Gov. JB Pritzker consulted Google and decided to look no further in an effort to rid the state of a financial burden that is the Thompson Center. In a restart of plans to save the state’s former Chicago office center, he said Google will buy the building in a deal that benefits taxpayers and the downtown office market.
The search engine giant with 2,000 employees in Chicago will move into the entire building. The state, which is working out terms with developer Michael Reschke, will sell it to Google for $105 million.
In exchange, the state will pay $75 million for the building at 115 S. LaSalle St., formerly the BMO Harris Bank building. Reschke, CEO of Prime Group, will lead a remodeling of the Thompson Center for Google.
“The state will own 50% more space on LaSalle Street at 50% less cost,” Reschke said.
Pritzker said the deal will save the state money on office rents, certify Chicago’s appeal to the tech community, and revitalize part of downtown. The new agreement replaces plans announced in December for Reschke to buy most of the Thompson Center, 100 W. Randolph St., with the state retaining some acreage there.
Pritzker told Google executives at a news conference on Wednesday, “Google is one of the most important companies in Chicago. You are an integral part of our community, and you have invested in your future as you invest in ours.” The governor said the agreement will allow the state to consolidate the downtown space it currently leases and over the next 30 years $1 billion in savings over the years.
Karen Sauder, Google’s head of operations in Chicago, said, “From our perspective, the Thompson Center is more than just a building. Establishing a presence here in the Loop allows us to breathe new life into the ground floor of the revitalization and revitalization of the heart of this city.
“As proud as we are of the role we played in transforming Fulton Market into one of the most vibrant and dynamic neighborhoods in the city, here’s an opportunity to do it all again.”
In December, Reschke released conceptual renderings of what the Thompson Center might look like. A Google spokesman said new designs are now in the works. Sauder said the company will work with others to “carefully adapt this building to our high sustainability standards while respecting its iconic design.”
Google began its corporate march into an old meatpacking and industrial area west of The Loop when it occupied a well-rehabilitated former cold store at 1000 W. Fulton Market in 2015. Other companies followed, as did hotels and apartment buildings.
State officials said $30 million from the sale of the Thompson Center will be in upfront cash. With the acquisition of 115 S. LaSalle, the state will own the westernmost tower of a three-building complex. The other two buildings use the address 111 W. Monroe St. and will continue to be owned by a partnership between Reschke and Quintin Primo III, chairman of the Capri Investment Group.
The 37-story 115 S. LaSalle building has nearly 592,000 usable square feet, state officials said. They said about 1,800 employees who work at the Thompson Center and in rented downtown offices will be transferred there. The state has already centralized about 2,000 workers in a building it owns at 555 W. Monroe St.
The James R Thompson Center
Pat Nabong/Sun Times File
While the state will be responsible for renovating its new home, officials said the cost will be much less than the $148 million projected share of work to modernize the Thompson Center, which opened in 1985. but from the neglect of the state suffered building aging.
The late architect Helmut Jahn’s glazed design, championed by the late Governor James Thompson, has long drawn mixed reactions. Some people applaud it as a progressive approach to a government building, others see it as outdated and a waste of space. Austerity measures during construction led to a building that overheats even in winter, experts say. State officials have said the building alone costs $17 million a year to operate.
Reschke cites the replacement of the glass facade as well as the heating and air conditioning systems as one of his main goals.
At Wednesday’s announcement, Reschke said: “We fell in love with this iconic treasure that Helmut Jahn and Governor Thompson built almost 40 years ago. The building is unique and irreplaceable.” He said the 17-story atrium has as much space as a basketball arena.
The building covers 1.2 million square feet, and while Google is fully acquiring it, it’s unclear what the company will do with its other Chicago office space. “Our occupancy plans for Fulton Market and The Loop will be decided later to align with specific team and business needs at that time,” a spokesman said. He said Google expects to occupy the Thompson Center in 2026.
The James R Thompson Center
Pat Nabong/Sun Times File
Google leases approximately 500,000 square feet between the former cold storage facility now marketed as 1K Fulton and nearby offices at 210 N. Carpenter St.
According to Sauder, one of the features of the Thompson Center is that it is a stop for six CTA transit lines, making it easier for workers to access from anywhere in the city. Officials said the renovation could go ahead without disrupting train service.
Google’s plans here even come as the company has said it will slow down the hiring. Google is the best-known unit of Alphabet, which on Tuesday reported its slowest growth since the pandemic began. The company said advertisers, Alphabet’s main source of revenue, are scaling back in anticipation of a recession.
The company remains highly profitable, earning $16 billion in the second quarter of this year.
Just as Google fueled its foray into the Fulton Market, downtown founders are hoping their new involvement in the Loop will help an office market struggling with vacancy. Business users are downsizing to save costs as more employees work from home, at least some of the time. The city also took a hit to its reputation when hedge fund Citadel said it was setting its stakes here and making its way to Miami. Founder Ken Griffin cited rising crime in Chicago as the main reason for his move.
Reschke said that Google’s move alone will bring the vacancy rate in the central loop down from 22% to 16%, a rate he says beats the national average.
Mayor Lori Lightfoot also praised Google, saying the investment promises to be the biggest job creation for downtown businesses in 10 years. “This is a milestone in Chicago history,” she said.
Lightfoot said Chicago holds many attractions for the tech sector’s younger workforce, including a track record of innovation and a relatively low cost of living. “The coasts have nothing against us,” she said.