The best way to sell Chicago’s Thompson Center? How about an online auction?

JamesRThompson_Intro2by Dan Rafter

Illinois Gov. Bruce Rauner is eager to sell the James R. Thompson Center in downtown Chicago. Since 1985, the center has served as the Chicago headquarters for State of Illinois workers. It’s also been a source of much ridicule, with critics of the building saying that it is impossible to adequately heat or cool. Workers complain that toiling in the Thompson Center is like working in a giant fish bowl.

This wasn’t what famed architect Helmut Jahn expected when designing the building that now occupies prime Chicago real estate at 100 W. Randolph St. And the architectural giant isn’t thrilled with Rauner’s plans to sell the building at auction. In a letter, Jahn criticized the state for filling the Thompson Center with the wrong kind of retailers, and suggested that the building be repositioned and possibly turned into hotel or multifamily space.

That seems unlikely, with Rauner seemingly determined to sell the property.

And if plans to sell do move forward? The auction format – specifically an online auction — might prove to be the best way for the state to sell the building and make the most money from the sale, said one Chicago-based auction expert.

Diana Peterson, president of Chicago’s SVN AuctionWorks, says that the online auction format will bring the highest number of potential buyers and the most transparency to a possible sale. And if that happens, the state stands to earn the highest possible dollar amount from selling off the Thompson Center, Peterson said.

“The urgency of an auction will benefit this type of building,” Peterson said. “You are going to bring people to the table much more quickly. An auction is also an as-is sale. This property, having so much deferred maintenance, would greatly benefit from an as-is auction sale.”

There’s still a long way to go before Rauner will get his wish to sell the center. It’s not even certain yet that he’ll gain the approvals he needs to sell off the facility.

But if the Thompson Center does go to auction? Don’t expect the oddly-shaped building to remain after a sale closes. The Thompson Center sits in an ideal location in downtown Chicago. But the building itself isn’t of much use to most retail, office or multifamily users, Peterson said.

“I’m assuming that a new owner will want to tear the building down and build something new,” Peterson said.

Rauner has said that the Thompson Center is suffering from about $100 million in deferred maintenance. It’s unlikely that a buyer would take on that financial burden instead of just tearing down the center and starting over.

The Thompson Center has also been notoriously costly to heat and cool. Rauner, not one to hide his true feelings about the building, has compared the center to a giant terrarium. By tearing down the building, the new owners could build new structures that are far more energy efficient.

There is a reason for the unusual design of the Thompson Center and all that open space inside it. It was supposed to signify a new era of openness in state government. Of course, that was before two Illinois governors were sent to jail.

But the state could still give a nod to transparency by selling the building at an online public auction, Peterson said.

“With an online auction, you can have total transparency in this sale,” Peterson said. “That is something that a government entity could benefit from. In a more traditional auction, the public doesn’t know who bid what or how a particular bidder got selected. If you were to bring the auction online as opposed to a sealed-bid auction, you would have a more transparent process.”

That’s because the only bidders allowed to bid online are the actual registered bidders.

“There will be a lot of scrutiny with this sale,” Peterson said. “The state would greatly benefit by bringing the building to online auction.”

Peterson says that an ideal user for the Thompson Center site would be one willing to build two towers on the property, one with ground-floor retail and office space above it and a second also with retail at its base but with multifamily units above it.

Rauner said that it costs the state $6 million to $12 million each year to operate the 17-story Thompson Center. The governor has already said that he’d prefer to sell the building at public auction, and that he’d like to do so quickly, within one year.

Advertisements
This entry was posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, multi-family, office, retail and tagged , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s