Tuesday, February 17, 2009
Details About the IBM Building Hotel Conversion
More details are coming out about the conversion of a portion of 330 North Wabash (the old One IBM Plaza) into a hotel. I was at a meeting recently with John Rutledge, the C.E.O. of Oxford Capital. That's the company doing the conversion, and he had some very interesting things to say.
The big question in everyone's minds these days is, "Is this really going to happen?" The answer at this time is "yes." The project was not financed with debt, so when the debt markets crashed and sent the economy into a tailspin it was no big whoop for Oxford Capital.
That said, Oxford is not in any particular hurry to complete the project. There's some asbestos abatement that has to be done, and Oxford plans to take its sweet time with that in order to help wait out the recession. The original plan was to begin work in 2009 and open in 2010. Now the plan is to start in the spring or summer of 2010, if there are signs that the economy is recovering.
Oxford bought floors 2-13 of the building on March 18, 2008. It actually had to fend off competing bids from two other hotel companies that wanted to do the conversion. Because of the way Ludwig Mies van der Rohe designed the building, it's a very easy conversion from office to hotel.
As part of the purchase, Oxford petitioned the city to have the building landmarked. This helped make the financing possible because it lowered the property taxes the hotel will pay from the higher hotel rate down to a landmark rate, which is similar to the rate being paid when it was offices. It's the youngest building in Chicago to receive landmark status, and the carrot used to get the city to approve the idea was the estimated $50 to $80 million dollars a year in taxes that hotel is expected to generate.
Some people have wondered if a hotel in the old IBM Building can compete with Trump's hotel just next door. Rutledge thinks the answer is once again, "yes." In fact, he says the success of the Trump Tower actually made 330 North Wabash more valuable as a hotel. Moreover, it fits in with Mayor Daley's plan to turn the main branch of the Chicago River into the city's next big tourist destination. "The New Gold Coast" is what the Chicago Tribune once called it, but that may be something of an overstatement.
As for the proximity of the Trump Tower to the IBM Building, it's not as bad as you might think. At its closest, the Trump International Hotel and Tower is 120 feet away from 330 North Wabash. From the ground it's a tight fit, but the view from the windows above is supposed to still be pretty good. In spite of the proximity of Trump they're supposed to be among the best hotel views in downtown Chicago. As someone who's stayed at the Hotel 71 , I can imagine that might be true. Also, Rutledge claims that design of the building will allow the hotel to have the largest luxury rooms in the city.
The hotel will be managed by Noble House Hotels in a joint venture with the Hotel Sax next door. People who work in the building will have access to the hotel's amenities. And having a one million square foot office building on top of the hotel is a benefit because it means you have a built-in customer base for their visiting clients as well as for large meetings.
Speaking of meetings, there will be some alteration to the building. The most drastic measure will be the removal of a portion of one of the floors in order to create a two-story ballroom. The ballroom will be about 5,000 square feet. Other changes include the addition of a green roof, and a slight reconfiguration of the lobby.
Details are still being worked out, but the lobby may be divided into two separate spaces, one for the hotel and one for the office. Another idea is to simply have a welcome desk in the lobby and an elevator which takes guests to the second-floor sky lobby for registration. That second floor is already planned to have a restaurant, a bar, and a lounge, so moving check-in up there isn't that big a deal. Still, at this time it's all very fluid. The Four Seasons at the Seagram Building in New York is being eyed as a model.
How about a name and a brand? Well, there will be no brand. Rutledge wants the hotel to stand on its own and maybe become the flagship property of a new luxury brand, so it will not be affiliated with any of the existing hotel chains. As for a name, that hasn't been decided yet. Oxford looked into doing something like "The IBM Hotel" in order to tap into the building's history, but trademark issues won't allow that to happen.
And speaking of pipe dreams -- Rutledge floated a very interesting fantasy for the hotel that utilizes its luxury status and its location. He imagines the hotel's concierge service dispatching a classic wooden motor boat like a Chris-Craft to pick up guest arriving by train at Union Station, and then cruise up the river to a private dock next to the hotel so they can arrive in style. It sounds a little extravagant considering the number of people who arrive in Chicago by train these days, but maybe in partnership with Trump and the Hotel Sax he might just be on to something.