By Robert Sharoff | December 10, 2013 | The New York Times
CHICAGO — The renovation of the landmark Wrigley Building, one of the beacons along this city’s Magnificent Mile, is an effort by an investor-turned-developer to reposition one of Chicago’s most famous structures amid the city’s expanding retail district.
The $70 million project, including $12 million in city tax breaks, is nearly complete, with a commitment from an anchor tenant at street level and leasing efforts for the upper floors underway.
The building’s developer, BDT Capital Partners, is an investment and financial advisory firm founded in 2009 by Byron Trott, a former vice chairman of investment banking at Goldman Sachs, as well as an adviser to Warren E. Buffett. The firm, which has a $3 billion investment fund, specializes in advising family-controlled businesses, including those associated with the Pritzker, Mars and Wrigley families.
For nearly a century, the building, which is on North Michigan Avenue, was associated with the William Wrigley chewing gum company, which created such brands as Juicy Fruit, Spearmint and Doublemint gum.
After Mars acquired the company in 2008 and sold the building to Mr. Trott’s firm for $33 million, the Wrigley company last year moved out and consolidated its Chicago operations at a research center it owns northwest of downtown.
Just north of the Chicago River, the gleaming white twin-tower complex has been under renovation for over a year, with everything above its first floor gutted to turn it into a modern office complex.
On the outside, the elaborate Spanish baroque terra cotta facade was repaired and cleaned and about 2,000 windows were replaced.
One of the biggest changes, however, involved doubling the amount of retail space in the complex to about 65,000 square feet on the first and second floors and creating an open-air shopping arcade along the city-owned plaza between the two towers.
The structure, which will continue to be known as the Wrigley Building, was completed in 1924 and has become a cherished local landmark. “There aren’t that many buildings in Chicago where you don’t have to use an address when you get into a taxi, but the Wrigley is certainly one of them,” said Ari Glass, executive vice president of Zeller Realty. His company is handling the leasing for the newly renovated building. Mr. Trott’s other partners on the project include the Groupon co-founders Eric Lefkofsky and Brad Keywell.
Mr. Trott’s BDT offices look out on the Wrigley’s heavily ornamented clock tower. “It’s the iconic building of Chicago, and one of our most important clients owned it and trusted us to own it for the next 20 years and treat it as they wanted it to be treated,” he said, referring to Mars.
The project’s added retail space acknowledges how high ground-floor retail rents along Michigan Avenue are, topping out at about $500 a square foot. By contrast, office rents in the area are in the $30 to $40 a square foot range.
“The retail rents along Michigan Avenue are enormous, and the Wrigley organization had not taken advantage of that over the years,” said Michael Kaufman, managing partner of Goettsch Partners. “The arcade was a big financial plus for the project.”
But the company has discovered, according to Robbie Robinson, managing director of BDT, that despite its prominent location and status, the Wrigley Building remains something of a mystery to many people. The project partners have been reintroducing the building, which still has a 60 percent vacancy rate, to the business community.
“For every five brokers we have brought into the building,” he said, “at least three have said they’ve never been in here before.”
Several new retail tenants have been signed, the most prominent of which is Walgreens, which announced that it leased 28,000 square feet on two levels in the building’s north tower for what it calls a “flagship” store.
Tom Connolly, vice president for facilities at Walgreens, noted the appeal of the location. “Every tourist who comes to Chicago walks down Michigan Avenue,” he said. “You could not ask for better positioning.”
The building should also benefit from a shift in development on the street. For many years, the Wrigley Building anchored the southern tip of the retail district. Today, however, it represents more of a midpoint.
“The gravity of Michigan Avenue from a retail perspective has continued to shift south since the development of Millennium Park in the Loop in the early 2000s,” said Keith Largay, executive vice president of Jones Lang LaSalle, a real estate services firm here. “That whole stretch of Michigan Avenue south of the Wrigley Building that used to be mom-and-pop retail is now being renovated to accommodate larger stores and national retailers.”
On the office side, leasing has been slower, reflecting North Michigan Avenue’s relatively high — 18 percent — office vacancy rate. The Wrigley Building’s small floors — 9,500 square feet in the south tower and 19,700 square feet in the north tower — have also been a factor.
“It’s more of a boutique kind of building,” said John Goodman, executive vice president of Studley Inc., a national office tenant representative firm here. “And if you are a company looking for 10,000 to 20,000 square feet of office space in downtown Chicago right now there are a lot of options to choose from.”
While the Wrigley Building is BDT’s first development project, it will not be its last. The deal for the Wrigley Building, for example, included a nearby 1.5-acre lot a block west of Michigan Avenue, with a vacant commercial building and a parking lot.
“We have a pretty important site there,” Mr. Trott said. “We have not just an economic opportunity but the chance to do something special for Chicago in the world of architecture.” He added that BDT would mostly likely move its offices into the finished building.