This cycle has been transformative for River North, it has become the “it” location by tech and creative sector tenants, leaving the submarket stripped bare of space. As of mid-year, River North had only a handful of buildings with large blocks of space available for lease. In fact, as of earlier this month there are just five buildings in River North that can accommodate a tenant needing 50,000 square feet of space, according to CoStar. Among the more than 15.3 million square feet of inventory in River North, just under 2.0 million square feet was available for lease as of mid-year. Now, Fulton Market appears to be following a similar trajectory to River North, evolving from a warehouse district to a burgeoning neighborhood that has become the target of commercial developers and a wide range of tenants. McDonalds’ move to the former Harpo Studios caps off a flurry of activity in Fulton Market--it is perhaps appropriate that the fast food icon is moving to an area once dominated by food processing and meatpacking companies.
The floodgates have opened in recent months in terms of such companies deciding that now is the right time to sell as property values peak. Properties already put on the market include: 1201 W. Fulton Market, 914-926 W. Fulton Market and 901 W. Lake Street. Flying Food Group, which owns about 15 commercial properties in Fulton Market area, is considering either a potential sale or a refinancing of its properties. Several developers have plans in place to renovate warehouses or construct smaller ground-up buildings in the area, including Summit Design+Build’s proposed renovation of a three-story loft building at 1032 West Fulton Market that calls for the addition of a fourth story and a new five-story building on an adjacent lot.
Sterling Bay, the developer behind McDonald’s upcoming headquarters, was a trailblazer when it came to projects in River North. It now has a few other pots on the fire in Fulton Market as well. Activity at its building Fulton West, located just three blocks from Google’s midwest headquarters, is heating up. Glassdoor signed a 13-year, 51,500-square-foot lease within the development, announcing its intentions to hire 250 workers in Chicago over the next three years; the company is currently occupying a 10,400-square-foot building at 370 N. Carpenter Street that was previously home to Uber.
Larger warehouses with bigger floorplates are ideal conversion candidates for tenants that are increasingly demanding open layouts that foster collaboration and also optimize space efficiency.
Landmark and zoning restrictions put in place in 2015 will restrict the size of most office and residential redevelopments in Fulton Market. A few of the area’s existing warehouse and distribution facilities could be converted to retail with a second floor of office space on upper floors. As is the case in many other emerging neighborhoods, chefs and restaurateurs are often among the first to set up shop. The millennial favorite Shake Shack, led by famed chef and restaurateur Danny Meyer, recently announced the company’s plan to open its fourth Chicago location at the upcoming Shapack Partners building 185 North Morgan St.
Retailers responding to the increased density in Fulton Market area have begun to announce plans for new stores. Urban Outfitters recently announced plans to open a location of its Free People brand store at 1101 W. Randolph St. Free People will be the first large national apparel chain to locate in Fulton Market district. Soon after the announcement, plans were also unveiled for a new location for Urban Outfitters’ Anthropologie brand at 1000 W. Randolph St. Additionally, Starbucks’ new high end concept is opening its flagship store at 1000 W. Randolph.
Additionally, there has been fervent activity by hotel developers to get in on the action in Fulton Market. Among the projects being built or in the planning stages, a seven-story, 159-room Ace Hotel is currently under construction adjacent to Google’s headquarters; the 83-room Nobu Hotel is being built at Randolph and Peoria; the New York-based Equinox fitness chain is planning to open a 145-room hotel along Randolph St., on the west side of the Kennedy Expressway; the Hoxton, a London-based hotel brand, is planned at Green and Lake Streets; and this week, plans for a yet-to-be-named, 245-room extended-stay hotel were unveiled, to be built at Lake and Halsted Streets.
As the new economy continues to change the way many companies do business, including the spaces and locations in which they operate, Savills Studley continues to see both traditional and nontraditional office users embrace creative office space concepts. Examples of recent leases in Fulton Market show the typical mid-stage tech and digital startups, marketing agencies, clothing manufacturers, and architects. More established businesses are sometimes reluctant to take the risk on a new location in a peripheral location. Limited parking and a long walk to mass transit can sometimes restrict the pool of companies willing to include Fulton Market in their space search. This leaves room, though, for smaller and mid-sized tenants to be the early adopters.