25 jun 09 | The Wall Street Journal
Big hotel planned next to Sears Tower
by Maura Webber Sadovi
A real estate investment group that owns the Sears Tower said it is pushing forward with plans to build a 500-room environmentally friendly hotel next door to North America's tallest building, but released few details on financing for a project that will cost as much as $225 million.
The group, which includes investors Yisroel Gluck, John Huston, Joseph Chetrit and Joseph Moinian, said they would spend $350 million to make the 110-story tower more environmentally friendly and reduce the amount of energy it uses. It plans to cut the equivalent of about 150,000 barrels of oil used annually by such steps as replacing the tower's 16,000 windows with more energy-efficient alternatives, adding solar panels, more efficient gas boilers and motion detectors so that escalators operate only as needed.
The proposed 50-story glass-clad luxury hotel would be located on a slice of land next to the tower and near the entrance to the Skydeck observation deck that is popular with tourists. The preliminary plans for the building, supplied by Adrian Smith + Gordon Gill Architecture, include wind turbines that would generate electricity and roof-top gardens to reduce storm water runoff and improve insulation.
Financing the projects will likely pose a challenge for the owners in the credit-starved real estate market, say real estate brokers. Members of the ownership group said they will look to the city of Chicago as well as some government grants for some assistance in funding the environmental upgrades to the Sears tower. The group also is pursuing private sources of debt and equity financing for the hotel.
The hotel is being proposed at a time when hotels in Chicago, along with the rest of the country, are struggling with falling occupancy and room rates. But the owners maintained that demand will be there when the hotel is completed in five years.
"We're not building the hotel for today's market," said Mr. Huston, executive vice president of Skokie, Ill.,-based American Landmark Properties Ltd., one of the owners. "We're building the hotel for three to five years from now."
Designed by Skidmore, Owings & Merrill and completed in 1973, the Sears Tower has faced increased competition from newer buildings as well as concerns from some prospective tenants about locating in tall buildings in the wake of the Sept. 11 attacks.
The Sears Tower's owners said earlier this year that they would change the tower's name to Willis Tower as part of an agreement to lease more than 140,000 square feet to Willis Group Holdings, a London insurance company. The name change is scheduled to occur later this summer.