Chicago landmark on crest of building-restoration wave

Rehabilitation of older downtown commercial buildings is a welcome lifeline for the economically depressed construction industry from New York to San Francisco.

In Chicago developers have launched the city's first major historic rehabilitation project in the north Loop redevelopment area with the restoration of the 108-year-old Delaware Building on the northeast corner of Randolph and Dearborn Streets.

Completed in 1874, three years after the Chicago fire, the ornate Italianate eight-story building is listed on the National Register of Historic Places and is believed to be the oldest office building in the city's Loop area.

The Delaware is an early cast-concrete building, modeled after the cast-iron architectural style popular in the early 1870s.

Originally six stories with an English basement, the building was remodeled in 1889, when two stories were added. After World War II, the building had a number of alterations to the original design of Chicago architect Leonard Wheelock.

Recently, the Delaware was acquired by 16 owners for $2.2 million. Current plans call for spending an additional $2 million for the painstaking restoration , including restoration of the ornate exterior facade, lobby, and interior skylighted atrium.

Besides the Delaware, the Chicago north Loop redevelopment plan calls for restoration and reuse of the Reliance, McCarthy, and Oliver Buildings, the Chicago Theater-Page Brothers Building, and the Michael Todd and Cinestage Theaters.

Real estate consultant Jared Shlaes, president of Jared Shlaes & Co., says the Delaware Building is typical of the national trend to restore old commercial buildings in large cities' downtown sections.

''Commercial rehabbing restores the city's tax base, provides employment opportunities both in construction and for businesses occupying the space, and attracts more desirable tenants,'' says Mr. Shlaes, a national authority on real estate landmark preservation.

Mr. Shlaes says the national trend toward restoring old commercial buildings is ''surging to become one of the most promising areas in a relatively inactive real estate market.''

The consultant cites five main reasons:

* The cost of gasoline and the problems of mass transit.

* The number of jobs that can be created from restoration of old office buildings.

* A growing preference for city living among young people.

* The high cost of suburban commercial development.

* The 1981 Economic Recovery Tax Act (ERTA).

This act provides new tax advantages for rehabilitation of buildings 20 years old and older, offering investment-tax credits ranging from 15 to 25 percent. To qualify for the 25 percent tax credit, a building must be listed on the National Register and the restoration plans must be approved by state and federal officials.

Mr. Shlaes says typical examples of urban downtown renewal projects are Pittsburgh's Renaissance II Pennsylvania Station, New York's South Street seaport section, and Chicago's Navy Pier renovation. Others include: Seattle's Pioneer Square, Denver's Lorimer Square, and Laclede's Landing in St. Louis.

Wilbert R. Hasbrouck, the Delaware's architectural-restoration consultant, says the project ''is a generic restoration of the highest quality.''

''If the Delaware restoration is completed according to the high standards set, the building will qualify for the hard-to-get designation as a Chicago landmark,'' the consultant says.

McDonald's Corporation has agreed to occupy the first two floors of the Delaware with a two-level, Victorian-style restaurant faithful to the building's origins, says Milton Podolsky of Podolsky & Associates, the leasing and management firm. Floors three through eight will be leased as offices.

The Delaware's new lease on life is an example of historic rehabilitation's benefit to a sluggish real estate market.

Real estate brokers can attract developers and buyers for such projects with some telling sales points.

Among them are the advantages of tax write-offs under ERTA, the considerably lower cost of restoring old buildings in comparison to the cost of new construction, the trend toward revitalizing downtown areas, and the enthusiastic support of a growing preservation movement that receives expertise from organizations like the National Trust for Historic Preservation in Washington.

A practical means of revitalizing the nation's downtown areas, historic commercial rehabilitation is also a welcome port for the storm-tossed construction and real estate industries.

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