The agency that owns McCormick Place announced Tuesday that it will build a second hotel near the convention center complex, with plans calling for a 1,200-room facility that can serve as a headquarters for trade shows and conventions.
The Metropolitan Pier and Exposition Authority, also known as McPier, said it is acquiring land for the project, which will cost $400 million to build and will be located immediately west of the convention center's newest facility, the West Building. A skywalk would connect the two.
McPier is in talks with the site owners, affiliated with McHugh Construction Co., for the L-shaped parcel, said Jim Reilly, chief executive of the state-city authority.
"We think that will work out," he said. "If for some reason it doesn't, the city is prepared to use its eminent domain power. But we hope we won't have to do that."
He declined to comment on the potential deal cost, but said it would be a fraction of the construction cost. McPier and the site owners are discussing the possibility of a land swap, in which McPier would trade some land it owns on a nearby block.
A representative of McHugh Construction could not be reached for immediate comment.
The McPier proposal comes as key parcels just north of the West Building are moving toward auction. Those sites have been viewed as potential locations for more hotels and entertainment, and possibly an arena for DePaul University's Blue Demons basketball team.
Reilly declined to comment on where things stand in talks with DePaul. But he said McPier's latest hotel proposal would not stand in the way of other hotels being developed nearby, noting a 2009 study found potential demand for up to 8,000 hotel rooms in the area. The area will need some lower priced options too, he said.
"I don't see this as competing (with other projects), he said. "This will give us 2,400 rooms, and we could easily use more than 2,400 rooms."
McPier owns the 800-room McCormick Place Hyatt Regency, which is undergoing a 460-room expansion due to be completed this summer at a cost of nearly $90 million.
The two hotels will operate cooperatively, McPier said.
The latest project, to be between Indiana and Michigan, along the south side of Cermak, was announced jointly with Mayor Rahm Emanuel and Gov. Pat Quinn. Both said, in prepared statements, that the project would stimulate the local economy and make the city more competitive in the race for trade shows.
McPier will immediately seek proposals from design/build teams, hotel operators, and financial advisers and underwriters, Reilly said. Construction should begin in the last quarter of 2014, with completion set for the end of 2016, he said.
As it did with its first hotel, McPier intends to finance the project in the construction phase through revenue bonds that would be paid back by hotel operating proceeds. At a later stage, it may add more financing through its expansion project debt structure, in which bonds are paid back with tourism taxes.
The hotel will have a Michigan Avenue address, which will connect it to the downtown in visitors' minds, and which should help foster entertainment development in the surrounding neighborhood, a historic strip known as Motor Row, Reilly said.
"I have long said I want there to be nightlife (in the area)," he said.
The hotel also would be two blocks from a planned new station on the CTA's green line, which should add to its appeal, he said.
International trade show visitors "love using mass transit," he said.
kbergen@tribune.com | Twitter@kathy_bergen
2nd major hotel for McCormick Place
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2nd major hotel for McCormick Place
