Six months after rejecting a plan to turn Lakeside Center into the Chicago casino, McCormick Place is looking to redevelop all or part of the aging convention facility into a new tourist attraction.
The Metropolitan Pier and Exposition Authority, which owns McCormick Place, issued a request for information last week, inviting developers to submit ideas for “reimagining” the 51-year-old steel-and-glass exhibition hall, an underutilized but architecturally significant building that Needs more than $400 million in deferred maintenance.
The redevelopment partner would operate the project to “enhance the experience” of conventioneers and visitors, drive economic impact and address the needed renovations — without reducing existing convention space, according to MPEA’s request.
“This is an opportunity of a lifetime for us to change, hopefully, the landscape of our portion of the lakefront,” said Larita Clark, CEO of MPEA. “But we also don’t want to lose any trade shows or meetings.”
The $1.3 billion Rivers Chicago McCormick bid to redevelop Lakeside Center as the Chicago casino was touted by developers as an opportunity to repurpose and renovate the building, and cover the deferred maintenance. But the proposal was pulled from consideration in March after McCormick Place expressed concern that it would lose hundreds of scheduled events over the next decade that could not be accommodated without a replacement facility.
In May, Bally’s bested other finalists with his proposal to build a $1.74 billion casino complex on the site of the Freedom Center printing plant in River West. The publicly traded Rhode Island casino operator filed its application with the Illinois Gaming Board last month, with plans to open a temporary casino at Medinah Temple by next summer.
Scott Goodman, founding principal of Chicago-based Farpoint Development, a partner in the Rivers Chicago McCormick casino proposal, believes McCormick Place missed an opportunity at Lakeside Center.
“We obviously felt that the casino was a great catalyst to conduct the necessary renovations and improvements and make it into a comprehensive entertainment complex,” Goodman said. “The city decided otherwise for the casino, but we still believe this is an iconic building for the city, and deserves to be fully utilized and repurposed.”
McCormick Place is hoping to find an alternative redevelopment plan that would revitalize Lakeside Center and attract visitors while complementing the core convention business. At this point, everything but a casino is apparently on the table.
Clark said one idea that has been floated is building an upscale restaurant or entertainment venue off the terrace at Lakeside Center, overlooking the shoreline. The redevelopment partners would likely fund the project and participate in a revenue-sharing agreement with MPEA. Depending on the scope of the proposed project, the developer would also cover needed renovations as part of their plan, Clark said.
The primary goal is to create entertainment options for convention attendees that would encourage them to stay on the McCormick Place campus in between exhibitions.
“It would be nice to have something right on site that they can go and have a memorable experience,” Clark said. “When there’s not a convention that has leased the building, residents and tourists can enjoy it as part of the Museum Campus.”
The MPEA is a municipal corporation whose board is split between gubernatorial and mayoral appointees. It owns McCormick Place, the Hyatt Regency McCormick Place, the Marriott Marquis Chicago, Wintrust Arena and Navy Pier, which it leases to a not-for-profit corporation for $1 per year.
The original McCormick Place opened in 1960 and burned down seven years later. It was rebuilt in 1971 as the steel-and-glass Lakeside Center, now the oldest of four exhibition halls comprising 2.6 million square feet. Lakeside Center has 580,000 square feet of exhibit space across two halls, 141,000 square feet of meeting space, a ballroom, outdoor terraces and the 4,192-seat Arie Crown Theater.
The four-level pavilion was designed by renowned architects Gene Summers and Helmut Jahn, and is considered one of Chicago’s “great mid-century modern buildings,” according to Preservation Chicago. But the building has seen better days, and needs a new roof, repairs to the parking structure, exterior glass replacement, interior upgrades and other improvements.
Heywood Sanders, a convention expert and professor at the University of Texas at San Antonio, said the state of Lakeside Center reflects both a declining industry and mismanagement by MPEA.
“Deferred maintenance is a failure,” Sanders said. “Their performance as a host of conventions and trade shows has been highly problematic.”
During the new millennium, Sanders notes that the convention and trade show business at McCormick Place shrunk — pre-pandemic — despite dramatic expansion of its facilities, including the opening of the West Building in 2007 and the Marriott Marquis hotel in 2017.
In 2000, there were 49 conventions and trade shows — excluding meetings and public events — that drew 1.44 million attendees and used 13.9 million square feet of space, according to data obtained through a Freedom of Information Act request by Sanders. In 2019, McCormick Place hosted 50 convention and trade shows, drawing 825,113 attendees and using 8.1 million square feet of exhibit hall space.
The economic engine of Chicago’s tourism industry, McCormick Place was hard-hit by the pandemic, with more than 230 event cancellations costing the city about 3.4 million attendees and nearly $3.1 billion in economic impact. Since reopening in July 2021, McCormick Place has hosted 228 events — including meetings, basketball games and other public events — drawing 1.65 million attendees, according to Cynthia McCafferty, a McCormick Place spokeswoman.
There are 31 events on the calendar for the remainder of 2022, and 112 scheduled for next year, McCafferty said.
The McCormick Square convention and hotel complex generated an operating income of $856,000 in fiscal year 2019, but fell to a loss of nearly $73 million in fiscal year 2021. MPEA lost $6.5 million in fiscal year 2022, which ended June 30, and doesn’t project climbing back into the black until 2025, according to its three-year financial plan.
The McCormick hotels made money before the pandemic. The convention center facilities did not, and lost nearly $45 million in fiscal year 2022. They are projected to remain in the red through at least 2025, according to MPEA’s financial plan.
McCormick Place has 250 events booked at the Lakeside Center over the next 10 years, putting the facility at about 50% occupancy. The industry looks at 70% as the maximum practical occupancy for a convention center.
The annual American Academy of Ophthalmology, which is expected to draw 24,000 attendees beginning Oct. 1, is the next major convention scheduled to use Lakeside Center.
While Lakeside Center is in need of repairs, Clark said it is still valuable as a convention center, projecting $12 billion in economic impact over the next 10 years. She said many of the events cannot be relocated elsewhere on campus, adding a layer of complexity to any complete repurposing of Lakeside Center. Replacing nearly 600,000 square feet of convention space would cost upward of $1 billion and take years, she said.
Sanders said McCormick Place should think outside the lakefront box and be open to other uses for a “distinguished piece of architecture on a critical piece of public land.” Replacing convention space, he said, is not a priority.
The convention and trade show industry declined accelerated during the pandemic, when hybrid events and virtual attendance gained traction, Sanders said. Convention business has been trending down for years in three of the four largest markets — Chicago, Las Vegas and Atlanta — with only Orlando showing gains through “pop culture” events such as “Spooky Empire,” a Halloween convention scheduled for October, he said .
With attendance steadily declining and the convention industry facing an uncertain post-pandemic future, Sanders said downsizing exhibition space at McCormick Place may be the right move.
“Having seen their business shrink, after doing all the things that they said they needed to do to boost their business, I question their contention that they need to replace any exhibit space they lose,” Sanders said.
MPEA has set a Dec. 22 deadline for the request for information on redeveloping Lakeside Center. It expects to win the submissions down to two or three viable options and issue a request for proposals by mid-2023, Clark said.
Farpoint Development, which missed out on its bid to turn Lakeside Center into a casino, plans to participate in the competitive process to redevelop the building.
“We have ideas for an adaptive reuse for the building that we are contemplating and trying to figure out if they are economically feasible,” Goodman said.
If everything goes well, a reimagined Lakeside Center would be completed in about five years, Clark said, or roughly the same timeline for Bally’s to open its permanent Chicago casino.
Clark said she has no regrets about not redeveloping Lakeside Center as a casino.
“We don’t have any misgivings about that,” Clark said. “We definitely still need it as a convention center.”