The Sad Saga of Chicago's Old Post Office Redevelopment

After closing its doors in 1996, the 2.7 million-square-foot Old Chicago Post Office represented one of the greatest redevelopment opportunities in the history of the city. Despite its prime location and a recovering economy, the reactivation of the hulking art deco building straddling the Eisenhower Expressway has faced one setback after another at the hands of a elusive and eccentric foreign investor and is evocative of the on again/off again nature of ultimately cancelled Chicago Spire project. The City of Chicago recently announced that it would retake control of the 12.6 acre site that includes the main Post Office as well as neighboring annex buildings, but how did we get to this point?

The Story so Far

The story begins in 2009 when British-born developer Bill Davies bought the Old Chicago Post Office for $24 million. He announced big plans over the following years. He and his company, International Property Developers North America, envisioned a $3.5 billion phased, mixed-use mega-development that would eventually include a trio of towers and 16 million square feet of residential, retail, entertainment, and office space. To say the plan was overly ambitious would be an understatement, especially considering the difficult global economic climate of the time. As a result, the project raised an untold number of eyebrows and was certainly not without vocal detractors. Regardless, Davies and International Property Developers pushed forward and were granted zoning approval by the city in 2012.

International Property Developers

In 2013 slightly more detailed plans were revealed after IPD partnered with architects at Antunovich Associates. While updated renderings of the project’s towering later phases made it easy to dismiss the whole thing as a pie-in-the-sky flight of fancy, potential tenants were giving real attention to the existing historic main building. Downtown’s emerging tech scene was enticed by the Post Office's large, open floor plans and many envisioned the space as the next Merchandise Mart -- which had recently repositioned itself as a technology hub. Despite the interest, actual work on the abandoned building failed to take place.

Antunovich Associates

In mid 2014 news emerged that Walgreens was considering a downtown move for its corporate headquarters and was eyeing the Old Post Office. A deal was never announced and the national pharmacy chain stayed put in suburban Deerfield. 2014 also saw Bill Davies partner with local developer and adaptive reuse expert Sterling Bay. Later that year the Post Office experienced a fire due to ventilation issues from the train tracks below, highlighting many of the code violation and building issues that plague the derelict site. After just four months together Davies and Sterling Bay parted ways, citing a difference in vision. Davies preceded to put the Post Office up for sale but not before his former partner made a reportedly "generous" bid for the property. Davies declined their offer.

Time passed and no buyer was found despite indications that Davies turned down a number of additional offers for the property. In September of 2015, chairman of the City Chicago’s Zoning Committee, Alderman Daniel Solis expressed the city’s frustration with the lack of progress at the Old Post Office. In the absence of any meaningful redevelopment action, Solis suggested the city down-zone the site and strip it of its valuable high-density building allowances. In other words, the city told Davies to "use it or lose it."

Antunovich Associates

Davies and company responded by presenting a new scheme for the property in January of 2016 that would have seen the floors of the Old Post Office (renamed Olde Post Office) converted into 1,500 micro-apartments. While the downtown rental market has been incredibly strong, the plan seemed a little half-baked considering units in the 280- to 600-square-foot range would be an odd choice for a building that included large, open floor plates as one of its key selling features. Davies and company released plans showing apartments with long, shot-gun style layouts. Their goal was to satisfy the impatience of the city and hopefully build momentum towards financing the project's future phases.

City Hall, however, saw the apartment idea as nothing more than too little, too late. Bill Davies found himself receiving a crash course in Chicago-style politics when it was announced last weekend that the city would buy back the Post Office through invoking eminent domain. Words like "eyesore" and "embarrassment" were frequently mentioned by city officials who hope to sell the property to a developer that has not only the ability but also the conviction to get the site occupied and back on the tax books as soon as possible.

Moving Forward

It’s hard to say what’s next for the Old Post Office. Representatives of Bill Davies have pledged to fight the City of Chicago’s eminent domain decision, according to a report by Fran Spielman of the Chicago Sun-Times. Though actions by the city might be seen as an overly aggressive precedent that sends an unfriendly message to foreigners looking to invest in Chicago, it is easy to see why the city became so frustrated by the Old Post Office saga -- especially with so much (too much) initially promised by the developer. If Davies wanted to sell he had options. If he wanted to keep the property he could have at least invested in its upkeep. Instead Chicago got an absentee landlord for one of its most prominent riverfront redevelopment sites.

A downtown casino for the Post Office is apparently still on the table and is an idea that is supported by both Mayor Rahm Emanuel and Governor Bruce Rauner. Of course Chicago would need to be granted a casino license from the lawmakers in Springfield which would first require the legislature to overcome their partisan stalemate on the state’s troubled budget. Apartments (similar to Davies’ last-ditch plan for the site but perhaps larger) might make financial sense if the units were available to rent today, but by the time the nearly 100-year-old neglected building can correct its scores of code violations and issues, the cyclical rental market could be in a very different place. Office space might be a good bet with the segment experiencing encouraging growth not only downtown but in areas such as the West Loop, Goose Island, and the Clybourn Corridor, but landing major tenants when so much square footage is involved is a tricky and often lengthy process. If all else fails, maybe the city can find a new mystery investor to build skyscrapers on the site. Maybe something 3,000 feet tall this time?

·British developer won't give up Old Main Post Office without a fight [Sun-Times]

·1,500 Rentals, New Tower Addition Proposed for Old Main Post Office [Curbed Chicago]