Old Post Office owner plots next move after breakup with Sterling Bay
October 8, 2014

The owner of the vacant Old Main Post Office may seek a sale of the sprawling West Loop property or a new development partner after a joint venture with Sterling Bay Cos. fizzled.

Less than four months ago, British developer Bill Davies and Chicago-based Sterling Bay said they were forming a venture for a $500 million redevelopment of the 2.7 million-square-foot building that straddles Congress Parkway.

The news brought hope that the property, empty since the post office close 18 years ago, finally would be transformed into a new use, likely a combination of office and retail space. But the relationship soon fell apart, and Sterling Bay recently withdrew from the venture after attempting to buy the colossus along the Chicago River for almost $150 million from Mr. Davies' International Property Investors, according to people familiar with the matter.

“Although Sterling Bay was excited and optimistic about developing the old post office with International Property Investors, over the last several months we have not been able to agree on the ultimate vision for the property or who would have primary responsibility to direct its completion,” Sterling Bay Managing Principal Andy Gloor said in a statement. He declined to comment further.

Sterling Bay, which is riding the momentum of several large office leases — including landing Google Inc.'s future Chicago offices — was seen locally as an ideal partner for Mr. Davies, a Liverpool native now based in Monaco. Although he has owned the post office since 2009, he never has completed a development in Chicago and is largely unknown here, while Sterling Bay is known for its nimble dealmaking.

The Chicago firm is not believed to have put any money into the venture but had agreed to invest heavily to gut the building and fill it with tenants.

Mr. Davies' next step is unclear. He is working with London-based real estate firm Savills PLC, known as Savills Studley in the U.S., to explore his options, including a potential sale...

Old Post Office owner plots next move after breakup with Sterling Bay

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