Merchandise Mart Vornado Realty in Chicago remains majestic on the river

About a decade ago, Chicago’s Merchandise Mart became popular. That’s fine for an Art Deco-style property that is one of the most famous buildings among the city’s architectural royalty, but it’s not enough.

There is still the issue of unused space and a design that looks off-putting to casual visitors and some tenants. The building’s owner, Vornado Realty Trust, first revamped it in 2016 by investing $40 million in changes that included a wide stairway connecting to the lobby.

Now, Vornado and design partner Gensler are nearing completion with another $40 million job, a renovation meant to keep the venue relevant in the company’s post-pandemic cycle of shrinking their space and staff working hard from home.

The plan was to make the office building a pleasant, almost student activity center that some people would remember from their college days, said Glen Weiss, executive vice president at Vornado.

“People want to be active in their daily lives at the office,” he said.

He adds that they want to get out of their desk for coffee, work out, meet someone for an after-work drink or maybe log into their laptop from a comfortable seat – outdoors in good weather.

There will be plenty of exercise, socializing, and drinking if the plan is successful.

The second floor of the building houses a new retailer specializing in beauty and health and a 23,000 square foot health club, offering classes and a juice bar. For more relaxed pursuits, there is a renters-only speakeasy themed lounge overlooking the river.

The southern exposure of the building benefits from attention. The South Lobby has a hotel-like treatment with more comfortable seating. The vehicle access road between the Mart and the river has restricted traffic lanes to create a River Park pedestrian square with al fresco dining and lawns for community gatherings.

People on Chicago’s Riverwalk in 2020 watching an Art on the Mart presentation related to the Joffrey Ballet’s staging of “The Nutcracker”.

Tyler Pasciak LaRiviere/Sun-Times

“We have the largest river front in the city and for a long time we parked our cars on it. It will make better use of that space,” said Paul Heinen, chief operating officer at Mart.

It’s as if the building now has a forecourt, a new way for people to connect with the 93-year-old landmark, such as the projection of a nighttime “Art on The Mart” digital image on the facade that Vornado coordinated with the city.

Tenants also get a 21,000 square foot conference center with lounge area and cafe. Heinen says shared conference rooms appeal to users who have trimmed their office space and don’t need constant access to the meeting room.

The Merchandise Mart is shown under construction in 1928.

Vornado had branded the building the Mart, but that was unlikely to get rid of its traditional name in most Chicagoans’ heads. It’s always piqued people’s appetite for superlatives. When it was being built in the 1920s, it was touted as “the largest building in the world.” But that was before the Pentagon and other structures. Today, its description still impresses as “the largest private commercial building in the United States”.

The Kennedy family, who are politically renowned, owned it for more than 50 years. Vornado bought it from the family in 1998.

Joseph Kennedy, patriarch of the Kennedy family, is shown in 1955 conferring with Merchandise Mart executives Tom King (left) and Wallace Ollman (right). Kennedy purchased the building in 1945.

The company’s upgrade will officially debut for this year’s NeoCon event for the commercial design industry June 12-14, the big annual event on the building’s calendar.

Along with special events, office leasing and wholesale showrooms form the core of Mart’s business. The mix has changed over the years. Showrooms usually predominate and are generally not accessible to the public. While that business is declining, Heinen said the segment still accounts for about a third of the 3.7 million square feet the Mart can rent.

The office section got a boost in 2012 when tech incubator 1871 made the Mart its home. Around the same time, Motorola Mobility, then owned by Google, signed a lease on approximately 600,000 square feet. Today, it is still the largest tenant. Others include Allstate, Medline Industries, PayPal and Grainger.

Weiss says corporate users are drawn to the building’s historic character and its spacious layout that allows multiple workers on one floor. In that way, the Mart became River North’s alternative to the renovation of the Old Post Office in the southwest quadrant of downtown. “The CEO is still looking for a place like this. It’s not just a glass-enclosed office for everyone,” said Weiss.

In its most recent quarterly filing, Vornado said the Mart was 81.6% filled, putting it on par with a weak downtown market. Vornado has been under pressure, particularly from its New York holdings, due to falling rent receipts and higher interest rates. It suspended its dividends, a difficult choice for real estate investment trusts with income-loving shareholders.

But at Mart, Weiss said, Vornado has made investments to break out of the economic cycle.

“If you have the right real estate, you rent space. [The Mart] is an asset forever,” he said.

Render of a tenant’s living room at the Merchandise Mart in downtown Chicago.

Virtual Evolution/Courtesy of The Mart

Redesigned Merchandise Mart South Lobby renderings.

Virtual Evolution/Courtesy of The Mart