No office submarket in Chicago—and arguably in the country—has seen an ascension over the past decade quite like Fulton Market’s. For those wondering if the winds of change might be coming, all the flags are starched and pointing toward unrelenting, unwavering progress.
“Since 2014, Fulton Market has achieved average rent growth of 9 percent annually, a 4 percent premium over the rest of the CBD,” said Paige Hennessy, director, Shapack Partners. “In 2019 the strong leasing velocity has continued, with 30 percent of net new absorption in the first half of the year occurring in Fulton Market, a submarket representing less than 3 percent of the current office inventory.”
Hennessy will be one of the speakers at next week’s State of Downtown Office, West Loop & Fulton Market Conference. There’s still time to register.
Shapack recently sold 811 Fulton for $50.3 million, the largest office sale in Chicago as measured by price per rentable square foot. It’s quite the turnaround as the firm acquired the site in 2014, then just a parking lot, for $2.6 million and added another $20 million in capital to develop the 70,000-square-foot office building.
Though built on spec, the property has attracted notable tenants, including commercial and residential furniture powerhouse Knoll, Chicago trading firm BlackEdge Capital and women-focused co-working outfit The Wing. What brought those tenants to the building? A common answer for properties like this is a suite of concierge-level amenities, but 811 W. Fulton Market has none. Like so many other properties in the area, the biggest draw for users is the neighborhood itself.
“Tenants recognize that Fulton Market is the amenity,” Hennessy said. “In the boutique buildings, tenants and their employees can step outside of their office environment and be in the middle of the most dynamic neighborhood in Chicago.”
That’s not to say that Fulton Market office buildings can’t or shouldn’t include amenities. Yes, it’s a hot neighborhood, but you’re still competing with other nearby properties. Where appropriate, office properties should consider adding what they can to attract top-tier tenants.
Shapack Partners recently broke ground on 167 Green, a 17-story, 750,000-square-foot office building that has already leased out 140,000 square feet to WeWork. When complete, the property will offer 13-foot-plus ceiling heights, the largest floor plates available in Fulton Market and 360-degree views with floor-to-ceiling glass on all sides.
On the penthouse level, those views will never go away as the site is surrounded by landmarked buildings. Because of this, it made perfect sense to not only include a flexible amenity level, but to bring it to the top of the building where all tenants would have access to the stunning vista.
Those top-floor amenities include a flexible event space that can be laid out to accommodate 400-person, town hall-style conferences or even a full-size basketball court. Smaller, more modular conference room space can fit groups of 10 to 50 people. The fitness center is a true gym, featuring a yoga studio, towel service and programming.
And yet, the best amenity here is still the one you can’t build into the project. The views from 167 N. Green are so impressive for the same reason that Fulton Market is so vibrant. Even in the face of meteoric popularity, the neighborhood has been able to preserve the hip, industrial vibe that invites people in the first place.
“For the most part, developers in Fulton Market have thus far maintained a strong ethos of good design intertwined with the neighborhood’s grit and authenticity,” Hennessy said.
There are so many ways that Fulton Market could have taken a wrong turn. Developers looking to cash in on a hot area could have forced through dense, quickly built properties that didn’t match the feel of the former warehouse district. Swinging the other way, the area might have even become pigeonholed by its own success.
In similar submarkets around the country, much of the organic growth has been focused on one industry. Fulton Market, on the other hand, has been able to pull in industries of all types. That’s important because companies of all stripe are—or should be—focused on attraction and retention of their employees. Fulton Market serves as a beacon to any corporate user focused on talent.
That diversity of users is one of the submarket’s strengths as a corporate attractor. Sustaining that desirability may require another type of diversity. Fulton Market already has a strong restaurant and nightlife scene. By fleshing out other retail options—along with hospitality, housing and other asset classes—the submarket will only continue to grow in popularity.
“It’s an interesting dichotomy —in order to attract more office tenants, Shapack Partners believes you must merchandise and build other asset types,” said Hennessy. “We have strategically built hotels, retail and residential all within blocks of our office projects. This differentiates Fulton Market from the traditional CBD and is a driving force behind the attraction to the neighborhood.”
Looking for more info on Fulton Market, as well as the West Loop and downtown? Reserve your spot now for next week’s conference.