Massive mixed-use complex planned for Fulton Market

from CRAIN'S Chicago Business By Danny Ecker on November 2nd, 2017

A rendering of a massive office, retail and hotel complex planned for the 1200 block of the Fulton Market District. (photo by S9 Architecture)

A rendering of a massive office, retail and hotel complex planned for the 1200 block of the Fulton Market District. (photo by S9 Architecture)

A pair of real estate investors are planning the biggest development to date in the Fulton Market District, hoping it will grab Amazon's attention as the online retail giant searches for a second home.

In a proposal that could shift west the epicenter of the fast-changing West Loop neighborhood, a joint venture of developer IBT Group and hedge fund investor Andrew Bluhm's LAMB Properties is aiming to build a 1.2 million square foot office, retail and hotel project on the 1200 block of West Fulton Street.

Towering over its surroundings in the full city block complex would be a 24-story geometric building, which would combine with an adjacent glass structure to account for about 900,000 square feet of office space. Those would overlook a 60-room boutique hotel on the property's southeast corner and ground floor retail stretching along 500 feet of the north side of Fulton Street, with 700 parking spaces built beneath the site.

If the ambitious half-billion dollar plan becomes reality—it must first win over the community and get zoning approvals of 27th Ward Ald. Walter Burnett and city planning officials—it would be another landmark development for an area that has rapidly transformed from a gritty hub of meat-packers and food wholesalers into a destination for trendy restaurants, hotels and corporate offices.

"We hope that this will be a real gathering point for all of the Fulton Market District," said Andy Bluhm, chief executive of LAMB Properties, a venture named for real estate investor Neil Bluhm's children, Leslie, Andy and Meredith.

LAMB and IBT are beginning to market the property, which was designed by New York-based S9 Architecture, to prospective tenants. But their sights are set higher: The project could also be the centerpiece of the City of Chicago's Fulton Market option in its bid to lure Amazon's second headquarters and the 50,000 jobs that could come with it over the next decade.

While the 1200 block site is not big enough on its own to accommodate the 8 million square feet the online retail giant seeks, Bluhm said he has spoken to other land owners in the area and that there are 25 acres of contiguous land including his site that could be developed into an "urban campus" for Amazon. Bluhm declined to name specific land owners, but one potential site to increase the footprint for Amazon is the 2.2 acre site that agriculture giant Archer Daniels Midland put on the market last month at 1300 W. Carroll Avenue.

"This isn't a suburban campus plopped down somewhere in the city, but a campus that is really part of the energy of what's already happening in the West Loop," Bluhm said.

Helpful to that recruitment effort would be extra transit options in the area beyond the CTA lines that run through the heart of the Fulton Market District. The developers said city planning officials have discussed the addition of a new Metra station near the northwest corner of Fulton Market.

A Metra spokesman said the city requested that the transit company's ongoing reconfiguration of a switching location just west of Fulton Market not preclude the possibility of a new station being built nearby at Ashland Avenue, though it has not had specific meetings about adding the station.

Ald. Burnett could not be reached for comment and a spokesman for the Department of Planning and Development didn't provide a comment.

Regardless of the Amazon recruitment effort, the 1200 W. Fulton development would be a massive addition to the flurry of office buildings underway or planned for the area, which has been validated as a destination for corporate headquarters by companies like Google and McDonald's.

Developers have flocked to the area to bet on continued demand from companies to move to or set up shop in the neighborhood. One major project is in the works across the street from the 1200 block site at 1330 W. Fulton St., where a 290,000 square foot building from developer Sterling Bay will soon house the offices of online job marketplace Glassdoor and the U.S. headquarters of vacuum cleaner company Dyson, among others.

Sterling Bay is also adding a 200,000 square foot office project at 210 N. Carpenter St. and is planning another 500,000 square foot building on the east end of Fulton Market that will be the future home of the Chicago office of ad agency WPP. Other projects are being built on speculation, or without signed leases.

A map showing the location of the 1200 W. Fulton St. proposal. Developers are hoping that a new Metra stop would be built nearby. (photo by Newmark Knight Frank)

A map showing the location of the 1200 W. Fulton St. proposal. Developers are hoping that a new Metra stop would be built nearby. (photo by Newmark Knight Frank)

Meanwhile, the area is quickly gentrifying: the Fulton Market District is on track to add more than 20,000 new jobs, 800 new hotel rooms and 3,500 new apartment units over the next 24 months, according to real estate brokerage CBRE.

"The basis for this kind of development is already forming," IBT Group Founder and Principal Gary Pachucki said of the 1200 block development, pointing to the mix of amenities that have poured into the area. "That really paved the way in our mind for the basis for this kind of a project."

The LAMB/IBT venture earlier this year agreed to buy the 3.5-acre block from a mix of property owners on the site for a total of $65 million, according to sources familiar with the deal. Remaining tenants on the site are set to leave over the next year, according to the developers, which will demolish the mix of low-slung buildings for its project.

Jon Cordell, Bill Rolander and Jason Houze of real estate brokerage Newmark Knight Frank are marketing the property to prospective tenants on behalf of the developers.

The Bluhm venture and its affiliates are best known locally for their work in the gambling industry, having developed $3 billion of casinos including Rivers Casino in Des Plaines, a company spokesperson said. LAMB is also developing approximately $2.5 billion in senior housing, office and residential real estate projects.

IBT is known for developing retail centers, including the Pulaski Promenade on the city's Southwest Side and the Evergreen Promenade in Evergreen Park.

Fulton Market block selling for more than $65 million

from CRAIN'S Chicago Business By Ryan Ori on February 23, 2017

The site for sale is marked in red.

Several property owners in Chicago's Fulton Market District have a deal to sell their entire block for more than $65 million, likely paving the way for another big development in the fast-changing neighborhood.

A venture of Chicago-based developer IBT Group and hedge fund investor Andrew Bluhm has a preliminary deal to buy a 3.3-acre parcel of lots and low-slung buildings in the 1200 block of West Fulton Market, according to people familiar with the deal.

The sale is contingent on obtaining zoning that would permit the developers to knock down smaller, older buildings on the block and redevelop the approximately 145,000 square feet of land with larger new structures as part of a mixed-use project that could include some combination of retail, office and residential space.

If the deal is completed, it would be the latest example of longtime business owners in the area, particularly food distributors, selling their properties amid a feeding frenzy by real estate developers. The far northwest corner of the West Loop is seeing an influx of boutique hotels, national retailers and big office tenants including Google's Midwest headquarters and the future McDonald's headquarters under construction.

In the 1200 block of Fulton, owners of several businesses banded together to sell their properties in one deal to try to maximize the sale price. Almost a year ago, they hired Newmark Grubb Knight Frank to seek a buyer.

One of those Newmark brokers, Gino Tabbi, declined to comment on the pending sale on behalf of the sellers. Bluhm and IBT's Gary Pachucki did not respond to requests for comment.

The exact price IBT and Bluhm are paying could not be determined, but it's believed to be more than $65 million.

That is more than $450 per square foot, a price that would have been unthinkable a few years ago, but below the $600 or more that some observers of the area expected pricing to reach by now, said broker Scott Maesel, who is not involved in the deal with IBT and Bluhm.

"The neighborhood's still on fire, just not at the prices people thought it was going to reach," said Maesel, managing director of SVN Chicago Commercial. "Land values are leveling off a bit.

"While there's still huge demand, now we're dealing with the fact that there are 15 to 20 sites on the market (for sale), openly or quietly. Now that there's so much supply, demand is changing."

IBT, led by Pachucki, is known for developing retail centers such as the Pulaski Promenade on the city's Southwest Side and the Mariano's-anchored Evergreen Promenade in Evergreen Park.

Bluhm is the son of Neil Bluhm, a billionaire real estate investor and casino owner. Andrew Bluhm is known more for buying distressed debt, running his Chicago-based hedge fund Delaware Street Capital and investing in technology startups.