The National Chicago

Crain’s Chicago Business

Owners of ex-CPS headquarters land $100 million loan

The owners of the former Chicago Public Schools headquarters in the Loop borrowed nearly $100 million as they complete an overhaul of the building now called the National.

A Chicago-based venture of Blue Star Properties and the Wolcott Group took out a $99.5 million loan on the 20-story building at 125 S. Clark St., according to the Chicago office of HFF, which arranged the financing.

The debt from Toronto-based Brookfield Real Estate Financial Partners and Little Rock, Ark.-based Bank of the Ozarks replaces a smaller loan and will fund leases and the completion of upgrades to the building including new indoor and outdoor tenant lounge areas, a fitness center and a food hall, said BlueStar founder Craig Golden.

“It gives us the flexibility to fully develop the property to the place where we’d like to see it, with more of a lifestyle approach to office space,” Golden said. “This will give us enough to do the rest of construction.”

The building’s redevelopment will cost more than $100 million, Golden said.

The Blue Star venture previously borrowed $26.4 million from Los Angeles-based Pacific Western Bank when it bought the building from CPS for $28 million in February 2015.

An HFF team including Managing Director Christopher Carroll and Senior Managing Director Michael Kavanau represented Blue Star.

Designed by Daniel Burnham, the building was completed in 1907. About 40 percent of its approximately 507,000 square feet of rentable space has been leased.

New York-based WeWork’s 112,000-square-foot lease is the largest co-working lease ever signed in Chicago. Chicago-based arts-and-crafts chain Paper Source leased almost 29,000 square feet for its headquarters and also plans a ground-floor store of about 2,000 square feet.

Blue Star’s work on the building will completed in July, and tenants will move in as soon as August, Golden said. WeWork and Paper Source are building out their spaces, and Blue Star is in talks with several other tenants, he said.