02.08.2006 Beitler in talks with Hancock Center over hotel development
From the Crain s Chicago Business Newsroom
February 08, 2006
By Alby Gallun
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(Crain’s) — Real estate developer J. Paul Beitler is in talks with the owner of the John Hancock Center over a plan to convert several floors of the landmark skyscraper into a hotel.
Mr. Beitler envisions a 400- to 500-room hotel in what now is office space in the 100-story tower. He said executives at Chicago-based Hyatt Hotels Corp. are interested in running the hotel as a Hyatt brand. Hyatt representatives did not respond to requests for comment.
“This may happen. It may not,” Mr. Beitler said. “But it would be a very exciting opportunity.”
San Francisco-based Shorenstein Co., which acquired the Hancock’s commercial space for $225 million in 1998, is considering redeveloping some of the building’s office space into a hotel after receiving inquiries from hotel companies. One interested party is Oxford Capital Partners, a Chicago-based real estate investment and development firm.
“At this point, Shorenstein isn’t anywhere close to making decisions about these inquiries,” says a spokeswoman for the building, declining to offer more specifics.
At 875 N. Michigan Ave., the Hancock is a premier address, but it has suffered amid a depressed downtown office leasing market. About 21% of the 889,000 square feet of office space in the building is available for lease.
Converting the vacant space into a hotel would allow Shorenstein to reduce its exposure to the office market and capitalize on a hotel market that is rebounding after a long slump. Any conversion would not include the tower’s 705 condominiums.
Known primarily as an office developer, Mr. Beitler last fall unveiled an ambitious plan to build a 2,000-foot tall television broadcast tower near Navy Pier. Yet he faces resistance from a key Streeterville residents group, indifference in City Hall and a possible legal dispute with fellow developer Michael Reschke, who alleges that Mr. Beitler broke an agreement by cutting him out of the deal.
