Vacant Blackstone Hotel to become a Marriot Hotel

Blackstone Hotel to be re-opened Buyers of landmark hotel will restore buildingÂ's features, update rooms By Jeff Danna City Beat Editor File The Blackstone Hotel, 636 S. Michigan Ave., has been vacant since it was shut down in 1999, but Denver-based company Sage Hospitality Resources LLP purchased the building last month and plans to re-open it as a Marriott hotel. For five years ChicagoÂ's historic Blackstone Hotel sat vacant at Michigan Avenue and Balbo Drive, but it has finally been sold. Sage Hospitality Resources LLP, a Denver-based development company, signed a contract last month to rehab the 94-year-old hotel at 636 S. Michigan Ave., just south of ColumbiaÂ's South Campus Building, 624 S. Michigan Ave. The sale of the Blackstone marks the end of a five-year period during which the hotel was closed due to building code violations. Last year the BlackstoneÂ's owners at the time, the Heaven and Earth Inns Corp., run by spiritual guru Maharishi Mahesh Yogi, put the hotel up for sale, hoping to convert the rooms into luxury condominiums. Revenue from the sale of the condos was supposed to be used by the Maharishi World Peace Fund to promote global tranquility. However, those plans fell through, and Sage swooped in. Â"We have a program here at Sage to redevelop old buildings and convert them into luxury hotels,Â" said Kenneth Geist, the companyÂ's executive vice president of Sage Hospitality. Sage has converted historic buildings to hotels in major cities across the country. Geist declined to say how much Sage paid for the Blackstone, but YogiÂ's corporation initially asked for about $31 million, said Art Burrows, senior vice president of NAI Hiffman, the Oak Brook-based real estate company that brokered the sale. Sage had been eyeing the Blackstone since it was shut down, but when the World Peace Fund announced its intention to convert the rooms to luxury condos, the company was out of luck, Geist said. He explained the cost to redevelop the existing rooms would have exceeded the cost of purchasing the building. Burrows said renovating the Blackstone to make it into a hotel once again was a more logical idea than converting it to condos. Â"It was the most efficient way to deal with the landmark space,Â" he said. One of the primary reasons the condominium project fell through, Burrows explained, was that the renovations would involve rehabbing a large portion of the historic interior, and by sticking to the hotel layout, the owners could market more of the floor space. Burrows also said the owners would receive a larger investment tax incentive by operating a hotel rather than a residential building. The two parties involved in the transaction are in the middle of a due diligence period examining each otherÂ's financial records, Geist said. He expects this process to last until December. SageÂ's next steps are to develop an interior design concept, obtain a permit for the project and begin renovations. Geist said the entire project will take about three years to complete. Â"WeÂ're working with some of the most prominent architects and contractors in town,Â" he said. Geist declined to say which architects Sage is working with because the development firm has not signed any contracts. Geist said Sage is also working with the Chicago Landmarks Commission, the Illinois State Historical Society and the National Park Service to adhere to the rules about renovating such an historic building. The company plans to restore the buildingÂ's façade and Crystal Ballroom restaurant. Sage will also enlarge the BlackstoneÂ's rooms to meet todayÂ's standard hotel room measurements, Geist said. When the Blackstone was built, the typical hotel room was about 200 square feet; Sage will renovate the rooms to be about 350 square feet each. The renovated Blackstone will most likely operate as a Marriott-Renaissance brand hotel due to the buildingÂ's luxuries, Geist said. Burrows believes the new hotel will fit in nicely with the neighborhood. Â"ThereÂ's been a mass shift in wealth to this area,Â" he said. Â"What weÂ're seeing with the opening of Millennium Park is that thereÂ's a convenience factor.Â" Burrows explained that the BlackstoneÂ's location across from Grant Park in the South Loop will allow guests easy access to many of ChicagoÂ's cultural attractions. In its early days, the Blackstone serviced many U.S. presidents, including Franklin D. Roosevelt and John F. Kennedy. The building is also famous for its Â"smoke-filled roomÂ" where Warren G. Harding was chosen as the Republican PartyÂ's presidential nominee amid clouds of cigar smoke. Geist said the hotel will become as important an aspect of the city as it was before it closed. Â"It will have a tremendous impact on the area,Â" Geist said. Â"ItÂ's a shame this property has been boarded up for so long.Â" Mark Tester, vice president of convention sales at the Chicago Convention and Tourism Bureau, said the re-opening of the Blackstone will help ChicagoÂ's high hotel occupancy rates by providing additional lodging space for people in town for conventions and other large events. Â"Generally, we run out of rooms before we run out of exhibit space,Â" Tester said. Â"We can always use more quality properties.Â" In 2000, ChicagoÂ's hotels had an average occupancy rate of 65 percent to 70 percent, and two weeks ago the occupancy rate was up to 90 percent, Tester said. And with more hotels, he explained, Chicago will be able to host more simultaneous events. He also said since 9/11, the economy has picked up and hotelsÂ' profits have increased. Â"As long as the economy stays strong, the hotel industry should remain healthy,Â" Tester said. No matter what the re-opening of the Blackstone does for ChicagoÂ's hotel market, Tester, Burrows and Geist agree that having such a notable building open again will be an achievement in itself. Â"I look forward to having it back in the community,Â" Tester said. Â"ThereÂ's a lot of history there.Â">