|Donald M. Biernacki|
In many cities, commercial building came to a virtual standstill after 2007’s financial collapse. Four years later, a mothballed skyscraper in downtown Chicago was still standing as a towering reminder of the Great Recession.
“The economy was horrible,” reflects Donald M. Biernacki, senior vice president of developer Related Midwest. “I don’t think you could have had a clearer image of what was going on than that 26 stories of concrete and rusting steel.”
Related Midwest took on a good deal of risk when, in 2011, it acquired the property, including more than $100 million in liens that more than a dozen companies had filed against the building. The developer came up with an elegant solution to form a business entity that gave the lien holders a seat at the table—rather than trying to fight them in court.
“It went very well,” says Michael Hughes, chairman and founder of Huen Electric, which was owed more than $8 million. Rather than tearing down the structure and starting over, “Don saw the validity of making something out of this,” Hughes adds.
The building went through a complete redesign that required tricky construction work, led by Lendlease. The project emerged, in 2014, as OneEleven, a 60-story, high-end apartment tower with 504 units. Later that year, Related Midwest sold it for a cool $333 million. On a per-sq-ft basis, it is believed to be the highest price paid for an apartment tower in the Windy City.
Related Midwest might have kept the building, but the developer needed to pay off its partners. “The money came rolling in, and we were all tremendously happy with the outcome,” Hughes says.