Delivering a new office building in the days leading up to the stay at home order issued by Governor Pritzker in March 2020 is not exactly an ideal situation for a developer. However, after years of plotting and planning various projects on Goose Island, developer R2 Companies did exactly that by taking the wraps off 1315 North Branch, a 120,000-square-foot industrial conversion, early last year.
The company has been active on Goose Island for at least the last seven years, and despite the pandemic, is pushing ahead with new leases and build-outs for office tenants. And with more developers quickly piling into the former industrial pocket along the Chicago River’s North Branch, Goose Island is likely to look and feel completely transformed in the coming years.
Furniture and home goods maker CB2 was the first major lease R2 inked for 1315 North Branch. An early mover into Fulton Market, the company was looking for a new, unique space to serve as the center of its corporate functions, including showroom space and prototyping studios, says Zack Cupkovic, who handles special projects with R2 Companies.
“We had a really good year last year, despite the pandemic,” Cupkovic says. “I think there’s been a progression of movement into the lower density, neighborhood-focused office product and COVID has accelerated that because we have parking, you can walk up and not deal with elevators if you want, and you can get outside and walk around.”
After a year of pandemic conditions, companies are not just reassessing how much office space they need, but there could be more of a focus on lower-slung office buildings with outdoor amenities, such as new sections of riverwalk planned for Goose Island and the Lincoln Yards site further north.
But it could be even more basic than that, Cupkovic suggests. Giving office tenants and their users more control over the space, the “creature comforts we have at home,” Cupkovic calls it, could become bigger selling points than shared amenities or a Loop address.
“Imagine being able to open a window in your office,” Cupkovic says. “You can’t do that at the Sears Tower, right?”
One of the company’s more ambitious projects will be the overhaul of the former Morton Salt site along Elston Avenue. R2 is planning a major mixed-use transformation of the 4.2 acre campus that will include office space, a variety of food and beverage options, a new stretch of riverwalk and a large outdoor venue for events and live music.
While R2’s developments mostly focus on adaptive reuse of existing industrial buildings, a wave of new construction is expected along the North Branch at the Lincoln Yards site and also on Goose Island. Recently, developer Onni Group unveiled a proposal for 2,650 rental apartments over five towers at the former Greyhound site on the southern tip of Goose Island. The plan could take up to ten years to complete.
And there are other office developers getting in on the action with their own unique take on the post-industrial aesthetic. Hines and partner Diversified Real Estate have been planning a timber office project at Goose Island called T3. With 270,000 square feet planned over six stories, the development would be the largest mass timber office building of its kind in Chicago.
Adam Showalter of Stream Realty Partners is on the leasing team for the building and says that the project meets the expectations tenants have for the post-pandemic office environment and location as more companies look at moving into neighborhoods.
“We’ve seen the start of the trend for neighborhood offices,” Showalter says, “In a post-pandemic world, some of the attributes like light and air, as well as accessibility means other than public transportation, are becoming real for them as end users, so they can justify going to a place like Pilsen, or Logan Square, or Goose Island.”
While originally proposed in 2017, the project’s developers are making a renewed push to land office tenants in order to kick off construction. Showalter adds that the project won’t be 100% spec, but once 50,000 square feet is claimed, construction could begin.
In response to the slow development timeline, Showalter suggests that the market is finally catching up to what the product offers, as well as its location.
“We feel that the market dynamics have changed significantly given what’s going on in Fulton Market and what’s going on in other neighborhoods from an office perspective, and we feel like the demand side has changed and made this a much more viable option four years later,” Showalter says.
Matt Garrison, CEO of R2 Companies, goes even further, questioning why it took so long for the market to finally catch up with what’s happening at Goose Island.
“First of all, I think people should have been looking at [Goose Island] in the first place, but just didn’t,” Garrison says. “I mean, you come one mile from downtown and get more space, there’s really cool buildings that don’t exist in other places, and there’s two- to three-miles of river frontage, so there are a lot of good reasons to be here.”
And while Fulton Market’s office market is expected to recover faster than the heart of the Loop, there’s been recent criticism that the neighborhood was redeveloped too quickly, that it’s lost its old industrial charm, or that it just doesn’t feel authentic.
So, how does Goose Island prevent itself from becoming a victim of its presumed future success?
One way is just by saving what’s left of the former industrial stock, Garrison suggests. While Fulton Market still has traces of the old warehouse district feel to it, much of the neighborhood has been built up in the last five to six years. And then at the Lincoln Yards site, virtually all of the original industrial buildings have been razed to make way for new towers and park spaces.
“You can’t replace the post-industrial buildings,” Garrison says of the stock still left on Goose Island. “I think everyone believes that there’s a lot of them left in Fulton Market [and along the North Branch], but there’s actually hardly any of them left.”
Reusing the older, existing industrial stock versus building new office mid-rises to look like a former warehouse building is “the difference between going to France or Italy and going to Epcot,” Garrison continues.
“All we’ve tried to do is identify the best post-industrial buildings that are left and figure out a way to save the ones that we can,” Garrison says. “I mean, that’s just our approach.”
This story also appears in the April 2021 issue of Illinois Real Estate Journal
