CHICAGO—Sterling Bay Companies has just taken another big step toward the revival of the city's old meatpacking district just west of the Loop by completing the $22 million acquisition of Fulton West, a portfolio of existing and partially completed office, retail and parking facilities, from an affiliate of Marc Realty.
Bounded by Fulton St. on the south, Carroll St. on the north, Elizabeth St. on the east and Ada St. on the west, Fulton West includes three loft-style office buildings with about 165,000-square-feet of space. Also included is a four-story concrete superstructure at 1332 W. Fulton that information technology company Whittman-Hart began developing during the 1990s Internet boom. It was meant to help transform the neighborhood into a high-tech office hub, but the bursting of the dot.com bubble left it empty and unused.
The Fulton West purchase further raises the profile of a developer already tackling the most notable rehab project in the neighborhood. Sterling purchased the Fulton Market Cold Storage building at 1000 W. Fulton and has been converting the 550,000-square-foot structure, now called 1K Fulton, into modern office space. And the company signed Google, Inc. as its anchor tenant, a good sign that Fulton Market will finally become an Internet hub after the first aborted attempt during the dot.com era.
“Sterling invested $175 Million in the 1K office development and the project is now 90% committed,” John Gavin, the firm's investment principal, tells GlobeSt.com. “That's what emboldened us to make even more investments to the neighborhood. The success of 1K Fulton continues to demonstrate the popularity and marketability of the area.”
“We started aggregating property around Fulton about three years ago,” Gavin adds. What sparked their interest was the city's decision to construct a Green Line El stop at Morgan St., just south of Fulton, which would ease the commute of office workers. The station opened in 2012. “We've seen property values increase exponentially in the neighborhood.”
Earlier this week, GlobeSt.com reported how the exit of many older businesses from the Fulton Market area, especially food distributors, has begun to spark the development of new distribution facilities in neighborhoods like Pilsen.
“A lot of people have had their businesses here in the market for 100 years and don't want to leave,” Gavin says, “but others never envisioned making money off their real estate and will take advantage of the opportunity.”
The empty superstructure on Fulton could eventually have about 270,000-square-feet of office space and a 750-space parking facility. Sterling hopes to get approval from the city in about nine months, but Gavin is not sure if the project will receive any subsidies or incentives. “We're not that far in the conversation,” he says.
“We will not go spec on that project,” he adds. “We will wait to land a major tenant. There have been numerous groups expressing an interest, and we see it as a build-to-suit for a corporate headquarters.”
Gavin remains modest about Sterling's role in the neighborhood's transformation from meatpacking district to high-tech hub. He points out that Oprah Winfrey's Harpo Studios, a major tourist attraction, has been in Fulton Market for years. “I'd say Oprah was the early adopter.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
