A 12-story office building in downtown Chicago that has stood as a recognized architectural landmark since 2009 has received an initial green light to be partially converted into a data center, as the city's real estate market continues to attract technology infrastructure investment.

Initial Approval Granted by Landmarks Committee

The Permit Review Committee of the Commission on Chicago Landmarks has given preliminary approval to a proposal to convert a portion of 300 West Adams Street into a data center.

The full commission will now review the proposal before any final determination is made. Local developer Igor Gabal is leading the redevelopment project, with Adams RE MGMT LLC listed as the building's owner in application filings. The plans call for a phased transformation of the lower floors of the building.

According to the filings, the project would include construction of a new ComEd vault on the first floor, data center equipment and support infrastructure on floors two through six, and the addition of backup generators on the roof.

The remainder of the 12-story, approximately 240,000 square-foot structure would not be part of the conversion under the current proposal.

A Landmark Building With a Complicated Financial History

The 300 West Adams Building presents an unusual backdrop for a data center conversion.

Built around 1972, the structure was designated a Chicago Landmark in 2009.

At the time of its designation, the Chicago city government described the building's "handsome design and excellent craftsmanship" as epitomizing the high-rise office building boom of the 1920s, calling it a significant example of that historic building type.

The building's financial history reflects the turbulence experienced across commercial real estate in recent years. The property was previously sold for USD 51 million in 2012.

A Pennsylvania-based firm, Alliance HP, later lost the building through foreclosure in 2021 to a Morgan Stanley-managed entity.

Gabal subsequently acquired the building in 2023 for just USD 4 million, a fraction of its earlier sale price. The steep decline in value from the 2012 transaction to the 2023 sale illustrates the broader pressures facing downtown office properties in Chicago and other major American cities.

Strategic Value Partners Joins the Project

The conversion effort has attracted an outside financial partner.

Reports from The Real Deal and other outlets indicate that Strategic Value Partners recently signed a deal to partner with Gabal on the conversion of 300 West Adams.

The involvement of Strategic Value Partners adds institutional backing to what is otherwise a locally led development initiative.

No financial terms of that partnership arrangement were disclosed in the available filings or reporting, and no timeline for the completion of the conversion was specified in the documents reviewed by the landmarks committee.

Chicago's Growing Data Center Appetite

The 300 West Adams proposal is part of a broader pattern of data center activity in the Chicago metropolitan area, which has emerged as one of the major data center markets in the United States.

The city's existing power infrastructure, fiber connectivity, and central geographic location have historically made it attractive for operators of large-scale computing facilities.

The 300 West Adams conversion is not the only office-to-data-center project underway in the city. GI Partners and Legacy Investing are currently working on a separate project to convert a former stock exchange building in Chicago into a data center, signaling that multiple developers are pursuing a similar strategy of repurposing underutilized commercial structures for technology infrastructure purposes.

The conversion of legacy office space into data centers has gained traction in several urban markets as remote work trends have suppressed demand for traditional office occupancy while demand for data processing capacity has accelerated, driven in part by the growth of artificial intelligence applications.

Converting existing buildings, rather than constructing entirely new facilities, can offer advantages in terms of land availability and, in some cases, existing electrical and structural infrastructure.

Landmark Status Adds Regulatory Complexity

The fact that 300 West Adams carries Chicago Landmark status adds a layer of regulatory scrutiny that would not apply to an ordinary commercial building.

The Permit Review Committee's initial approval represents only one step in the process. The full Commission on Chicago Landmarks must still weigh in before the project can advance, meaning the proposal faces additional review before construction can begin.

Landmark designations in Chicago are intended to protect buildings of historical and architectural significance, and any proposed alterations must be evaluated for their compatibility with the character and integrity of the designated structure.

The committee's preliminary clearance suggests the proposed modifications were not viewed as incompatible with the building's landmark status at this stage, but the full commission's review will be the determinative proceeding.