Block 37

Block 37

Company type	Mixed-use complex
Industry	Real estate, Retail
Founded	1989 (site cleared)
Headquarters	Chicago , United States
Area served	Chicago Loop
Products	Retail, office space, residential units, hotel

108 North State Street, commonly referred to as Block 37, is a mixed-use complex and retail center located in Chicago's Loop. It is enclosed by West Randolph, North State, West Washington, and North Dearborn Streets. Although the above-ground redevelopment has been finalized, work on an underground transit station was suspended and remains incomplete.

The original structures on this parcel were torn down in 1989 amid considerable dispute during Mayor Richard M. Daley's administration, notably including the demolition of the Chicago Landmark McCarthy Building following an Illinois Supreme Court decision against preservation advocates.

After the site was cleared, several redevelopment proposals failed to materialize. Construction commenced under Mills Corporation in 2005 but encountered setbacks in 2006 due to financial instability, leading contractors to worry about payment issues. By November 2009, Mills was declared in default, prompting CB Richard Ellis to assume control as receiver. Subsequently, Joseph Freed and Associates LLC took ownership; however, Bank of America foreclosed in 2011 and later sold the property to CIM Group in 2012. The three new structures were completed by 2016.

Site

In 1829, a group of commissioners appointed by the state legislature hired James Thompson to survey and map Chicago, which at that time was a small town with fewer than 100 inhabitants. The official filing of this plat on August 4, 1830, marks Chicago’s recognized municipal founding. Block 37 is part of the original 58 blocks laid out in this plan. Its prime position within the Loop, situated between the State Street shopping district, government offices, and theater venues, demonstrates its role at the heart of the city’s commercial and civic development.

Prior to the Great Chicago Fire, Block 37 was home to one of the largest theaters in the city. By the late 1800s, it contained numerous high-rise office buildings. In 1970, the block featured eleven buildings including theaters, office spaces, a YMCA, and retail outlets such as Stop & Shop. On June 14, 1973, Mayor Richard J. Daley initiated a substantial urban renewal project targeting the North Loop theater area. Over the following sixteen years, developers like the Rubloff Company and JMB Realty proposed extensive mixed-use developments that combined retail malls along State Street with hotel and office towers above. The creation of the North Loop tax increment financing district by Mayor Harold Washington in 1983 provided both funding mechanisms and eminent domain authority to assemble properties for redevelopment.

Currently, Block 37 is flanked by the Richard J. Daley Center on its western edge and the former Marshall Field and Company Building on its eastern boundary. It lies within Chicago’s central business district near significant government facilities such as Chicago City Hall and the James R. Thompson Center, which houses Illinois state offices.

Buildings

The original blueprint envisioned a trio of interconnected buildings: a 21-story residential condominium tower named 108 North State Condominium Tower located at North State Street and West Randolph Street; a 20-story hotel tower called 108 North State Hotel Tower situated at West Randolph Street and North Dearborn Street; and a 17-story CBS Broadcast Center positioned at North State Street and West Washington Street, designated for WBBM-TV, CBS 2. At one stage, plans to replace the hotel tower with a second residential tower surfaced, although subsequent designs still included the hotel component. These structures stand above retail areas that host a variety of shopping, entertainment, and dining venues. In November 2008, the city proposed financial assistance to support Loews Hotels in constructing a 354-room hotel.

From an architectural perspective, the ground level features transparent corner facades and unobstructed glass views at street level. Collectively, the buildings provide roughly of retail, entertainment, and dining space along with of office space. The 38-story Marquee at Block 37 (25 West Randolph Street) was finalized in 2016, offering 690 residential units.

The 2005 design incorporated a superstation linking the CTA Blue Line and CTA Red Line, facilitating seamless transfers and providing downtown rail service to both O'Hare and Midway. The projected cost for this station was $213 million, with funding split between the City of Chicago and Chicago Transit Authority (CTA) covering $172 million, while the Mills Corporation was responsible for the remaining amount.

Due to budget overruns and delays, the city and CTA absorbed approximately $100 million in expenses already incurred. Ultimately, the CTA discontinued the project because it lacked the estimated $1.5 billion necessary to provide express airport service instead of slower local trains. Around $400 million had been spent constructing the station shell, with an additional $40 million allocated for preservation costs.

By November 2009, construction progress allowed the Block 37 segment of the Chicago Pedway to open between the Lake station on the Red Line and the Washington station on the Blue Line. Initially, riders using farecards were charged a $0.25 transfer fee for this connection, which was eliminated in May 2013.

Following the cancellation of the superstation plan, Chicago investigated privately financed airport express options using Block 37 as a downtown terminus. In June 2018, The Boring Company secured a contract to develop the Chicago Express Loop, a high-speed transit system to O'Hare featuring dual tunnels and electric vehicles modeled after the Tesla Model X. This project is to be fully funded by the company itself and aims to reduce travel time to O'Hare to approximately 12 minutes.

Block 37

Block 37 was cleared in 1989 after Mayor Richard M. Daley authorized its demolition to make way for a mixed-use skyscraper combining retail, hotel, office, and residential components. This decision sparked public debate as it led to the loss of landmark status for the McCarthy Building, despite efforts by preservation advocates. The site remained nearly empty from 1989 until 2005 due to political challenges and funding difficulties faced by developers. The sole surviving pre-1989 structure is a Commonwealth Edison transformer facility that supplies electricity to much of the Loop.

The nonprofit organization founded by Maggie Daley, originally known as Gallery37 in 1991, began by offering visual arts programs for teenagers through tents located on this site. It later moved nearby into what is now called the "Gallery 37 Center for the Arts" on Randolph Street.

In 1987, Mayor Harold Washington approved a $24 million subsidy for FJV Venture aimed at developing Block 37. Several redevelopment proposals followed but did not materialize, including plans for Block 37 Towers featuring a 47-story building designed by Murphy/Jahn, Inc., as well as another concept by Solomon Cordwell Buenz that included a 711-foot residential tower alongside a Marriott Hotel atop retail space. Earlier still were designs by Kohn Pedersen Fox Associates for a 39-story building intended for completion in 2004. These repeated setbacks resulted in the property reverting back to city ownership.

In 2002, a development rights competition attracted ten interested parties. By 2004, Block 37 was sold to Mills Corp. at a loss of $20 million. Mills then transferred development rights to Joseph Freed and Associates in 2005 when the city committed $42 million through tax-increment financing. By 2007, expenses had exceeded budgets by $150 million. Initially managed by Mills Corporation—known for regional shopping centers—the development rights are now held by Joseph Freed and Associates.

Corporate challenges

The difficulties faced by Mills began in November 2005, marked by significant losses from unsuccessful ventures, liquidity problems, and an investigation by the U.S. Securities and Exchange Commission into its accounting practices. By March 2006, the SEC had escalated this to a formal probe with subpoena powers. On April 6, 2007, Mills was acquired by Simon Property Group, Inc. and Farallon Capital Management for $25.25 per share.

Issues at Block 37

In March 2006, construction at Block 37 was halted due to concerns over contractor payments, leading Morningstar to reconsider its lease agreement and diminishing the project's overall value, which complicated resale efforts. Mills was nearing an agreement with German investor Deutsche Immobilien Fonds A.G., who had outbid Chicago's Golub & Co.—the latter eventually securing the office space segment. Mills transferred retail space rights to Chicago-based developer Joseph Freed & Associates, who also purchased the adjacent Carson, Pirie, Scott and Company Building.

By 2007, legal conflicts arose between Golub and Mills concerning Morningstar leases worth ; Golub accused Mills of misrepresenting floor space measurements and making project modifications without city approval. Additionally, Golub filed suit regarding the residential portion sold to Freed, alleging that Freed accepted the office segment at low profit margins with expectations of gains from residential development. A court decision permitted Mills to terminate its contract with Golub for the residential towers and sell that section of Block 37 to Joseph A. Freed & Associates LLC.

Foreclosure in 2009

On October 19, 2009, lenders including Bank of America initiated foreclosure proceedings on the retail and transit parts of the development after Joseph Freed and Associates exhausted its funding. Freed entered technical default in March, with cost overruns surpassing $34 million by August. According to a Cook County lawsuit, Freed owed $128.5 million on a $205 million construction loan.

Despite this, on November 3, the developer announced plans for 13 new tenants to open shortly thereafter. However, on November 20, a circuit court judge revoked Freed’s development rights and assigned control to CB Richard Ellis. That same day saw issuance of a partial occupancy permit for the underground pedway linking the Red Line and Blue Line, along with first-floor retail spaces. Freed maintained that loan payments were current and that default was merely technical. On December 30, Freed was held personally responsible for $6.8 million in costs.

As receiver, CB Richard Ellis was tasked with submitting a status update by December 8 and a comprehensive financial report by January 15, 2010. Disputes over insurance delayed transfer of development rights until late January 2010. In March 2011, Bank of America obtained ownership of the $206 million property through a sheriff’s foreclosure sale using a $100 million credit bid. By February 2012, CIM Group was poised to complete a negotiated acquisition of the entire 305,000-square-foot retail center from Bank of America, which was finalized in April 2012.

Phase I construction

After securing the project site from the city on November 11, 2005, The Mills Corporation initiated construction on November 15, 2005, following their success in the master developer competition and receipt of municipal approval. Early tenant agreements included CBS 2 Chicago Broadcast Center, Boggi Milano, Sisley, Andrew's Ties, Banana Republic, Rosa Mexicano, David Barton Gym, and dining concepts introduced by restaurateurs Steve Lombardo and Steven Foster. Morningstar, Inc. committed to leasing roughly 210,000 square feet spread over eight floors, establishing itself as the largest office occupant. WBBM-Channel 2 also pledged about 100,000 square feet for office space and a television studio.

In February 2008, Joseph Freed & Associates announced a tenant lineup featuring Club Monaco, an Muvico Entertainment LLC cinema, David Barton Gym, Rosa Mexicano restaurant, a coffee outlet, and a restaurant operated by Lettuce Entertain You Enterprises. By June 2008, Puma had confirmed intentions to open a two-story flagship store alongside an eight-screen Muvico multiplex. By October of the same year, Zara had secured space at Block 37 in addition to Puma and Ben Sherman. Other retailers confirmed included Steve Madden, Godiva Chocolatier, Lululemon Athletica Inc., Aveda, and Sabon. Potential tenants reportedly considering Block 37 at that time included Apple and Crate & Barrel.

Phase II construction

Retail and Chicago Transit Authority (CTA) construction commenced on July 31, 2006. The retail segment encompassed the CBS 2 Broadcast Center building located at North State Street and West Washington Street, which also functions as the corporate headquarters for Morningstar, Inc.. This 17-story structure stands 276 feet (84 meters) tall and represented the first tangible advancement beyond groundbreaking after earlier project postponements.

Phase II was initially scheduled for completion by March 2008 to facilitate Morningstar’s planned relocation prior to the expiration of its lease at 225 W. Wacker Drive in early 2009. However, financial difficulties caused delays that compelled Morningstar—originally intending to occupy more than half of the building—to pursue alternative office space options downtown. Despite this setback, Morningstar remained hesitant to vacate due to a favorable lease rate below market value in the low $20-per-square-foot range.

On June 11, 2008, the CTA board evaluated a three-stage bailout strategy addressing cost overruns related to rapid transit station construction beneath Block 37. This plan included an additional $20 million in tax increment financing after CTA had already absorbed $60–70 million in excess expenses. Developer Joseph Freed & Associates agreed to cover $19 million of these overruns. The initial budget of $213 million—$173 million funded by CTA—had surged to $320 million, surpassing estimates by $150 million. With no further funding allocated, station construction was suspended pending new financial commitments.

Construction on the third tower—comprising hotel accommodations and residential units—finally began toward the end of 2009.

You Are Beautiful

Throughout the construction phase, a group of 100 local artists crafted wooden cutout letters that were mounted on the temporary construction barrier next to the pedestrian path. The message You Are Beautiful was showcased in various languages.

Completion

The mixed-use, 16-story structure officially opened with a ribbon cutting ceremony in September 2008. The CBS studio within the building includes an outdoor video screen. Morningstar moved its global headquarters to this location and introduced the globe’s first upscale coworking environment on the 15th floor, featuring 100 workstations along with amenities such as a spa, pool room, recording studio, graphic design facility, audio-visual boardroom, penthouse suites, and concierge services.

Retail occupants encompassed Bebe, Coach, and J.Crew. Lettuce Entertain You managed a café, food court, and marketplace. The top floor was originally designated for Muvico Theaters, which withdrew in 2009. The project's inaugural and largest tenant, David Barton Gym, also exited due to delays in the mall’s opening from fall 2008 to fall 2009. In March 2009, Apple Inc. terminated its lease and soon relocated to a new site in the Clybourn Corridor, leading to Lululemon also pulling out. Additional leases signed in March 2009 included Chicago haberdashery Bigsby & Kruthers, Sunglass Hut, jewelers Swarovski, Starfruit Cafe, and fast-casual restaurant Tahini. Amid declining advertising revenue, CBS sought to sublease portions of its studio space.

The underground pedway linking the Blue and Red Lines commenced operation on November 20, 2009. The following day marked the opening of Steve Madden shoes as the first retail store in the building. By February 2012, plans for the theater, food court, and gym had been abandoned, with these venues never opening. Retail occupancy remained low at 26 percent as retailers hesitated during ongoing bankruptcy disputes between lender Bank of America and developer Joseph Freed.

Apartment building

In 2014, CIM advanced its proposal for a rental residential tower above Block 37. By September, permits were secured for a 34-story apartment building containing 690 units, which Crain's Chicago Business referred to as "the largest apartment tower the Loop has seen in decades." Construction commenced in October 2014 with an anticipated completion date in Summer 2016; amenities included an outdoor swimming pool, rooftop spa, and fitness center. At that time, retail occupancy stood at 52 percent. This residential project replaced earlier plans that had called for a hotel atop the structure. Simultaneously, an 11-screen AMC dine-in cinema was planned and opened on the fourth floor in December 2015, becoming both the Loop’s sole major chain theater and Chicago’s first Dine-In Theatre.

On June 1, 2016, the Marquee at Block 37—a 38-story building located at 25 West Randolph Street—officially opened, marking the conclusion of construction at Block 37. CIM and its Canadian partner Morguard attempted to sell the property in 2017 for $414 million but received no bids. Later that year they refinanced with a $225 million mortgage loan to repay a $110 million construction loan. The property was put back on the market in 2019 with an asking price of $300 million. In November 2019 Morguard acquired CIM’s stake through financing secured by a $165 million loan from Northwestern Mutual.

External links

• Visual documentation for block 37