Chicago developer John Buck has taken a key step forward in his plan to build a two-tower office building in the West Loop, buying the site he is eyeing for the project despite tough times for downtown office landlords.
A Buck spokeswoman said the firm recently acquired a surface parking lot at 655 W. Madison St. for $53 million, where it is planning an ambitious 1.5 million-square-foot development overlooking the Kennedy Expressway. The sale completes a deal Buck reached in 2019 with the property’s longtime owner to buy the site if the city were to approve Buck’s redevelopment plan.
The city has yet to sign off on Buck’s vision for a pair of office towers atop a five-story “podium” on the nearly 2-acre site, but Buck has purchased the parcel anyway.
It’s a vote of confidence by the veteran developer against a backdrop of companies embracing remote work and slashing their office footprints. That movement has pushed downtown office vacancy to an all-time high, setting off competition among building owners offering unprecedented perks to lure tenants.
But Buck is wagering that the newest and most up-to-date office buildings will outperform the rest of the market moving forward, just as they have during the pandemic. Vacancy at top-tier, or Class A, buildings has dropped over the past year, belying the broader trend.
“There is simply not enough (Class A) product, as evidenced (by) the performance of the latest generation of new buildings,” Buck said in a statement. “The 655 Madison project will meet this demand and (can) deliver to tenants in 2026.”
A Buck spokesman said the developer will still need to pre-lease a portion of one of the towers before it can begin construction. To ease that effort, Buck tweaked his plan for the project last year by scrapping his vision for a single office tower in favor of the two-building design, which can be developed in pieces. Instead of having to find an anchor tenant looking for close to 500,000 square feet—the likes of which are almost impossible to find as many companies shrink their footprints—in order to land financing for a massive tower, Buck estimated last year he would only need to pre-lease about 150,000 square feet to 200,000 square feet to launch the revised project’s 850,000-square-foot first tower on the northern edge of the block.
Buck isn’t the only developer making such a bet that new office buildings will be in high demand. With a similar thesis, Related Midwest recently unveiled its vision for a 1 million-square-foot office building on the other side of the Kennedy at the doorstep to the Fulton Market District.