After buying one of Chicago’s tallest skyscrapers for just $45 million, a New York investor is eyeing a plan to convert part of it to a hotel.
Kohan Retail Investment Group is seeking a hotel developer to lease several floors in the 65-story tower at 311 S. Wacker Drive and operate a 200- to 300-room hotel in the mid-rise section, CEO Mike Kohan said.
That partial conversion plan is emerging after the Great Neck, New York-based firm finalized the $45 million purchase of the high-vacancy tower at a massive loss to the previous owners, Chicago-based Zeller Realty Group and China’s Cindat Capital Management, and their lenders.
The Zeller-Cindat venture bought the approximately 1.3 million-square-foot property for more than $302 million in 2014, when office values and demand were soaring.
CoStar News first reported in May that Kohan planned to buy the 961-foot-tall tower, and the purchase was completed in June.
Kohan told CoStar News that Zeller and Cindat conceived the hotel vision but never followed through on it.
“I’m just following the previous owner’s plan,” Kohan said. “I’m looking for a developer to come in and do the hotel.”
Kohan’s hotel plan could cost around $60 million, he previously told Crain’s Chicago Business. The move would serve the dual purpose of adding a new form of lease revenue while eliminating around a dozen floors of vacant space in the skyscraper.
If Kohan’s hotel plans come to fruition, it would add to the list of decades-old office towers in the city getting full or partial conversions to new uses, including several planned residential projects in and around the Loop business district amid historically low office demand.
The tower at 311 S. Wacker is across the street from the 110-story Willis Tower.
No. 9 on the list of Chicago’s tallest buildings, the tower at 311 S. Wacker is known for a crowned top that lights up at night. Designed by Kohn Pederson Fox, the tower was completed in 1990.
Kohan was focused on investing in malls and shopping centers throughout the country before recently buying several New York office buildings with investors Alan and Kevin Assil, who also are involved in the Chicago deal.
Kohan’s bargain-rate purchase in Chicago followed higher-priced deals for 311 S. Wacker that fell through with other prospective buyers in recent years.