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The No-Debt Tower

The No-Debt Tower
A bit of Chicago CRE lore from the late '80s includes a major office developer who, during a panel discussion, became exasperated with Wall Street's growing control of developers like him, demanding preleasing and the like in return for debt financing. "Preleasing is for sissies!" he proclaimed. Yesterday was a little blast of the (mid) '80s: a new office tower downtown, no preleasing necessary.
New Ivanhoe-Hines Tower
The Ivanhoé-Hines JV has the equity firepower to get the building out of the ground without resorting to debt, which would be hard to get even with a major anchor tenant. By going the equity route, the developers assume all the risk but also stand to reap all the long-term rewards by capturing a piece of any upsurge in leasing during the rest of this decade. Bisnow asked Hines SVP Greg Van Schaack about the conspicuously missing anchor. Tenants will come, he says. For one thing, the property's going to include an acre-and-a-half park fronting the river, something no one else in the city has. (Allowing tenants to have a catch or watch clouds on their lunch breaks, something everyone dreams of.) Greg also says that the building's shape and position on the river are going to make it instantly iconic. Tenants thinking about looking for space now will be very familiar with the tower ahead of its 2016 completion.
Reznick (Retail) MCHI
Ald. Brendan Reilly points out a feature of the new tower to Mayor Rahm Emanuel, Ivanhoé Cambridge EVP Arthur Lloyd and Hines Mindwest CEO Kevin Shannahan
At yesterday's event announcing the building, alderman Brendan Reilly points out a feature of the new tower to Mayor Rahm Emanuel, Ivanhoé Cambridge EVP Arthur Lloyd, and Hines Midwest CEO Kevin Shannahan. Bisnow also talked to one of our recent developer panelists, Trammell Crow's Grady Hamilton, to sound him out on the project. He told us that Hines' announcement underscores what was said by most panelists that morning—that fundamentals have tightened and that the market has several companies whose requirements will not be easily met by the vacancy within the existing building stock. "As the trend continues, I believe we will see further capital interes t in CBD development," Grady reiterates.