The company managing the debt on Chicago's JW Marriott hotel has gone to court to stop construction crews from converting the office floors above it into apartments, after a power mishap allegedly knocked out the hotel's phones for more than four hours during a crunch of checkouts and check-ins. Torchlight Loan Services filed suit against developer Prime Group in Cook County Circuit Court, asking a judge to freeze work at 208 S. LaSalle until Prime secures the hotel's consent.
According to The Real Deal, the complaint centers on an incident at about 9:15 a.m. on Oct. 27, when a Prime electrical subcontractor cut power to a 14th-floor room housing the hotel's internet and phone equipment. The outage knocked out phone service for more than four hours, the complaint states, hitting right as 230 rooms were checking out and another 230 were checking in. Hotel staff reportedly skipped standard payment checks just to get guests into their rooms during the chaos.
A hearing on the dispute is set for Jan. 4, though the available court filings do not specify the year. The JW Marriott's camp argues a 2014 easement agreement gives the hotel veto power over any construction changes that raise its costs or disrupt shared building systems, per the same account. The hotel pays 54 percent of the building's shared costs, and roughly 70 of its pricier rooms, plus its executive lounge, sit directly beneath the construction zone.
A Conversion Plan With a Moving Number
Prime Group's broader plan calls for turning office floors above the hotel into apartments, with the company also planning roughly 70 new hotel rooms on floor 17. The Real Deal's report on the lawsuit puts the apartment count at about 167 units spread across floors 13 through 16 of the 22-story landmark building. Other accounts of the same project differ: Urbanize Chicago has described it as 168 apartments including 51 affordable units, while a Cushing & Company analysis pegs the figure at 226 residential units, a third of them affordable. The exact final count for the 208 S. LaSalle conversion is not settled across these reports.
The building itself houses more than one hotel brand under one roof: the 610-key JW Marriott Chicago occupies the lower floors, while the LaSalle Hotel sits on top, per Cushing & Company's account of the site. Torchlight is acting as special servicer for the bondholders who took control of the JW Marriott through foreclosure, and the lender is seeking to pause work until Prime and the hotel settle the consent question.
A Hotel's Wild Valuation Swings
The financial backdrop to the fight is dramatic on its own. The hotel was appraised at $205 million in May, a steep drop from the $370.4 million appraisal it carried in 2017, the outlet reports. In between, Rialto Capital hired JLL in 2024 to sell the property when it was appraised at $228 million, and Wells Fargo, acting as trustee, won the hotel outright with a sole $251 million bid at a July 2022 foreclosure auction. Natixis had originated a $203.5 million senior loan on the hotel back in 2017, with about $79.3 million of that packaged into three commercial mortgage-backed securities deals.
Despite the valuation swings, the hotel's business has been recovering. Revenue hit $84.1 million in the first nine months of 2025, already surpassing the $74.5 million it brought in for all of 2024, according to the same report. That rebound adds financial weight to the hotel's objection to construction disruptions happening overhead.
Part of a Bigger LaSalle Street Push
The 208 S. LaSalle fight is unfolding against the backdrop of a much larger effort to remake Chicago's financial district. Roughly 7.3 million square feet of office space has been pulled from the metro Chicago market through conversions or redevelopment since 2020, Cushing & Company notes. The city's six LaSalle Street Reimagined projects together represent nearly $900 million in investment and about $300 million in tax-increment financing support.
City officials have touted the broader initiative as transformative: it's expected to create more than 1,700 apartments across six buildings in the corridor, with 30 percent of units set aside as affordable housing, according to Block Club Chicago. Another 24 residential conversions are underway downtown outside those six TIF-funded projects, per that same outlet's reporting. The Bellwether, a conversion of the historic Rector Building, was the first LaSalle Street Reimagined project to open, having received $28 million in TIF funding toward its $64 million price tag.
Disputes between developers and the hotels sharing their buildings are not unique to 208 S. LaSalle. At the Clark Adams Building, Primera Group and investor Marc Calabria had planned to turn empty offices into 400 apartments, but a judge entered a default judgment against Primera in a separate $15 million lawsuit, as reported by The Real Deal. Blackstone and CWCapital had earlier threatened to sue over a rezoning of that building without the hotel's consent, before the City Council voted to landmark the tower in November 2025. Separately, a CoStar analysis of the corridor noted a Prime Group affiliate had proposed 84 apartments elsewhere within 208 S. LaSalle, while a competing proposal for the same building called for 102 units.
Whether the Jan. 4 hearing resolves the standoff between Torchlight and Prime Group, or whether the hotel ultimately grants its consent, remains to be seen. For now, the dispute stands as the latest flashpoint in Chicago's push to convert aging Loop office towers into housing without disrupting the hotels that still call those same buildings home.
