Larry Freed doesn’t believe in jinxes.
In fact, the steady and analytical head of the Chicago family firm building the mall at 108 N. State St. is so indifferent to curses that he is naming the mall what Chicagoans have called the lot for decades: Block 37.
That is, if he gets to open it.
The third-generation head of home-grown suburban strip mall developer Joseph Freed and Associates LLC is battling to stave off foreclosure and open the mall by Thanksgiving. While Block 37 is far from being complete, Freed wants residents and tourists walking through the retail complex every day, and soon.
It is a critical deadline for retailers aiming to capture holiday sales, but also for Freed to show that the shopping center that had been a figment of city and civic leaders’ imaginations for decades is real and ready for public use.
On Friday, Bank of America and its lenders are scheduled to appear before a Cook County Circuit Court judge and ask her to take away Freed’s control of the project and give it to a receiver. On Thursday, the city is slated to give Block 37 the final inspection needed to open.
“We are working towards getting the building open,” said Freed, in a rare interview. “That’s our goal. This project was a very challenging, intricate puzzle. We were never bothered with the history of the jinx or the stuff about a curse.”
Call it bad luck or bad timing, but just weeks before the mall was set to open, Bank of America said it wasn’t going to give Freed any more money to finish the project. Then Freed shot back with a two-page statement calling the bank’s foreclosure efforts “a serious breach of trust with the people of the city of Chicago” and warned “once shuttered, this project will be near impossible to restart.”
Bank of America officials won’t comment beyond the lawsuit, which essentially says Freed spent too much money. The bank, lead lender on a $205 million construction loan, asserts that Freed is at least $42.6 million over budget and has remained “silent as to how it will fund completion” of the project, according to court filings. Larry Freed declined to comment on the lawsuit, but in court filings Joseph Freed and Associates said it believed there was an understanding with the banks from the day it took over the project that more funding would be required.
Freed is the third developer in as many decades to try to make something of the vacant Loop lot across from Macy’s. The star-crossed project, a victim of overambitious efforts, a previous real estate crash and State Street’s less-than-glamorous image, would be a coup to pull off. It’s unclear how much of a financial bet Freed is making on Block 37, but losing the project would be a blow to the firm’s reputation.
Late last week, the five-story, glass-enclosed mall bustled with 300 construction workers who were hanging signs, cutting tile, sanding floors, putting up drywall, drilling holes for light fixtures and installing glass display windows.
At clothing chain Anthropologie, the sign is up, the walls are painted green and shrink-wrapped wooden tables sit in front of a grand staircase ready to display sweaters. Specialty stores Steve Madden, Zara and Puma are putting finishing touches on shelves and lights.
On the Pedway — the granite-tiled ground floor of the mall that opens to the skylight five stories above — Au Bon Pain’s cash register and soup pots are set. And L’Occitane, Godiva and Swarovski are ready for customers.
Mayor Richard Daley, whose city hall office overlooks the mall, wants the underground Pedway open before winter for the thousands of workers who walk through the Loop each day. But Freed says it can’t open the Pedway without opening the entire mall. The Pedway, which connects the CTA Blue Line at Daley Plaza to the CTA Red Line at Macy’s on State, serves as the gateway to the atrium at the mall’s center. There is no way to separate it, said Paul Fitzpatrick, senior vice president of development at Joseph Freed.
“We think everyone will be pleasantly shocked when they walk in and see the Pedway,” Fitzpatrick said Friday at the site.
Larry Freed, whom friends call a modest man, made arguably the boldest move in his family firm’s history two years ago when he decided to take on one of the nation’s most troubled and complex urban projects. The project had undone bigger and more seasoned developers. Freed tackled it anyway.
The 46-year-old bachelor grew up in Glencoe. The youngest of three children, he was the only one who took an interest in the business his grandfather Louis Freed started as a store fixture supplier during the Depression and which his father, Joseph Freed, expanded into a shopping center developer in 1960. The youngest Freed spent summers as a teenager on construction sites talking to potential tenants and learning the art of the deal.
“I always viewed it as an interesting game,” he said. “It’s fun to deal with people. It’s fun to create or redevelop things. It’s very much a common-sense business.”
Freed’s first job after graduating from the University of Michigan was at May Department Stores Co. in St. Louis working in corporate real estate. Two years later, Herb Simon, co-founder of what is now Simon Property Group, the nation’s largest shopping center developer, asked Freed join his firm. When Freed was home for the holidays and casually mentioned that conversation, it became clear that his parents hoped he would pick up the mantle.
“His mother told him, ‘You’re really worrying your dad. He thinks you may never come home,'” said longtime friend and business associate Barry Kaufman, a retired real estate adviser. “Larry always intended to come back to the family business. And that was the catalyst for Larry coming back to Chicago. They are a very close-knit family.”
In the later years of Joseph Freed’s life, as multiple sclerosis took over, Larry would pick up his father and put him in a wheelchair so they could tour the annual shopping center developers trade show in Las Vegas.
“People either have a very positive or very negative experience working in the family business,” Larry Freed said. “I was fortunate it was a very positive experience. My dad loved the deal making. He loved to take on challenging developments.”
Freed joined the family business in 1986 as it became the largest privately owned shopping center developer in the Midwest. The same year, Freed took on its first historic preservation project by redeveloping Wieboldt’s department store in Wicker Park. In 1993, Larry Freed became president, and a year later his mother, Joyce Freed, who had run the back office, died unexpectedly. As the elder Freed’s illness progressed, Larry Freed took on more responsibility — for the business and for his father.
He continued to build and redevelop suburban strip malls in Illinois and Michigan, while also saving old Chicago retail buildings, including in recent years the Goldblatt department store building in Uptown and the Carson Pirie Scott flagship in the Loop.
Freed then expanded to Colorado, where the family likes to ski, with a Whole Foods Market building in Basalt that stalled late last year as credit markets froze. He also moved headquarters from Palatine to the Carson’s building in Chicago.
When Freed and Associates took over Block 37 from the now-defunct Mills Corp., it discovered that the economics were unrealistic, Freed said in court filings related to the foreclosure lawsuit. Mills was financially strapped and the plan showed it.
Freed set about redesigning the escalator flow, upgrading finishes, putting express elevators in from the street level to the third-floor Lettuce Entertain You food court and installing LED billboards. While the results are stunning, what matters is that the mall opens before Thanksgiving, said Matthew Sardo, owner of Comic Vault, a Block 37 tenant slated to open this month.
“If they don’t, it will be a detriment to the project as a whole. I don’t want to open in January when nobody shops,” he said.
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smjones@tribune.com
Online gallery: Block 37 is taking shape on State Street. See it at chicagotribune.com/block37
