Speculation and imagination mingle at Humboldt Park project

As a real estate project, the property marketed as The Terminal in West Humboldt Park reveals itself slowly — so slowly that it’s hard for passersby to appreciate.

Walk by the two-story building at 1334 N. Kostner Ave. and you see a handsome example of industrial architecture from a century ago, but there’s much more behind it. The frontage along Kostner is part of a three-building complex covering nearly 7 acres. It contains soaring old factory space the owners believe is perfect for a cadre of innovative young companies.

Developer Gary Pachucki, founder of IBT Group, is accustomed to conducting tours of the raw space, inviting prospective tenants to let their imaginations fill in the blanks. Backed by billionaire Joe Mansueto, founder of Morningstar, Pachucki sees the place attracting brainy entrepreneurs who want room to grow outside of the popular, expensive neighborhoods.

They also want the satisfaction of seeing job growth in a community prioritized in Mayor Lori Lightfoot’s Invest South/West program.

“We can offer them cost-effective space in a great neighborhood. This will be a campus” for businesses engaged in research, he said. Intensive manufacturing isn’t part of the plan, although Pachucki said he’s had discussions with a brewer — and having factory-fresh beer on-site might draw more tenants.

The property is between a future Amazon distribution hub on one side and Menards and Aldi on the other. But with tidy homes along the opposite side of Kostner, the site has an out-of-the-way feel. For its first tenant, that was a key selling point.

Anthony Vazquez/Sun-Times

EeroQ, launched near Michigan State University, has moved into 9,600 square feet at The Terminal. The company is trying a new approach to quantum computer development by floating single electrons on liquid helium.

The work is unimaginably exacting, and CEO Nick Farina said he brought the 10-worker company to The Terminal because the building, solid and with no basement, doesn’t vibrate. Other properties have trucks or trains rumbling by. Being in Chicago made sense, he said. “Chicago has a deep bench of quantum computing talent,” Farina said.

For Pachucki, landing EeroQ validated the concept. He still has about 220,000 square feet to fill and hopes to have a couple more tenants soon. Working with Ratio Architects and the construction firm Arco/Murray, Pachucki has the largest of the three buildings ready for tenant improvements, while renovations continue on the other two.

He said the investment in the property could hit $70 million. The project involves no public money.

The complex, listed on the National Register of Historic Places, goes back to 1916 when Pyle-National Co. opened it to build lights for locomotives and other industrial uses. Additions were finished by 1926. It left the property in the 1990s after moving operations to South Carolina.

A lot had to be done to make the neglected buildings presentable. Pachucki said a prior owner rented space by the month to about 40 car repair operations, and a room was used for cockfights. He said police told him they were glad for his involvement because the property was a source of trouble.

The renovation has added windows just beneath the high roofs so sunlight can brighten the space below. Tenants will have the option of adding space on a second level. Pachucki said the plan calls for outdoor gathering space, a spot where food trucks can park, and he’s considering an exercise room and bike storage. The property has on-site parking and easy access for equipment deliveries.

“We’re getting to the point where people start to get it when they tour the property,” Pachucki said.

One person who “got it” early on was Mansueto. “He’s very low-key, but he liked this when he saw it, and Joe has shown he wants to do good things for the city of Chicago,” Pachucki said.

Anthony Vazquez/Sun-Times

Records show their partnership paid nearly $8.3 million for the property in July 2020. Since giving up his day-to-day role at Morningstar, Mansueto has shifted attention to Chicago real estate.

He owns the Wrigley Building and the Waldorf Astoria Chicago hotel and is backing a renovation of the vintage Belden-Stratford apartment building in Lincoln Park. Mansueto has won Lightfoot’s backing for a training and practice center on the Near West Side for his Chicago Fire soccer team, calling it a “community-benefit investment.”

Ari Glass, head of real estate for Mansueto, said The Terminal was an attractive opportunity as a quality asset “in need of a vision.” With high ceilings and ample land, the property “has a sense of place. It almost becomes a submarket of its own,” Glass said, alluding to its potential to host several hundred jobs.

For Mansueto, the investment is not a quick-turnaround deal. “We’re making a commitment to the asset,” Glass said.

Pachucki, asked what lesson he’s drawn from the project, said, “Patience. You’ve got to believe in it. And Chicago is not an easy city to build in.”