Unused space in Millennium Garages eyed for self-storage, data center

With acres of unused space, the owner of the parking garages under Millennium and Maggie Daley parks downtown wants to convert some of it into a self-storage facility and another part into a small data center.

The international joint venture that paid $370 million in 2016 to lease and run the underground Millennium Garages parking system has been exploring all sorts of ways to soak up surplus space in the massive property, even considering turning some of it into a subterranean urban farm. With 9,176 spaces, it’s the biggest underground parking system in the country.

But filling those spaces is getting harder as more people ditch their cars and rely on ride-hailing services like Uber to get around town. Demand for parking is likely to shrink further if self-driving cars catch on as expected.

“We need to find a way to innovate to keep this space relevant to the city,” said Rick West, CEO of Millennium Garages.

Already, local car dealers rent hundreds of spaces in the Millennium Lakeside Garage under Maggie Daley Park, where they store new and used cars. It’s one way to make up for the loss in revenue from commuters and tourists.

But West is thinking beyond cars. He’s working on plans to convert the lower level of the Lakeside Garage into a self-storage facility. He said he still needs final approval from City Hall, but the city recently granted a construction permit for the project, which would total 200,000 square feet, with about 123,000 square feet of rentable space. LSC Development, a Barrington-based developer, would build out the space, West said. An LSC executive was not immediately available for comment.

“It’s still not a done situation yet,” West said.

Over in the Millennium Park Garage, just west of Columbus Drive, West is drawing up plans for a 20,000-square-foot micro data center. Millennium Garages is spending about $5 million to install fiber and wireless technology to bring internet access to the garage. Building the data center would allow to the venture to generate a return on its investment, West said. ExteNet Systems, a Lisle-based communications infrastructure company, would build the data center.

Millennium Garages, a joint venture between Toronto-based Northleaf Capital Partners and AMP Capital of Sydney, paid $370 million for the garage concession in 2016, about three years after the prior owner of the concession defaulted on $403 million in debt.

The garages, which include parking under Grant Park, are on a stronger financial footing today but have delivered a middling performance in recent years. They generated revenue of $34.2 million in 2018, slightly higher than the $32.6 million average over the prior decade, according to financial reports filed with the city. Net operating income totaled $7.9 million in 2018, down from $9.0 million in 2017. Financial information for 2019 is not publicly available yet.

S&P Global Ratings recently put the $205 million in debt secured by the garages on a watch list, citing “the potential for a prolonged period of depressed parking volume caused by COVID-19.”

Parking revenues at the garages have fallen more than 50 percent since Gov. J.B. Pritzker’s stay-at-home order last month, as downtown workers who would normally park have stayed home, West said. But more than 1,000 cars still park there daily, West said, and he doesn’t expect the venture will have trouble making its next debt payment at the end of June.

West also expects revenue to pick up this year when Northern Trust moves as many as 3,000 employees into a new office space in the big red tower at 333 S. Wabash Ave. in the East Loop. With many Northern Trust employees expected to park there, the Grant Park South garage will be close to full, he said.

Meanwhile, West is still trying to cook up new ideas for the 3.8 million-square-foot property. His group’s concession expires in 86 years, so he’s taking the long view. Millennium Garages recently formed a consortium with the City Tech Collaborative, an urban solutions accelerator, and other parties to explore ways to reposition the garage and integrate it into the broader transportation network of the 21st century. The group’s first project will focus on electric vehicles and charging stations.

Read the article at Crain's Chicago Business.