July 21 (Bloomberg) -- International Property Developers announced plans to build a $3.5 billion office, residential, hotel and retail project in downtown Chicago, including a 120-story tower that would be the tallest in the U.S.
The closely held company, led by Monaco-based investor Bill Davies, filed a proposal for the development with city planners today. The tower, at about 2,000 feet (610 meters), would be taller than both the 1,729-foot Willis Tower, formerly known as Sears Tower, near the site of the planned development, and the 1,776-foot 1 World Trade Center being built in New York.
“It’s an incredible site,” said Martin Mulryan, the project manager on the development for International Property. “There’s no other opportunity like this in the U.S.”
Commercial real estate construction declined in Chicago during the U.S. recession. International Property’s proposed project would be the biggest in a part of downtown with little new development.
The project, planned for 20 acres (8 hectares) on the banks of the Chicago River in the southwest area of downtown, would be built in phases over 10 years. The first phase would include transforming the former Chicago Main Post Office Building into a retail and entertainment center. International Property bought the postal facility, once the biggest of its kind in the world, for about $25 million in 2009.
The first phase also includes a 40-story hotel. A second phase would include the 120-story tower, which would have offices, a hotel and residential units, Mulryan said. A third phase would include two 60-story residential buildings.
‘Hard to Understand’
The plan for the tallest building would make more sense in cities where land is more expensive such as New York, said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. Making such skyscrapers work financially is difficult, he said.
“It just doesn’t make a lot of sense,” Green said. “It’s hard to understand why anyone would want to build the tallest building.”
Mulryan said the first phase of the project may cost up to $450 million. Davies has options on adjacent properties for the development, Mulryan said. Financing for the total project will be from investors, and International Property isn’t planning to take on “major debt” for the project, he said.
Five years ago, Dublin-based Shelbourne Development Ltd. planned to build a 2,000-foot residential tower in Chicago. The project stalled amid the recession and housing slump. Late last year, a lender on the project received approval from a Cook County judge to appoint a receiver for the property, according to the Chicago Tribune. The parcel is at the mouth of the Chicago River on the shore of Lake Michigan.
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