Real estate developers and well-wishers gathered this week in Chicago’s Fulton Market district for something rarely seen anywhere in the United States in 2023: a groundbreaking ceremony for an office project.
While celebrating that feat, the group led by Fulton St. also said it was pushing toward kicking off a massive residential project in the former meatpacking district.
That project, which would include almost 1,300 apartments in three towers on a pair of sites across the street from one another on Fulton, is the latest sign that Fulton Market is largely thriving despite rising interest rates, soaring construction costs, scarcity of loans and a sluggish flow of real estate deals throughout the country.
“Here’s to the triumph of teamwork, innovation and the continued success of Fulton Market in Chicago,” Fulton St. CEO Alex Najem said during the event Wednesday at 919 W. Fulton.
The formal ceremony, on an unusually warm November afternoon, came a few weeks after Fulton St. and its partners, Chicago-based JDL Development and lead equity investor Shanna Khan of SNK Capital, secured $233 million in construction financing for the planned 409,000-square-foot office building.
Work to build the foundation began Oct. 2.
Even with Harrison Street Real Estate Capital in hand as anchor office tenant and a lease with Gibsons Restaurant Group at the base of the 11-story building, the developers have said the project was derailed multiple times before loans from Bank OZK and Manulife Investment Management were secured.
“The cards were stacked against us, but this group would not fail,” JDL founder and CEO Jim Letchinger told the crowd.
This week’s celebration was a chance for Chicago real estate professionals to rub elbows with Khan, as the family office plans other real estate investments in Fulton Market involving Chicago firms Fulton St. and JDL.
Khan is the daughter of Shahid Khan, who owns auto parts supplier Flex-N-Gate and the NFL’s Jacksonville Jaguars.
“Chicago has it all, and yet it has unlimited potential,” Khan said during the ceremony.
Upcoming investments also will include the three-building apartment project approved for sites at 1200 and 1201 W. Fulton a short walk west of the recently started office project.
The developers’ plans track the progression of the neighborhood west of the Loop business district, which in recent years emerged as the fastest-growing urban office market in the country. Now Fulton Market is amid a residential construction boom that has increased since the city lifted a moratorium on apartment projects north of Lake Street, including sites in the 1200 block of Fulton.
Related Midwest recently completed the tallest tower in Fulton Market, the 495-foot-tall, 300-unit The Row Fulton Market, and even taller plans are on the drawing board.
Besides starting the office project, Fulton St. in recent weeks has signed New York-based Bathhouse to a build-to-suit deal for a 40,000-square-foot bathhouse and spa facility in the area and signed local restaurant group Heisler Hospitality to a lease for an entire two-story, 10,000-square-foot building it owns with Latsko Interests.
Those successes, and even more so the big office project, have Fulton St. now eyeing a late 2024 kickoff of a 34-story, 433-unit apartment building at 1201 W. Fulton, Najem told CoStar News. He said the group of developers hopes to start building the first of two approximately 30-story towers on the 1200 W. Fulton site by sometime in 2025. Those towers will have about 850 units combined.
Meanwhile, Najem said interest in office space at 919 W. Fulton has intensified in recent weeks as construction equipment rumbled onto the site. The office project is expected to be completed in 2025.
“We’ve gotten a lot more traction from tenants now that we have the financing,” Najem said.