108 North State Street, often referred to as Block 37, is a shopping mall and development situated in the Loop area of downtown Chicago, Illinois. This site is defined by the square block bordered by West Randolph Street, North State Street, West Washington Street, and North Dearborn Street, originally designated as one of the city's 58 blocks. While the above-ground redevelopment has been finished, construction on an underground station was halted, leaving it only partially completed.
The previous buildings on the block were demolished in 1989 for a hotly contested redevelopment plan under the then Chicago Mayor Richard M. Daley. The debates included the demolition of the Chicago Landmark McCarthy Building, which proceeded after the Illinois Supreme Court decided private preservation groups did not have standing to challenge the city's decision.
After the site was cleared, the original redevelopment plan collapsed, along with several others that followed. Mills Corporation began construction in 2005, but its previous financial struggles cast a shadow over the project. This troubled history, coupled with a shifting economic landscape, led to delays in 2006 as contractors hesitated, fearing they might not be compensated. By November 2009, the developer was declared in default, prompting CB Richard Ellis to step in as receiver. The project was then taken over by Joseph Freed and Associates LLC, but in 2011, Bank of America foreclosed on the property, ultimately selling it to CIM Group in 2012. The three new buildings were finally completed by 2016.
Site In 1829, the legislature appointed commissioners to locate a canal and layout the surrounding town. The commissioners employed James Thompson to survey and plat the town of Chicago, which at the time had a population of less than 100. Historians regard the August 4, 1830, filing of the plat as the official recognition of a municipality known as Chicago. Block 37 is one of the city's original 58 blocks in the layout of the town. Due to Block 37's central location in the Loop, between the State Street retail district, the city/county government complex, and the Randolph Street theater district, its history is a microcosm of the city's history.
Even before the Chicago Fire, the block was home to one of Chicago's largest theaters. During the late 19th century, tall office buildings proliferated on the block. By 1970, the block was densely developed with 11 buildings, housing theaters, offices, a YMCA, and retailers like grocery store Stop & Shop. On June 14, 1973, Mayor Richard J. Daley announced a broad urban renewal initiative centered on the North Loop theater district. Over the ensuing 16 years, numerous private developers, notably the Rubloff Company and JMB Realty, planned large mixed-use developments on the site, with a mall along State Street and hotels and office towers above. Property assembly was facilitated by Mayor Harold Washington's creation of the North Loop tax increment financing district in 1983, which gave the urban renewal effort a steady revenue stream and eminent domain authority.
The modern-day Block 37 is flanked to the west by the Richard J. Daley Center and to the east by the former Marshall Field and Company Building. It is part of the central business district that includes Chicago City Hall and the James R. Thompson Center (the State of Illinois office building) within 2 blocks.
Design
Buildings According to original plans, the complex was to be composed of three united structures: a 21-story residential condominium tower called 108 North State Condominium Tower at North State Street and West Randolph Street; a 20-story hotel tower called 108 North State Hotel Tower at West Randolph Street and North Dearborn Street; and a 17-story tower called CBS Broadcast Center at North State Street and West Washington Street (for WBBM-TV, CBS 2). At one point, there was talk that the hotel tower has been abandoned in favor of a second residential tower, though later plans indicated that the hotel tower was still anticipated. These structures rise above lower level retail space, with an eclectic mix of shopping, entertainment, and dining in its lower retail floors. In November 2008, the city proposed financing to enable Loews Hotels to build a 354-room hotel.
Architecturally, the main floor features transparent cornered project facades and clear glass street level views. The multiple structures feature approximately of retail, entertainment and dining space, and of office space. The 38-story Marquee at Block 37, also known as 25 West Randolph Street, was completed in 2016 with 690 residential units.
Transit facilities The design that broke ground in 2005, included a superstation that would connect the tracks of and serve passengers on both the CTA Blue Line and CTA Red Line, enabling direct transfers. The planned project included a downtown station for train service to both Chicago airports: O'Hare and Midway.
The cost of the station was estimated at $213 million. The City of Chicago and the Chicago Transit Authority were to pay $172 million, and the Mills Corporation (the initial developer) was to pay for the rest. Cost overruns and delays forced the city of Chicago and the Chicago Transit Authority to pay about $100 million to cover already-incurred costs, and the CTA canceled the project, partly because it did not have the estimated $1.5 billion that would be needed to create express airport service (as opposed to slow local train service using existing tracks and stations). In the end, about $400 million was spent on construction on the shell of a station, plus $40 million in mothballing costs.
In November 2009, progress in construction of the commercial and residential buildings allowed the Block 37 portion of the Chicago Pedway to open between the Lake station on the Red Line and the Washington station on the Blue Line. Because this only connected the unpaid areas of the stations, farecard holders paid the standard $0.25 transfer fare to use this connection. In May 2013, the CTA made this transfer free.
After the failure of the superstation project, the city began investigating the possibility of a privately constructed airport express service using Block 37 as the downtown endpoint. The city announced in June 2018, that The Boring Company had won a contest to negotiate a contract to construct a high-speed rapid transit link to O'Hare, dubbed Chicago Express Loop, using twin tunnels and electric vehicles based on the Tesla Model X. Funding for construction and operation would be provided completely by the company, and the system would reduce travel time to O'Hare to about 12 minutes.
History
Block 37 Block 37 was demolished in 1989, after Mayor Richard M. Daley approved its demolition to erect a multi-use skyscraper with retail, hotel, office, and residential spaces. This prompted much public consternation; the McCarthy Building, a Chicago Landmark, was even stripped of landmark status over the objection of preservationists and public interest groups in order for the block to be cleared. Block 37 was a nearly vacant city block from 1989 until 2005 after several attempts at redevelopment failed due to Chicago politics and insufficient funding of several past developers. The single remaining building from the pre-1989 Block 37 architecture is an active Commonwealth Edison transformer building that distributes power to a great portion of the Loop.
Maggie Daley's nonprofit, After School Matters, started as Gallery37 in the summer of 1991, where the organization set up tents to provide visual arts classes to teenagers. The organization moved from Block 37 when development began, and now operates in a nearby building named "Gallery 37 Center for the Arts" on Randolph Street, a few blocks east of its original home.
In 1987, Chicago Mayor Harold Washington approved a $24 million subsidy to FJV Venture to develop Block 37. There were a series of subsequent alternate redevelopment plans. Among the prior redevelopment plans for the block were the original Block 37 Towers, for which the original block was demolished and which included a 47-story tower designed by Murphy/Jahn, Inc. Another failed plan was a Solomon Cordwell Buenz plan including a 711-foot 66-story residential tower and a 12-story Marriott Hotel towering over a 4-story retail base. This had followed the 39-story Kohn Pedersen Fox Associates design scheduled for 2004 completion. The developments fell through, which put the property back into the city's possession. In 2002, the city initiated a competition for the development rights to the property. In 2004, the city sold the property to Mills Corp. at a $20 million loss. Mills sold the development rights to Joseph Freed and Associates in 2005, when the city committed $42 million in tax-increment funding. In 2007, the city learned the development was $150 million over budget. The complex was originally being developed by the Arlington, Virginia-based commercial real estate developer, Mills Corporation, best known for its ownership of numerous super-regional shopping malls. However, Joseph Freed and Associates LLC has inherited the development rights.
The Mills Corporation
Corporate difficulties
Mills' troubles began in November 2005, with revelations of large losses on failed projects, a cash crunch and a U.S. Securities and Exchange Commission investigation into its accounting. The SEC inquiry was upgraded to a formal investigation in March 2006. The reclassification as a formal investigation allows for the use of additional techniques such as subpoenas. On April 6, 2007, Simon Property Group, Inc. announced the joint acquisition of the Mills Corporation along with Farallon Capital Management for $25.25 per share of common stock.
Block 37 troubles In March 2006, contractors halted construction because of fears that they would not be paid. This caused Morningstar to reconsider their lease commitment. As a result, the value of the project declined, which made the resale of the project rights difficult. Mills was close to a deal with German investment firm, Deutsche Immobilien Fonds A.G. prior to the difficulties. DIFA had outbid Chicago developer Golub & Co., which then became the frontrunner. Golub, an international real estate investment company headquartered in Chicago, has closed on the office space portion of the project. Mills eventually sold the retail space rights to Chicago developer Joseph Freed & Associates, who had previously purchased the nearby Carson, Pirie, Scott and Company Building (located at 1 South State Street) that closed in early 2007.
By 2007, Golub and Mills were in a legal entanglement over certain leases to Morningstar for . Golub claimed Mills knew the measurements of the floors actually totalled although they contracted for . Golub claimed a Morningstar affiliate "...induced Morningstar to agree in the lease to be bound by an after-the-fact re-measurement of the space." Additionally, Golub claimed that Mills has acted without Daley administration authorizations for plans such as elimination of a proposed hotel in favor of a second apartment tower, as required by an agreement between Golub and Mills. In addition, Golub had sued over the residential portion of the project, which was given to Freed. Golub claimed to have accepted the office space part of the project at a low profit with the expectation of making a larger profit on the residential portion. The subsequent court ruling allowed Mills to terminate its contract with Golub to develop the project's two residential towers and to sell the residential portion of the Block 37 project in the Loop to developer Joseph A. Freed & Associates LLC.
2009 foreclosure