Chicago’s new planned retail complex Block 37 has hit another snag. The development, which will contain offices, shops condos and hotel rooms has lost their anchor hotel. Chicago Business reports that Loews Hotels has walked away from the deal to build a four-star, 384-room hotel at the project even though they received the site for the low, low price of $1. The Loews move follows walkaways on the retail side that included Apple Computer, David Barton Gyms and Lululemon Athletica. So far only the office portion of the project is complete. The first phase of the retail side is supposed to open later this year and is more than 70 percent leased.
Loews cited a lack of construction financing and the general travel industry slowdown as reasons for not going forward with the $175-million project.Block 37 developer Joseph Freed & Associates LLC is searching for another hotel operator. This may be no easy task. As the Chicago Business article mentions, lenders now require that developers pony up nearly half of a project’s cost, compared with as little as 10 percent a few years back. This requirement and the work of constructing has led many hotels to seek expand by seeking existing space rather than build new projects.