In the heart of Chicago’s LaSalle Street corridor, a significant transformation is underway as investor Igor Gabal takes on the redevelopment of the historic office building at 19 S. LaSalle St. With a $50 million-plus plan, Gabal aims to convert the 159,000-square-foot property into as many as 190 residential apartments. This project is part of a broader push to repurpose outdated office buildings into much-needed housing in downtown Chicago’s Loop.
Key Details of the 19 S. LaSalle St. Project:
- Developer: Igor Gabal and Envoi Partners
- Size: 159,000 square feet
- Planned Units: 170-190 residential apartments
- Cost: $50 million+
- Potential Funding: Exploring tax-increment financing (TIF) and other tax incentives
- Historical Significance: Designed by William LeBaron Jenney, built in 1893
- Current Building Status: 30% leased, bought via distressed loan purchase
- Timeline: Construction start and completion dates to be determined
This ambitious redevelopment will breathe new life into a structure that has played a vital role in Chicago’s architectural history. Designed by the famous William LeBaron Jenney, the building originally opened in 1893 as the Central YMCA Association Building. It is recognized for its historic significance, carrying an “orange” rating from the Chicago Historic Resources Survey. This designation emphasizes its architectural and historical value, even though it is not a designated landmark.
Transforming the LaSalle Street Corridor
Crain's Chicago Business reports that the redevelopment of 19 S. LaSalle St. is a critical part of the larger effort to revitalize the LaSalle Street corridor, which has been hit hard by office vacancies, particularly after the COVID-19 pandemic reshaped work habits. Many office buildings in the area have become financially distressed, making them prime targets for redevelopment.
Gabal and his team purchased the distressed loan tied to the building for just under $4.2 million, acquiring the property through a deed-in-lieu of foreclosure. This acquisition came at a significant discount, as the building was previously valued much higher before office vacancies skyrocketed. The building’s previous owner, Rubin Espinoza, faced foreclosure after occupancy rates dropped to 56% in 2021, and the property’s financial performance deteriorated.
Repurposing the Building for Residential Use
The primary focus of the redevelopment is converting the former office building into 170 to 190 residential apartments. The plan capitalizes on the growing demand for downtown living, especially with Google’s transformation of the nearby James R. Thompson Center into its new Chicago headquarters. The 19 S. LaSalle redevelopment will provide much-needed housing for the growing workforce expected to move into the Loop area in the coming years.
This project is well-aligned with the city’s strategy to encourage office-to-residential conversions in the Loop. The city has allocated $151 million in TIF money to support these redevelopments, and Gabal’s team is exploring various incentives and tax credits to help finance the project. This could be key to ensuring the project's financial viability, given the high costs of converting a historic building while maintaining its architectural integrity.
Challenges and Opportunities
Although the potential for revitalizing this building is high, the project also faces several challenges. Gabal will need to navigate the high costs of construction materials, labor, and property taxes, all of which have been exacerbated by post-pandemic economic conditions. However, acquiring the building at a discounted rate offers an opportunity for long-term growth and success.
The building is currently about 30% leased, meaning that a significant portion of the property is already unoccupied, making it easier to proceed with the planned renovations without displacing many tenants. However, the building’s occupancy dropped significantly during the pandemic, which underscores the broader challenges facing office buildings in the Loop.
Despite these challenges, Gabal remains optimistic. “I love Chicago and the old real estate, especially in the Loop. People want to see this come back,” he said. His strategy revolves around resetting the financial basis of the buildings he acquires, allowing him to reinvest in their redevelopment and position them for future growth.
Historic Preservation
Given the building’s historical significance, the redevelopment will involve preserving key architectural features while modernizing the property for residential use. Designed by William LeBaron Jenney, often referred to as the father of the skyscraper, the building is an important part of Chicago’s architectural legacy. The redevelopment will honor this legacy by ensuring that the building’s historical elements are preserved, even as it is repurposed for modern residential living.
Gabal’s Broader Investment in the Loop
Gabal’s investment in 19 S. LaSalle St. is not his only bet on the recovery of Chicago’s Loop. He has been actively acquiring distressed properties in the area, including a deal for the Burnham Center office building at 111 W. Washington St. He is under contract to purchase the distressed loan tied to that property, which could give him a path to acquire the 22-story office building.
His efforts reflect a broader trend of investors looking to revitalize the Loop by converting outdated office buildings into residential units. With Google’s new headquarters set to bring thousands of new jobs to the area, the demand for downtown housing is expected to rise, making projects like the 19 S. LaSalle redevelopment critical to the Loop’s future growth.
The redevelopment of 19 S. LaSalle St. represents a significant step in revitalizing Chicago’s Loop and addressing the city’s need for more residential housing. With plans to convert the historic office building into 170 to 190 residential units, the project aligns with the city’s strategy to encourage office-to-residential conversions and revitalize downtown neighborhoods. Despite the challenges posed by high construction costs and the complexities of redeveloping a historic building, Gabal’s vision offers a promising path forward for both the building and the LaSalle Street corridor. As Chicago continues to recover from the effects of the pandemic, projects like this will play a crucial role in shaping the future of the city’s downtown core.
