January 23, 2019 Brian Rogal, Bisnow Chicago
The first wave of major development in the Fulton Market neighborhood is coming to an end, but a new one is just beginning. Sterling Bay 210 North Carpenter St., Chicago Sterling Bay set off the development explosion when it bought 1000 West Fulton, a cold storage building that towered over the once-industrial area west of the Loop, in 2012 for $12M and by 2015 transformed it into 1KFulton, the regional headquarters of Google. The influential tech firm’s arrival signaled that Fulton Market had become a true office submarket. “That gave everyone the green light,” Skender Vice President Clayton Edwards said. His firm recently built out a number of Fulton Market office spaces, and Edwards will be a featured speaker at Bisnow’s State of the Office event Feb. 14, which will explore what the future holds for the West Loop.
Developers renovated many of the industrial loft buildings around 1KFulton, which were quickly populated with creative users. Much of that renovation work is done, and developers have now kicked off construction on a set of new office towers, including ones built on spec, that will continue the neighborhood boom by placing more traditional users alongside Fulton Market’s creative and high-tech pioneers. McDonald’s decision to abandon its suburban Oak Brook campus in favor of a new 490K SF Fulton Market office building developed by Sterling Bay late last spring was a signal, from an iconic traditional business, that the neighborhood was seen in a new light. “The market has matured to the point where Fulton Market is no longer seen as an up-and-coming neighborhood that doesn’t have the credibility of a traditional Loop office address,” Sterling Bay Director of Leasing Michael Lirtzman said. “Tenants of all sizes and sectors are now actively seeking space in the area, ranging from startups to mature, Fortune 500 headquarters-type tenants.” Sterling Bay has also begun construction on a 19-story tower at 333 North Green St., and a 200K SF building at 210 North Carpenter, where Google has already agreed to occupy more than half the space. Courtesy of Gensler 333 North Green St., a new Sterling Bay property in Fulton Market.
Mondelez International, the maker of Oreo cookies, announced earlier this month it would move its headquarters from suburban Deerfield to 905 West Fulton St., a 108K SF complex that will combine historic facades with new design. Thor Equities began building it last summer, and its quick success in finding an anchor tenant gave other local developers another shot of confidence. Tishman Speyer bought a development site last December at 310 North Sangamon in Fulton Market, and will partner with developer Mark Goodman & Associates on the speculative construction of a 12-story office tower with 225K SF. The new buildings underway could attract more traditional office users that need large floor plates, the lack of which has kept many in the Loop, Edwards said. Unlike the recent past, which saw corporate behemoths like Google and McDonald’s take over entire properties, the next generation of office towers are likely to have multiple occupants. “We are seeing interest today from tenants in every kind of industry from creative and tech to banks, law firms, consulting firms and the professional service sector in particular has recently taken a keen interest in the market, which was not happening just 12 to 18 months ago,” Lirtzman said. The neighborhood does need more retail, along with more quick-casual eateries that bolster the fine dining of its world-famous Restaurant Row. Transportation also remains a challenge for companies going to Fulton Market, Edwards said. The opening of the Morgan Street stop on the Green Line in 2012 helped make the neighborhood a viable option for city dwellers, and the plans to open a stop on Damen Avenue in 2020 may push development farther west. Suburbanites taking the Metra trains to the Loop, however, still need to walk or take a bus to reach Fulton Market. That hasn't stopped tenants from putting stakes in the ground. In 2017, Skender was the first company to move into Sterling Bay's new Fulton West building at 1330 West Fulton St., and like many growing businesses, it saw moving out of downtown as a natural step. "Our old space at 200 West Madison was buttoned-up, because we were a relatively new firm, and we wanted to be taken seriously," Edwards said. Today Skender is one of the city's top construction firms, and does not worry about getting taken seriously. It recently topped out the Hyatt House Chicago Fulton Market District, which will open this summer, and built out offices for its fellow tenants in the now-full 1330 Fulton building, including The Climate Corp., Glassdoor and The AZEK Co. Edwards expects the energy and vibe of Fulton Market to continue drawing new office users. "It gets dark at 3 p.m. in the Loop during the winter due to all those 50-story towers, but out here we have openness, a lot of sunlight and a beautiful skyline." There is still some old stock left, but generally for companies that need between 20K SF and 40K SF, he said. Last fall, for example, Skender began reconstructing 939 West Fulton St., an old four-story timber loft building, into a 40K SF headquarters for Vital Proteins, a health supplements retailer. "But the biggest chunks of new office space in Fulton are now going to come from new development."
Chris Coleman, VP of Development at Wingspan, periodically shares his thoughts and observations on property development news.