E. Dewey, won.
Copyright © 2001, New York Times
By Jodi Wilgoren
Sept. 22 - Ryan Kasprzak, a consultant who works on the 44th floor of the Sears Tower here, is considering a parachute. He found one on the Internet for $130. A reasonable investment, he figured, but how would he break the skyscraper's window to make the jump?
"You need something small and hard -- you can't just throw a chair at it," said Mr. Kasprzak, 26, trying to think rationally about what once was inconceivable. "And if there's only one parachute, are people going to fight over it?"
Plus, he added, "I don't know if we're high enough up that it would open in time."
What once was this city's most prestigious business address has become a hotbed of jittery nerves, as office workers worry that terrorists might strike again. Heightened security had eased anxieties after the 110-story building, the nation's highest, was evacuated and closed on Sept. 11, but worries soared anew after rumors of a hijacked plane heading their way on Thursday led hundreds of employees to flee again.
The observation deck remained shuttered, leaving tourists to peek out of lobby windows on the 67th and 34th floors. Shops and restaurants have been starved for customers. Clients called to cancel meetings. There was a quiet on the upper floors and a feeling of martial law in the mezzanine, where security guards searched briefcases and backpacks, greeting longtime employees by name but still demanding to see photo identification.
Individual companies were putting together emergency response plans, appointing cubicle captains and arranging to assemble in nearby parks for head counts. But for many of the 10,000 people who work in the tower, every morning brings an internal struggle between, as President Bush said, freedom and fear.
"Every day you walk in now and think about how big the Sears Tower is, and imagine two the size of the Sears Tower falling," said Brad Kotler, who works in a law firm on the 60th floor.
Dawn M. Farrell, a stockbroker on Floor 8, said on Friday: "Every day my stomach turns. Yesterday was the first day that I came in and it wasn't the first thing on my mind."
But then, just before lunchtime on Thursday, word spread that a plane out of Milwaukee had been hijacked and was about to crash into the Sears Tower. Ms. Farrell and a colleague, Nancy L. Dombrowski, raced downstairs and outside and into Ms. Dombrowski's car and onto the freeway.
"I'm not sticking around to see if anything happens," Ms. Dombrowski said.
That scare cost Tom Green, a waiter at Mrs. Levy's deli on the tower's second floor, whose daily lunch tips have fallen from about $70 to $20 in two weeks; Thursday, he made $6. The usual 20-minute line had dwindled to nothing. At the white-tableclothed Metropolitan Club on the 67th floor, it was easy to get a table by the window on Friday.
"I'm a fatalist," said Greg Merdinger, a real estate developer nonchalantly reading the newspaper over a bowl of clam chowder at Mrs. Levy's counter. "If something's going to happen, it's going to happen."
The tower's 3.5 million square feet of office space rent for $36 to $46 per foot, and officials say no one has canceled a lease. The annual security budget of $2.8 million is expected to grow by $1.1 million, with about double the number of guards on duty. Food can no longer be delivered to a desk. Taxis cannot idle at the curb.
Thursday's spontaneous evacuation was a test of the new reality. Antonio Bismonte, executive vice president of TrizecHahn, the company that owns the building, said security officials quickly determined it was a hoax and decided not to evacuate; still, police officers and ambulances raced to the scene and searched cars for bombs.
"The way you get confidence back is you have enough false alarms that you become inured to thinking about it," said Mr. Kasprzak, the consultant. "You'll never feel completely safe again."
Copyright © 2001, Reuters Limited
A rumor that apparently originated on Chicago's financial exchanges of another hijacked plane on Thursday sent skittish office workers streaming out of the Sears Tower, the tallest building in the United States.
A spokesman for the downtown Sears Tower said the rumor was utterly false, likening it to a false bomb threat. He said the rumor spread from one of Chicago's trading floors to a brokerage firm in the building, and moved from there.
Chicago police said there was no truth to the rumor.
Some people working in landmark buildings such as the Sears Tower say they have been nervous since last week's air attacks on New York's World Trade Center and the Pentagon near Washington.
"This just shows the anxiety level around here," said Pete Newell, an executive with Salomon Smith Barney, who works on the tower's 85th floor.
"They say it's OK to go back, but what is OK?" asked Diane Sheets, an office worker on the tower's 37th floor.
As word spread through the 110-story tower, hundreds of the building's roughly 10,000 workers congregated on sidewalks outside, some crying....
Copyright © 1999, CBS Worldwide Inc.
Television viewers around the country were treated this morning to something more than the usual traffic copter shots. A man in a red skintight suit was scaling the 1,450-foot Sears tower in Chicago while many of us were still having our first cup of coffee.
Alain Robert, a French daredevil known as "Spiderman", scales skyscrapers as a publicity stunt. He has made it to the top of more than 30 skyscrapers, including New York's Empire State Building.
The spectacle at America's tallest skyscraper ended with success, but the celebration didn't last very long, reports CBS station WBBM-TV in Chicago. Police, who had reached the top via the elevator, were already in place and waiting with handcuffs. Roberts was taken into custody and could face charges. Viewers weren't able to see the drama at the top because cloud cover prevented cameras from catching the moment of victory.
The Sears Tower was the world's tallest from the time it was completed in 1973 until 1996. In '96, the Petronas Twin Towers in Kuala Lampur, Malaysia, was ruled taller at 1,483 feet.
Copyright © 1999, Chicago Tribune
By Abdon M. Pallasch
Several Chicago-area television and radio stations went off the air Sunday morning, a problem attributed to the installation of a new digital antenna on top the Sears Tower by WFLD-Ch. 32.
Between 9:30 and 11 a.m. broadcasts were sporadically disrupted on several stations including WLS-Ch. 7, WMAQ-Ch. 5, WJMK-FM and WXCD-FM.
The interruption occurred as crews installed an antenna to meet a federal deadline for bringing high-definition television, or HDTV, to the Chicago area. The Federal Communications Commission has set a national deadline of May 1 for the four major networks to have their antennas in place.
HDTV promises to bring a new standard of clarity to television pictures.
The 3,000-pound, 30-foot antenna that was installed on the Sears Tower is mounted atop an 80-foot mast.
A helicopter lifted the antenna Sunday morning from the top of the Sears Tower's parking garage, said Greta Brown, a spokeswoman for Andrew Corp., the Orland Park firm that manufactured the antenna. Police closed off a four-block area around the tower.
Despite warnings broadcast ahead of time, an employee taking calls at WMAQ during the blackouts said she fielded about 100 calls from viewers.
Whether all stations will eventually transmit HDTV from the Sears Tower isn't clear. A consortium of stations is considering other locations for HDTV transmitters.
By May, viewers in 30 percent of U.S. homes will be able to receive a digital signal from at least one station in their market. By the end of 1999, that number will increase to 50 percent of households.
Some HDTV programming will be available from satellite services as well.
Amoco Building Could Be Next
Copyright © 1998, Chicago Tribune
By J. Linn Allen
To Casey Wold, the Sears Tower is as good as Santa Claus.
Not that he means to give away office space there like Christmas presents. He's talking about the name recognition.
"It's like Santa Claus, North Pole," Wold said. "You don't need an address for mail to get there."
Wold is president of Chicago-based TrizecHahn Office Properties, the office division of TrizecHahn Corp. of Toronto, which late last year acquired the Western Hemisphere's tallest building for $70 million in cash and $734 million in debt.
While not seen as such at the time, the acquisition of the Chicago icon was evidently a signal that the giant Canadian property company would be raising its profile here.
TrizecHahn is working on selling its retail properties, which would leave the Chicago-centered office company as its main operating arm, and it is hot for more snazzy purchases here.
One is the 80-story Amoco Building, which Amoco Corp. has put on the market hoping to bring in $500 million or more. Another is probably the 45-story, 915,000-square-foot Madison Plaza Building at 200 W. Madison St.
Madison Plaza, built in 1982 and headquarters for Hyatt Corp., is being quietly marketed for its owners, a partnership including insurer Equitable Cos., an IBM Corp. pension fund and a Japanese financial group, and could bring up to $200 million.
TrizecHahn hopes its retail portfolio, which includes 25 major shopping malls, will bring up to $2.5 billion, and a lot of that war chest is likely to go for acquiring more major office buildings in the United States, Canada and possibly overseas, with Chicago the pivot point for the whole operation.
"Chicago is the best central location for an office company. And I wanted to be here," said Wold, a sociable, energetic 40-year-old native of Glenview. He became head of the office property division in 1995 and presides over a 30-member staff at the Chicago headquarters at 500 W. Madison St.
Including recent acquisitions not yet closed, the company has a portfolio of some 70 office buildings in North America encompassing about 50 million square feet of space, making it the second-largest publicly traded owner and operator of office properties in the nation. Some 9 million square feet have been bought in the last few months alone, and Wold said the company intends to keep up the pace.
Among the notable office properties are the Renaissance Tower and the Bank One Center in Dallas and the Grace Building and the World Apparel Center in New York.
The nation's largest office property owner is Chicago financier Sam Zell's Equity Office Properties Trust, which has some 258 buildings comprising 65 million square feet.
The two together make a strong case for anointing Chicago as the office building hub of the country.
Both are focused on becoming the top office property names in the nation, using their size to create management efficiencies that can cut operating costs and at the same time set up long-term relationships with major corporations that use office space nationwide.
And the two well-capitalized companies are turning out to be major rivals for some of the country's premier office trophies as each pursues a strategy of controlling major downtown office markets.
Both are likely bidders for the Amoco Building and Madison Plaza, and they are reportedly vying as well to buy the six-building Embarcadero Center, San Francisco's biggest office property, from the Prudential Insurance Co. of America, a $1 billion-plus deal.
The companies also crossed swords over the Sears Tower, according to Wold. Zell has said he took a pass on the building, but Wold says he knows for a fact that Equity Office at one point was preparing a bid. "He was interested, absolutely," Wold said.
The rivalry is keener because until he joined the TrizecHahn group three years ago, Wold was with Equity Group Investments' office properties division, the precursor of Equity Office Properties, where he had been head of acquisitions for nearly eight years.
Now Wold has the bankroll and management team to go head to head for America's best-known buildings with his old boss, Zell.
"It's fun to compete," said Wold, who added that he maintains good relations with Zell and still chats with him from time to time. "I don't think (Zell) would have expected us to be as big a competitor three years ago."
The irony is particularly sharp because Wold says he became familiar with the Canadian company when Zell's tentacles were reaching northward to swallow it up--with Wold as part of the effort. The deal was never made, but Wold ended up being acquired himself.
The company, at the time called Trizec Corp., was instead bought by another captain of finance, Peter Munk, who at the time headed Horsham Corp., a giant Canadian holding firm with extensive gold and oil investments.
In 1996 the merged companies became TrizecHahn, chaired by Munk, a 70-year-old, Hungarian-born entrepreneur whose background has interesting parallels with Zell's--both come from central European Jewish families who fled the Nazis, and both founded their fortunes on real estate. During the 1970s Munk was head of the largest hotel chain in Australia and New Zealand.
TrizecHahn, focusing on real estate, sold its majority stake in St. Louis-based oil refiner Clark USA last fall and recently cashed in its share in Barrick Gold Corp., one of the world's leading gold producers. Munk himself still has a stake in Barrick and remains chairman of Barrick as well as TrizecHahn.
"Oil to me was never that important," said Munk from Paris, where he was investigating European development opportunities, particularly in his native Hungary. He created his wealth as head of the Sydney, Australia-based Southern Pacific Hotel Corp., he noted.
"We believe real estate has come back as a result of the prosperity in North America and globally," Munk said. "We have in place a good portfolio . . . and excellent capital resources and global contacts, and we can provide ongoing management."
Munk said other big retail operators could do a better job maximizing the value of the company's shopping mall portfolio, which is why it is being sold. On the other hand, TrizecHahn can be a top consolidator and operator of office properties, he said.
And even though the company is selling its existing malls, it will continue to build, through its development division headquartered in San Diego, retail complexes in the United States and around the world, he added.
Among these are a glitzy entertainment-based shopping center it is constructing in Hollywood, and another in Las Vegas.
TrizecHahn, as a Canadian corporation, has more flexibility in selling properties than the big U.S. real estate investment trusts, such as Equity Office Properties, with which it often competes.
REITs, which are not taxed at the corporate level, were set up to be passive property-holding companies generating income to be passed along to investors, who are taxed. Federal laws place restrictions on sales by REITs so they won't make their money flipping properties for quick profit.
"We can stay more nimble," said Wold, adding that tax losses from the original Horsham-Trizec merger will continue to shelter the company from corporate taxes for some time.
Analysts like the company's chances to contend with Equity and a handful of other national office giants.
"They have built a very deep and very talented management team. Wold is a dynamic guy who doesn't seem like he enjoys coming in second," said Jim Sullivan of Green Street Advisers, a Newport Beach, Calif., research firm specializing in REITs.
"My expectation is they will continue to be very active buying high quality office assets in the U.S. and Canada," he said. "With the Sears Tower, they've proven their ability to find opportunities that aren't readily available to others."
The Sears Tower acquisition was a "highly leveraged bet on the continued recovery of the downtown Chicago market," Sullivan said. "We won't know for three or four years whether it will pay off or not."
Wold wants to return Sears Tower to the sterling market image it had before Sears' big exodus to Hoffman Estates in 1992 left it 40 percent empty. It is almost fully leased, but rents still aren't enough to cover the debt.
The new effort doesn't mean big renovations--the building went through a $90 million rehab during the early 1990s--but some improvements to the sky deck, the antenna operation and building services, as well as a high-powered marketing campaign, said Wold.
"People aren't as aware as they should be that it's the most prestigious building in Chicago," he said.
Copyright © 1997, The New York Times
By Barnaby J. Feder
A rapidly growing Canadian real estate company said today that it was acquiring effective control of the 110-story Sears Tower, North America's tallest skyscraper, for just $70 million. The purchase includes an additional $40 million for full ownership of an adjacent 1,100-car garage, a site for potential future development.
The deal values the tower at more than $800 million. The Trizec Hahn Corporation, which is based in Toronto, is acquiring the garage and control of the equity in the building from AEW Partners L.P., a group of pension fund investors based in Boston. But the building carries a $734 million mortgage liability held by the Metropolitan Life Insurance Company of New York.
The deal will generate annual management fees of about $2 million for Trizec Hahn. The company's long-term grip on its new prize will depend on generating enough cash flow from the building to retire or refinance the Met Life mortgage by the year 2005.
"We could have talked to Met Life, too, but we like the leverage we get by leaving that mortgage there," said Gregory C. Wilkins, president and chief operating officer of Trizec Hahn. "This gives us a shot at a much better return on equity."
Real estate brokers here said the price reflected the strong rebound in the Chicago commercial market and especially in the downtown district known as the Loop. In the early 1990's, estimates of the Sears Tower's value fell to less than $500 million and occupancy tumbled below 60 percent as Sears, Roebuck & Company, which erected the building, moved its headquarters to suburban Hoffman Estates.
Today the building is more than 91 percent rented to tenants like Goldman, Sachs & Company, Merrill Lynch & Company and major law firms, although it is still failing to cover all of its operating and finance expenses. Trizec Hahn is counting both on filling the building, which has 3.5 million square feet, and raising rents substantially as existing leases expire.
Trizec Hahn's office properties group is based here but until now had its prime assets elsewhere. The portfolio includes a 49.9 percent stake in the Grace Building and two smaller office buildings in New York City acquired for $210 million in February and prominent properties in Atlanta, Dallas, Houston and Stamford, Conn. Still pending is a $500 million purchase of an office portfolio in Washington that includes the Watergate complex.
Trizen Hahn (sic) cannot gain title to the Sears Tower before 2003 because of the terms of a 1994 restructuring that averted bankruptcy for the building. That deal converted what had been a nonperforming $250 million second mortgage AEW gave Sears in 1990 into the equity and management control Trizec Hahn is acquiring. Until 2003, title remains with a trust set up to allow Sears, Roebuck to keep tax benefits it had enjoyed when it owned the building.
On the New York Stock Exchange, shares of Trizec Hahn rose 31.25 cents, to $24.625. The deal for control of the tower was reported today by The Wall Street Journal.
Completed in 1973, the Sears Tower was the world's tallest building until last year, when it was surpassed by the side-by-side Petronas Towers in Kuala Lumpur, Malaysia, which at 1,483 feet, are 33 feet taller than the Sears Tower.
Copyright © 1997, Chicago Tribune
Compiled by Jacqueline Fitzgerald
TrizecHahn Corp. of Toronto confirmed a Tribune report last week that it is acquiring Chicago's landmark Sears Tower from Boston-based AEW Partners LP. The company paid $110 million in cash for the 110-story building and the adjacent Franklin Center Garage, a 1,100-space facility. TrizecHahn also assumes a $734 million mortgage held by Metropolitan Life Insurance Co. and $4.6 million in other liabilities.
Copyright © 1997, Chicago Tribune
By J. Linn Allen
Toronto-based TrizecHahn Corp., a recently formed real estate firm with an appetite for big-name properties, has inked a tentative deal to acquire its biggest U.S. name yet--the Sears Tower.
The company is going over the building and its financial condition prior to cementing purchase of the property from an investment partnership of Boston-based AEW Capital Management, reliable real estate sources said Thursday.
The price tag on the deal remains uncertain, but the tower carries with it an $850 million mortgage held by Metropolitan Life Insurance Co. The AEW partnership, which is held in trust, holds whatever equity interest exists in the building.
A TrizecHahn Corp. spokeswoman declined to confirm the deal, saying only that the company was "very active" in seeking new property. A spokeswoman for AEW, an investment management firm, said the company doesn't discuss pending transactions.
TrizecHahn's office-building portfolio is heavy on trophy properties in downtown markets, and its holdings include landmarks such as the Grace Building in New York, Citicorp Center in Los Angeles and Renaissance Tower in Dallas.
It is also rumored to be a bidder for the Prudential Center in Boston, that city's biggest commercial complex, and Triangle Plaza, a top-tier office tower near O'Hare International Airport.
TrizecHahn also has a big retail portfolio that includes CN Tower in Toronto, one of Sears Tower's rivals as the world's tallest structure. The 1,450-foot, 110-story, 3.7-million-square-foot Sears Tower was only last year eclipsed as the world's tallest building by twin-tower spires in Malaysia.
The purchase of the Sears Tower by an ambitious international real estate firm with a relish for downtown glamour is a big turnaround from only a few years ago, when the skyscraper was a symbol of the shakiness of center-city commerce.
The property was more than a third vacant after Sears moved its merchandising group to Hoffman Estates in 1992, and Sears relinquished its equity interest in the building to AEW two years later in an act of financial hand-washing.
Only three years later, the almost-full tower is apparently going from castoff to prized possession. "It's symptomatic of just how fast the market is recovering," said Scott Brandwein, president of the Chicago office of Insignia/FC&S, a real estate service firm.
"It's considered to be once again one of the trophy properties, with the most sophisticated investors trying to buy it," he added.
Copyright © 1997, Chicago Tribune
By J. Linn Allen
The Sears Tower, though no longer officially the world's tallest building, is standing tall enough to draw the attention of top real estate investment firms, attracted by its mostly filled offices.
Only three years ago, the 110-story landmark was such a drain on Sears, Roebuck and Co. that the retailer relinquished the building and its $850 million in mortgages in a deal with AEW Capital Management, a Boston-based investment firm that held the debt with Metropolitan Life Insurance Co.
Now TrizecHahn Corp. of Toronto is angling for the tower, according to reports. And rumors persist that Equity Office Properties Trust, controlled by Chicago financier Sam Zell, also is interested.
All three firms declined to comment on a possible sale, but commercial real estate industry observers said the time might well be ripe for a transaction.
"With all the activity in the market for commercial property and given the fact (Sears Tower) is now basically fully leased, it wouldn't be surprising if AEW was looking to determine the value of its position," said John Iberle, a principal with John Buck Co., which manages the 1,450-foot-tall Sears Tower.
Buck embarked on an aggressive and highly successful leasing program that gradually refilled the tower's 3.7 million square feet of space after Sears moved its merchandising group to Hoffman Estates in 1992, leaving the building more than one-third empty.
John Lutzius, a real estate investment analyst with Green Street Advisors of Newport Beach, Calif., said downtown office properties are becoming hot targets for public real estate investment companies newly flush with Wall Street cash.
Up until last spring, big-city downtowns had been shunned for years, he added. "The view was negative. With the exception of Boston and San Francisco, investors didn't think they had value," Lutzius said. "Now all of a sudden there's a big change in investor sentiment."
Chicago's downtown office market plunged into the doldrums in the early 1990s, but has recently been showing strength as the economy booms. Vacancies in prime Class A buildings downtown, such as the Sears Tower, dropped to a 10-year low of 9.5 percent in the third quarter, according to a report by the Julien J. Studley real estate firm.
Equity Office, which has its headquarters in Chicago and has major Chicago holdings already, would be naturally interested in Sears Tower, Lutzius said.
Zell's stated objective for Equity is to gain dominance in the markets he's in, and Sears Tower would be the trophy of all trophies in the Chicago market. The acquisition might also possibly salve the wounds Zell suffered in his losing battle two years ago for New York's Rockefeller Center. But sources close to the company say reports that Equity has made a bid on the tower are inaccurate.
TrizecHahn, which owns office buildings and shopping centers in the U.S. and Canada also is looking for central business district assets, Lutzius said.
A look at the city's top observatories
Copyright © 1997, Chicago Tribune
By Beth Cameron
Because of two architectural icons -- the Sears Tower and the John Hancock Center -- Chicago stands a little taller than any other city in the United States. These heaven-reaching skyscrapers create the canyons of Chicago's impressive shoulder-to-shoulder architectural skyline like Olympian wonders of the modern age -- offering stunning vistas in every direction, a majestic visual sweep over the heartland of America.
On a clear day you might not be able to see forever from atop these two soaring structures, but you certainly can see the four states of Michigan, Wisconsin, Indiana and, of course, Illinois. Leroy Brown, the security supervisor at Sears, observes that "once the sun burns off the clouds, you can see almost 50 miles in every direction." Dean L. Johnson, general manager of the John Hancock Center, said that "you probably could see forever if the curvature of the Earth didn't get in the way -- because the horizon drops off at about 80 miles distance."
Both buildings were designed by the same architectural firm of Skidmore, Owings & Merrill and have lightning-fast elevators that take you to its top floors at warp speed. These Bunyanesque structures offer spectacular daylight views of Chicago landmarks, such as Midway and O'Hare International airports; Grant Park and the lake shore; Soldier Field and the Adler Planetarium; and, of course, the rail lines and expressways that radiate out to all points of the country. At night, the view dazzles with equal intensity as sparks of manmade starlight flash throughout the city's velvet darkness and dots of light curve along Lake Shore Drive.
In lists of the tallest buildings in the world, Sears Tower comes in second, yet Browncontends that it's still number one. "There's a building in Malaysia that's considered the highest, but it holds the top spot only because its antenna, which is part of its building structure, is included -- and that's why it edged out Sears. If Sears could count its attached antenna, it would still be the champ," he said.
Completed in 1974, the Sears Tower, at 1,454 feet high (not counting its 253 feet of antennas), on the West Side of downtown, towers a bit over the Hancock, which stands 1,127 feet above Michigan Avenue (not counting its twin 346-foot antennas). Maybe it's because "Big John" doesn't quite reach eye-to-eye level with the Sears Tower that it has gone all out with a $2.5 million redevelopment of the Hancock Center Observatory. Closed for renovation since Jan. 2, the Hancock's 94th floor observatory reopens May 9 with the addition of some 21st Century special effects.
From the moment you walk into the concourse level of this Magnificent Mile colossus, you see a thematic ticketing area that simulates the early 1965 construction site of the John Hancock Center (which opened in 1969). Here you'll see exposed X-braced steel beams that give the dark aluminum-skinned tower the strength to withstand gusts off Lake Michigan, and you'll walk over rough concrete floors that resemble the original groundbreaking site. On one side you'll find walls plastered with old construction photos enclosed by a link construction fence. Another wall features construction peepholes, and still another wall stands out with a blowup of the original architectural blueprints.
From that introductory gateway, passengers take the world's fastest elevators, which travel as much as 1,800 feet per minute, and beam upward to the observation deck in 39 ear-popping seconds. Upon entering the 15,724-square-foot observatory lookout, you immediately come upon a cluster of seemingly commonplace computers sitting on an elevated stage. But this pod of anything-but-ordinary computers offers a futuristic high-tech experience, which makes up "Windows on Chicago."
"These are Quicktime virtual reality, next-generation computers," explains general manager Johnson. "They let visitors tour the city's hot spots, going behind the scenes without leaving the observatory. We've got 10 virtual reality computers in which you can zoom into buildings to take your own tour of the city."
The "tour" isn't just of the outside of the buildings but of the inside too. Johnson demonstrates how at a click of a computer button you're transported inside the Art Institute of Chicago. It's as if you're standing right in the middle of a gallery and the room revolves 360 degrees around you, allowing you to see a closeup of every painting on the wall.
"We're a one-stop visit for planning and taking a tour of the city," said Johnson. "Look," he said, as he pointed eagerly, "you can get inside the United Center." As he clicked a button, the center basketball court inside the stadium suddenly appeared. Another click and you've got a group portrait of the famous Bulls team, followed by a peek inside the Bulls' locker, including a glimpse of Michael Jordan's famous red No. 23 jersey.
Six "Soundscope" machines provide another virtual reality experience. Sporting a Flash Gordon-style design, these science-fiction devices allow you to zoom in on all points of the compass. You can see and hear birds singing in Lincoln Park to the north, the sound of waves crashing against Navy Pier to the east, the cheers of White Sox fans to the south at Comiskey Park and the roar of jet engines at O'Hare International Airport to the northwest. All the while, a narrator describes these and many other attractions in four languages: English, Spanish, French and Japanese.
Another new addition to the observatory allows visitors to take a walk on a patio-like enclosure, well-named the "Skywalk." "We took an 80-foot-long-by-12-foot-wide stretch, removed the windows and replaced them with industrial-strength stainless-steel screening," said Johnson. "Now you not only can see the city, but can feel and smell it as well."
To cap it all off, there's the "History Wall." Wall panels of historical maps and photos of the city take you through Chicago's history. It begins with artistic renderings of the city's early beginnings in 1830, when its swampy shores teemed with a multitude of 50 people, to its present population of nearly 8 million in the metropolitan area.
One of the quotes that adorn the wall of this exhibit features the famous line from legendary Chicago planner Daniel H. Burnham, who in 1909 said: "Make no little plans. They have no magic to stir men's blood." A vision that "Big John" certainly took to heart.
Copyright © 1997, Chicago Tribune
The management company for Sears Tower announced Thursday that it plans to ask the state's utility regulatory board for permission to put its own power generators in the building and use Commonwealth Edison Co.'s infrastructure to distribute the power.
Edison owns the wires and cables and other power distribution infrastructure in Sears Tower, and the John Buck Co. needs the Illinois Commerce Commission's approval to use that equipment to feed power through the building, said Phil Domenico, senior vice president of John Buck. Buck wants to use generators installed by QST, a subsidiary of the Peoria-based Central Illinois Light Corp. If the deal is approved, the company could save approximately $2 million in electric costs, Domenico said.
Copyright © 1998-2007, Randall Krause. Unauthorized reproduction prohibited.