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."
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.