Mr. Tess

Architecture & Design

The History and Revival of Chicago's Blackstone Hotel

By John Tess, President & CEO, Heritage Consulting

There was a time when the name said it all: In New York, New York, it was the Waldorf. In San Francisco, California, it was the Fairmount. In Atlanta, Georgia, it was the Winecoff. In McAllen, Texas, it was Casa de Palmas. And in Garden City, Kansas, it was the Windsor.

These names quite simply represented "the place". It was THE place to stay, THE place to have dinner, THE place to have a wedding. They represented unsurpassed quality in reputation, service and architecture. And as important, they represented the community's sense of arrival - a first class place for visitors to stay, for residents to socialize. In today's vernacular, these hotels then were the grand dames of the communities.

Sadly, the aging grand dames have had a poor survival rate. Beginning with the Depression and into the postwar America, these hotels were less grand dames and more like aging dinosaurs. With elaborately designed spaces, to stay on top, these hotels required a steady influx of money to keep them running. Maintenance and upkeep is expensive and the maintenance of expensive settings is even more expensive. Yet, the go-go years of the 1920s seduced many hotel owners to refinance their properties to fund expansion. With the collapse of the American economy in 1929, money dried up. The Depression undermined the business and excursions travel market. It undermined the market for social gatherings. And it left many hotel owners overextended with their mortgage payments. There simply wasn't money to reinvest in maintenance and upkeep. Most had few options other than to rest on their reputation.

Following World War II, the U.S. economy boomed and boomed big. Yet, it also represented a time of a fundamental shift in the hotel market and in our cities. American fell in love with the automobile. Real estate investment, including hotel investment, drifted out of the downtown into the suburbs. Vacationers and business travelers alike were drawn to properties like Howard Johnson and later Holiday Inn, motels which offered standardize modern quality in an auto-friendly environment. As investment moved out, downtown cores became fraught with dilapidated buildings and unsavory street environments. Some buildings went the way of the wrecking ball, leaving a surface parking lot in its place. Most often, the buildings that suffered most were the single-use properties, such as the great movie palaces of the 1920s.

So too did the grand dames suffer. More and more, they were viewed as white elephants with no future. Built in an earlier era, these buildings suffered from decaying conditions and a nearly auto-adverse design. Many didn't even have parking. And as the 1950s became the 1960s, this downward cycle continued, accelerated in part by building codes favoring new construction. In time, these buildings slide down the economic scale. If they survived, they trended towards low-rent hotels, or were adapted for senior housing, or even just remained vacant while the ground floors were adapted for retail.

Such was the saga of the Blackstone Hotel in Chicago. At the turn of the 20th century, the Second City was coming into its own as the competitor to New York as the dominant American city. New industrial technologies joined with new transportation and distribution technologies to fuel Chicago's rapid growth. The 1893 World's Columbian Exposition set the tone for Chicago to aggressively grow into the 20th Century.

In the first decade, Chicago hoteliers Tracy C. and John B. Drake secured control of Timothy Blackstone's mansion at the corner of South Michigan Avenue and Balboa on Chicago's trendy near south side. Their father, John Burroughs Drake, had operated the Grand Pacific Hotel, one of the city's leading hotels in the 1880s. and thus the brothers came from a "hotel" family. Their intent was to build Chicago's best hotel, one attractive to the travelers but to the locals also.

The Blackstone mansion site overlooked Grant Park, designed by the Olmstead Brothers in 1907, with Lake Michigan to the east beyond - a dramatic setting convenient to the nearby rail stations. The Drakes then secured the services of architects Marshall & Fox, a firm noted somewhat for theater design. $3 million later, the Blackstone Hotel opened in 1910.

The hotel's exterior featured dramatic architecture with contrasting red brick and white terra cotta. A primary entry off Balboa lead to an exquisite lobby finished with gold trimmed mahogany paneling, wedgewood-like decorative plaster ceiling and a basket weave marble floor. The building also featured a marble lined entry off Michigan Avenue, leading to a curved marble stair to the lobby. Off the lobby to the east, overlooking the Park, was an elegant double stair to a formal dining. On the formal level above was an Art Hall that lead to a two-story ballroom over the dining room, but also smaller meeting rooms such as the Colonial Room, French Room and English Room, all appropriately decked out.

This high fashion styling quickly succeeded. In short order, the Blackstone was the place for prominent Chicagoans to congregate, and the place for the well-to-do to host parties and balls. Perhaps for these reasons, it also quickly became recognized as "The Hotel of the Presidents", a tradition started by then President Woodrow Wilson. It gained prominence in the 1920s when a deal was cut in the Governor's Suite to allow Warren G. Harding to become the Republican Presidential nominee. That same suite was used by Harry Hopkins in 1940 to inform President Franklin Roosevelt that he had been nominated for a third term at the Democratic Convention.

The hotel prospered until the Depression. As was common, the Drake Brothers had mortgaged the hotel to expand elsewhere. The Depression forced them to default and in 1932, the hotel was acquired by the mortgager, Metropolitan Life Insurance Company. Four years later, in 1936, it was leased to A. S. Kirkeby who operated the hotel. Kirkeby operated the hotel until 1954 when the Sheraton Hotel Company acquired it. In 1971, the hotel was sold again to a group of Chicago investors. Eventually, it was sold to Marharishi Mahesh Yogi to establish a center for transcendental mediation.

While each cycle of ownership brought some new investment, work was generally cosmetic and superficial. By 1999, the City of Chicago closed the building for safety reasons. Simply put, it was a "dangerous building". Although several developers explored redevelopment, the building remained vacant as it neared its century mark and the wrecking ball might not be too far off.

Yet, as the downtown's revitalize, the market for these grand dames returns. "Live, Work, Play", this tripartite mantra relies on the mutual supportive markets of residents, employees and visitors to drive the downtown economy. It is an economy that emphasizes the highlights of the urban experience, filled with culture, restaurants and shopping.

The same is true for the Blackstone as the hotel is under renovation by Denver-based Sage Hospitality Resources, to be transformed into a 4-star Renaissance Hotel. The redevelopment is using a mixture of historic and other incentives to make the project viable. This includes $18 million in tax increment financing from the City and $15 million in historic tax credits. The total renovation is estimated at $119 million.

Work is comprehensive. The exterior will include repair and cleaning of the terra cotta and brick and replacement of the windows. The dramatic public spaces, including the lobby, dining room, ballroom and meeting rooms, will be repaired as necessary and returned to original condition. At the same time, the historic "Smoke-Filled Room" and the "Presidential Suite" will be retained and kept in "historic" condition. At the same time, the upper floors will feature guest rooms meeting modern standards. The renovated building will meet current building and fire and life safety codes. When completed, the once aging grand dame will reassert itself into the prestigious hotel market of Chicago.

What is particularly exciting about the Blackstone is that all too often, in the rush to redevelop historic properties; great hotels are both saved and lost. They are adapted for housing, condominiums or even offices, and so the building is "saved". But at the same time, the intangible of the hotel and its contribution to the psyche to the city is lost. It survives as a ghost of its former self, essentially disconnected from the past beyond a plaque or market.

But in the case of the Blackstone and with Sage Hospitality, the historic use is re-energized, the great public spaces returned to original function and guest rooms modernized to market standards. By returning the hotel back to its roots, the heritage is maintained and the intangible contribution to the City's sense of place and history retained.

John M. Tess is President of Heritage Consulting Group, a firm that assists property owners, attorneys, accountants, financial institutions and investors maximize the value of historic real estate assets through the use of federal tax incentives and other tools. Heritage has represented projects totaling more than $1 billion. Heritage specializes in linking developers with corporate and institutional investors active in historic tax credits. Heritage Consulting Group is headquartered in Portland, with offices in San Francisco and Washington, D.C. Mr. Tess can be contacted at 503-228-0272 or jmtess@heritage-consulting.com Extended Bio...

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