Transformation of historic Loop office building into housing begins
City officials and development partners on Thursday marked the start of their efforts to convert four Loop office buildings into apartments, an effort to create a vibrant mixed-use neighborhood after the pandemic hiked office vacancy levels.
A groundbreaking was held for 79 W. Monroe, the first office-to-residential conversion to break ground under the city's La Salle Street Corridor Revitalization initiative.
The property — formerly known as the Bell Federal Savings & Loan Building but now as the Rector Building — was built in 1905. It's the oldest surviving commercial tower designed by architect Jarvis Hunt. The building was also given landmark status by the Chicago City Council on March 12.
The project is being led by Chicago-based developer R2 and Lagfin, the holding company of Italy-based spirits company Campari Group. A limited liability corporation tied to Campari Group purchased the building for an estimated $48 million in 2022.
The conversion is a $64.2 million investment and is expected to create at least 75 construction jobs, according to officials. In October, City Council approved $28 million in tax increment financing for the project.
“We are really committed to preserving [the building’s] unique character while modernizing its use,” said Massimiliano Seliziato, Lagfin’s S.C.A. director. “This project is more than just a conversion — it is a blueprint for the future of urban living.”
The 14-story property will have 117 units, including 41 affordable. Floors seven through 13 will include apartments, according to Housing Department Commissioner Lissette Castaneda. The lower floors are currently occupied by a charter school and a Walgreens on the ground floor.
The units will include studio, one- and two-bedroom floor plans, Castaneda said.
The typical studio apartment in the Loop rents for more than $2,000. At the Rector Building, that same unit will be available for about $1,000. “That can make a difference — a world of difference — to Chicagoans with varying income levels,” Castaneda said.
The building will also include a lounge, fitness center and dog run for residents. Key architecture features — like the Weather Bell sign — will be restored and preserved.
In late 2022, former Mayor Lori Lightfoot invited developers to submit proposals for what was then called La Salle Street Reimagined, to reduce vacancies in office and retail space in what was Chicago’s nerve center for finance. The three original winners — not including 79 W. Monroe, which was added later — were drawn from six shortlisted responses to the city’s call.
The La Salle initiative — part of a wider, reconfigured economic plan Mayor Brandon Johnson unveiled during the groundbreaking — will add more than 1,000 new apartments to the Loop.
Johnson's new economic development strategy, called Build Better Together, is an umbrella for the city’s ongoing business, housing and infrastructure pushes — including the La Salle projects and Cut the Tape.
It also includes other new initiatives, such as a push to create “missing middle” market-rate housing on redeveloped city-owned land, according to Chicago's Department of Planning and Development Commissioner Ciere Boatright.
Build Better Together will pull from Johnson’s $1.25 billion bond for housing and development projects, according to city officials. It will be allocated over a five-year period and split equally between the city’s Department of Housing and the Department of Planning and Development. Other existing funding sources will also be used.
“Build Better Together focuses on leveraging the foundation that we have built,” Johnson said during Thursday's groundbreaking. “The investments and developments that we are describing today will ensure that Chicago continues to grow and thrive — and not just today, but for generations to come.”
Build Better Together is supposed to drive economic growth in Chicago’s neighborhoods, with a focus on affordable housing, business innovation and job growth.
Cutting administrative tape that has long bogged down development and business growth in the city is one of the main strategies. The Cut the Tape initiative, announced in April 2024, has reduced planned development approval timelines from 135 days to 79, city leaders said Wednesday in a call with reporters. City-owned land valuation timelines have also shrunk from six months to one month because of the initiative.
Cut the Tape is why 79 W. Monroe will be the first La Salle project to break ground, Johnson said.
Ald. Bill Conway (34th), whose ward the building falls in, hailed the conversion project as “very important” for Chicago and the first step toward revitalizing the Loop after the pandemic.
The pandemic dramatically hit office buildings and lowered their value. Downtown Chicago’s office vacancy rate hit a record high of 23.2% in the fourth quarter of 2024, according to commercial real estate firm Bradford Allen.
“This work that we do downtown will … radiate all over the city and bring jobs and housing when it's needed most,” Conway said.