Chicago business icon Wm. Wrigley Jr. Co., whose renowned namesake building is an architectural gem, is studying its long-term real estate needs, including a move from its historic headquarters building, the Chicago Tribune has learned.
If the company decides to pull up stakes for another location in the city--unthinkable even a few years ago--one likely scenario is that the Wrigley Building at Michigan Avenue and the Chicago River would eventually be turned into luxury condominiums, real estate sources said.
Wrigley spokesman Christopher Perille said the chances were "remote" that the maker of chewing gum would move from the prominent structure. He also said the concept of a residential condominium conversion was "way out there."
The Chicago office of real estate firm CB Richard Ellis Inc. is conducting the study for Wrigley, which has made some acquisitions in recent months and is apparently outgrowing the terra cotta classic, where it has been based for more than 75 years.
Perille declined to confirm the study. "On an ongoing basis we work with different consultants to look at real estate options because our business is growing."
He added: "We have deep roots in Chicago and the Wrigley Building, and I don't think that's changing."
Awash in bright lights at night, the Wrigley Building, with its gleaming white facade, is one of the city's biggest tourist attractions.
But the company's space review reflects two large influences that are reshaping the downtown Chicago real estate market: the residential redevelopment of older office buildings, particularly those in premiere locations; and the demands of large businesses for the newest office space that they deem better suited to their business needs.
Several older office buildings--including other famous Michigan Avenue structures like the Palmolive Building and the Carbon & Carbide Building--outlived their usefulness as office buildings and have been converted for other uses.
The Palmolive Building, which once housed the headquarters of Playboy Enterprises, is now all condos. The Carbide & Carbon Building at 230 N. Michigan Ave. is now a Hard Rock Hotel.
In addition, the Wrigley Building is next door to the construction site of Donald Trump's hotel/condo tower, which has drawn significant numbers of condo buyers to the area and increased interest in more condo development nearby.
"It's beautiful, but it does not appear to be terribly viable as an office building," said Bruce Miller, managing director with Jones Lang LaSalle Inc., who handled the 2002 sale of a Michigan Avenue icon, the Palmolive Building, to a residential developer.
No end to condo conversions
"There seems to be no end in sight for these high-quality buildings up and down Michigan Avenue that are being converted," he added.
The company's potential move also underscores how William Wrigley Jr., who became chief executive in 1999 and chairman last year, is putting his stamp on the venerable company.
Once stodgy and content with just its main gum products, Wrigley has been trying to grow bigger and more diverse through acquisitions.
"Bill Wrigley is re-examining the old family assumptions of every aspect of the business," said Steven Fifield, chief executive of the Chicago-based development firm that bears his name.
The Wrigley Building is actually two towers separated by a courtyard, with addresses of 400 and 410 N. Michigan Ave. The company now occupies nearly 227,000 square feet, almost half of the 453,400-square foot development. Five years ago, the company had 159,000 square feet.
The rest of the space is leased to small companies, such as investment firms and advertising agencies.
While CB Richard Ellis assesses its long-range needs, Wrigley is also looking for short-term additional office space near the headquarters.
That search for about 60,000 square feet of space is being handled by another real estate firm, Transwestern Commercial Services, Perille confirmed.
Wrigley would lease that space for between three and five years. For specific projects, Wrigley has in recent years leased short-term office space outside of the Wrigley Building, he noted.
But the current short-term space is partly needed to accommodate Wrigley's expected acquisition of the LifeSavers and Altoids candy brands from Kraft Foods Inc. for $1.48 billion, he said.
The deal, a sign of Wrigley's break from the past, would allow the company to expand its product line to compete with other candy companies like Hershey Foods Corp., which Wrigley made a surprising, but unsuccessful, attempt to buy in 2002.
Many experts expect Wrigley to make more acquisitions, and a key part of the CB Richard Ellis study is to determine the amount of Wrigley's future space needs.
Todd Lippman, an executive vice president with CB Richard Ellis, who is handling the Wrigley study, could not be reached for comment.
Study's deadline unclear
A time frame for completion of the study could not be determined. Meanwhile, a short-term lease could give Wrigley time to expand in its current location as tenants move out, experts say.
And the company could still opt to divide its offices between its historic home and another building, although most large corporations would consider consolidation to be a key benefit.
But many large downtown firms are relocating into new office towers, motivated by advantages such as larger, more efficient floors, improved technological capacity, and lower operating costs.
A new Wrigley Building would give the company a more modern image, developer Fifield said.
"Look at the innovation center," he said, referring to the company's new high-tech, 208,000 square foot research campus on Goose Island.
Employees have already started to move into the $84.3 million facility, a key part of a focus on product development begun in 2001.
If the Wrigley Building went up for sale, most real estate experts say residential developers would likely outbid office building investors, similar to the 2002 sale of the Palmolive Building, when Draper & Kramer acquired the building. Yet, despite the Wrigley Building's prestige, a residential conversion would be a challenge, requiring time-consuming city approvals, an arrangement for parking, and hefty construction costs.
Although not a city landmark, real estate developers say neither the company nor city officials would allow any changes to its classic aspects, particularly the facade.
Moreover, another historic feature, the building's nighttime illumination, would also complicate any conversion. The lighting poses little issue for office workers who leave at dusk, but would be a problem for condo residents, said developer Michael Lerner, president of MCZ Development Corp.
"The deal will certainly sell, because the building is so fantastic, but there are a lot of things to overcome," he said.