LaSalle Street’s role as a financial center and reservoir of Chicago’s historic character is being threatened as office tenants flee its grand but often outmoded buildings for new high-rises being developed elsewhere downtown, according to the Daley administration.
That said, how do you resurrect a street that is home to a great collection of art deco office buildings?
To stem the tide of tenants leaving for the West Loop and Wacker Drive and to attract new ones, Mayor Richard Daley has proposed investing $550 million in city tax revenues during the next 23 years. The money would go toward adding green space and upgrading streets, sidewalks, lighting and office structures on this storied street and about 40 nearby blocks.
Few dispute the commercial weakening of the LaSalle Street neighborhood, where office rents have declined and vacancies have climbed to 40 percent, or even 60 percent. Most also agree that its historic architecture, which includes 10 city landmarks, defines what Chicago taste, past and personality are all about.
“Many of [these buildings] are really historic,” the mayor said at a City Hall press conference Wednesday. “We don’t want them all taken down,” which, he noted, “developers would love to do.”
But some wonder whether it is the best strategy to make LaSalle Street one of the city’s 143 Tax Increment Financing districts, in which tax revenue is diverted from various municipal departments for revitalization work.
During the 23-year period, as tax revenues increase, some of the additional money can be spent to upgrade the area. The city is scheduled to hold a public review of the proposal Aug. 4 and a public hearing Sept. 12.
“I hope it helps these old buildings, they need it,” said Peggy McTigue, a senior vice president overseeing downtown leasing here for the Dallas-based Trammel Crow Co. But, she asked, “Should we pull money away from schools? No one will be working if we don’t have a good education system. If an old building isn’t architecturally significant, why should we put the money in?”
TIF specialist Jeff Chapman, a professor of public affairs at the University of Arizona at Tempe, said that such tax policy succeeds if it is well planned.
“But one must ask: is it really necessary or will the market work without it?” Also, Chapman added, “Who gets hurt when taxes are rechanneled?”
David Merriman, a professor of economics at Loyola University Chicago, raised another question. “Will it be worth the cost if the investment doesn’t pay off?” Then he queried, “Why not finance economic redevelopment as part of the regular city budget rather than sequestering tax receipts?”
The city, its businesses and visitors will reap rewards from a TIF that helps preserve hand-fashioned masonry facades, upgrade antiquated mechanical systems and beautify crumbling streetscapes, said David Bahlman, president of the Landmarks Preservation Council of Illinois.
“A LaSalle Street TIF would be terrific,” he said.
That thoroughfare is sometimes called the Chicago Canyon for the ornate masonry offices that stand along it shoulder-to-shoulder a la Wall Street from City Hall to the Chicago Board of Trade. Many of these edifices “are extraordinarily important” because they are “architecturally rich, exciting” and designed by renowned figures such as Daniel Burnham and William LeBaron Jenney, Bahlman said.
“A TIF will provide a huge incentive for the very costly job of rehabilitating historic buildings and can be a springboard for the economic redevelopment of a whole area,” he added.
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Since the 1980’s many LaSalle Street office tenants have relocated to the West Loop and Wacker Drive. They find “more light, air, river views and easier transit access,” said John O’Donnell, vice chairman of The John Buck Co. The firm has built and owns downtown commercial properties within and outside the proposed TIF district.
Twenty years ago Buck built on LaSalle Street. “It used to be the No. 1 location for office development,” he recalled. “But it’s been eclipsed by Wacker Drive.”
With tenants that occupy large blocks of space decamping in recent years, “owners are panicking a little,” said McTigue of Trammel Crow. “Vacancies have remained so high for the last four years that owners are wondering where the tenants will come from.”
Two years ago the bank ABN Amro left the 90-year-old 208 S. LaSalle St., which is now 42 percent vacant.
The tower at 115 S. LaSalle St. is 43 percent vacant and the 20-year-old 190 S. LaSalle St. is about 60 percent vacant, she estimated.
A TIF could help bring some of these and other offices up to modern safety standards and help fill space available for lease and sublease that in some parts of the district averages about 25 percent, said Ken Szady, a senior vice president for capital markets at Trammell Crow.
With modern air handling and mechanical systems, some old “C” buildings could be competitive with new ones in attracting professionals and businesses that need to be near courts and government buildings,” Szady noted.
There’s life in old LaSalle Street yet, agreed McTigue.
“It’s still a financial heart of downtown,” she said. Some major banks have long-term leases on space there. “They aren’t leaving,” she said.
Meanwhile, the commute is convenient for people who live around North Michigan Avenue and Lincoln Park.
“TIFs are an important way to generate money to keep the city healthy,” she added. “It just has to take in the interests of the entire business community.”
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