Chicago touchdown nearing for United
Deal would put airline in ex-Donnelley site
By Barbara Rose and Susan Diesenhouse
Tribune staff reporters
July 14, 2006
Declining to fly away, United Airlines is in final negotiations on a deal to move its world headquarters from the suburbs to the former R.R. Donnelley & Sons Co. building at 77 W. Wacker Drive, according to a source familiar with the negotiations.
The deal would keep a high-profile employer and "Chicago's hometown airline" in the region. United had considered moving its 350 executives and top staff to Denver or San Francisco, also major hubs for the carrier, and its loss would have been a major blow in prestige and jobs.
Representatives for United and the City of Chicago declined to comment Thursday.
City and state officials made a full-court press to keep the carrier, which has been weighing its options in the downtown area for weeks.
Speculation had centered on several buildings within the proposed LaSalle Street redevelopment district, which appeared to be on a fast track to accommodate United's desire to move from its Elk Grove Township headquarters in the first quarter of next year.
Locating in a redevelopment district allows the city to sweeten United's deal with millions of dollars in tax increment financing. The former Donnelley headquarters is in an existing TIF district and would not require waiting for the LaSalle Street district to be approved.
United informed city officials that its budget for the headquarters relocation is between $15 million and $20 million, according to another source familiar with the negotiations.
The source said United's package could include between $5 million and $6 million in tax-increment financing. City and state officials also have been discussing capping jet-fuel taxes for United and other large users, a deal that could be worth several million dollars to United, the source said.
State officials would offer millions of dollars in corporate tax credits and job-training incentives, the source added. The tax credits are available under a program that reduces employers' tax liabilities using a formula based on the number of jobs created and retained and the jobs' salaries.
United would get naming rights to 77 W. Wacker, the source said. That may have been a factor in a choice that surprised some economic development officials who anticipated the financially strapped carrier would select a less pricey building.
Among the buildings eyed by United in the proposed LaSalle Street district are: 190 S. LaSalle, 115 S. LaSalle and 200 W. Madison St.
The move downtown represents a return for the airline's parent UAL Corp., which left the South Side for Elk Grove Township in 1961 to be near O'Hare International Airport. In 1999, UAL announced plans to build a new headquarters near O'Hare, saying it had outgrown its Elk Grove facilities. But it abandoned the plan a few years later amid deteriorating economic conditions.
The carrier's likely choice of 77 W. Wacker, a 14-year old, 50-story glass tower, "is a corporate-headquarters-quality building in every regard," said Mark Parrish, a senior vice president and leasing director for Grubb & Ellis Co., which is not involved in the deal.
"It has a strong presence on the skyline, an impressive lobby, it's architecturally significant and still one of the best buildings in the city," he said.
If United goes into the 946,000-square-foot tower in the popular West Wacker Drive area, the space it would occupy is primarily that vacated by Donnelley, an original anchor tenant that took up about 225,000 square feet . Average gross asking rents range from about $35 to $38 a square foot a year.
