Third Millennium, Hines Pursue Second West Loop Tower

The owner of a West Loop office tower is moving forward with scaled-back plans for a second office tower on a site where it has held a building for years.

Third Millennium Group is partnering with Houston-based real estate giant Hines to develop a 28-story tower at 590 West Madison Street, CoStar reported.

The plan marks a departure from a 2014 proposal that called for a 41-story office and hotel complex adjacent to the 31-story building it owns at 540 West Madison. That plan was shelved due to the inability to secure an anchor tenant.

The planned development, designed by Goettsch Partners and Michael Hsu Office of Architecture, will feature 605,000 square feet of office space along with 50,000 square feet of amenities, including sports courts and a climbing wall. It will also include 10,000 square feet of retail space, according to marketing brochures.

Chicago’s downtown office vacancy rate is 26.3 percent, however, Class A office buildings perform better.

Third Millennium and Hines are betting that demand for new Class A office space will continue, particularly as companies continue to relocate to more modern buildings.

Hines, which developed 540 Madison in 2003, has already started marketing the second tower to potential anchor tenants.

Hines is also working with Chicago investors John Murphy and Gerald Kostelny to redevelop two land parcels next to the 65-story office tower at 311 South Wacker Drive. They are considering the possibility of demolishing the skyscraper to pave the way for a large-scale multitower development.

That partnership is under contract to acquire the tower for $70 million, or $53 per square foot, a stark contrast to the $230 per square foot that Zeller Realty Group and Chinese investor Cindat Capital Management paid in 2014.

— Andrew Terrell