Fulton Market Demand Moving West
Developers now consider Fulton Market one of the hottest submarkets in the city, but the construction of new spaces for companies like Google may force many of the neighborhood's long-standing tenants to look elsewhere.
“We’re seeing a lot of tenants getting pushed out of Fulton Market’s eastern side by the higher rents,” Dayton Street Partners principal Michael Schack said. “In some cases, the rents east of Ogden Avenue are equal to second-generation space downtown on Wacker Drive.”
The Chicago-based firm has bought and renovated many Fulton Market properties in the past few years, but now focuses on the neighborhood’s western half.
It recently closed on the $3.9M acquisition of a 33K SF industrial building at 1827 West Hubbard St.
“We’re trying to stay ahead of the curve, and go where the demand is going to be,” he said.
Gross rents on the eastern half now hover around $40 to $45/SF, but in Dayton’s 1500 West Carroll building, which it purchased in 2016 and renovated into modern office space, rents run about $32, he said.
That building is now occupied by a variety of firms, including a digital ad agency, an engineering firm and Breather, a WeWork-like provider of conference space.
The gap in costs should continue drawing Fulton Market tenants west, especially when the Chicago Transit Authority opens up the new Damen Avenue Green Line Station in 2020, giving neighborhood users even quicker access to downtown, Schack said.
One obstacle could be a lack of available product.
“There are not a lot of buildings for sale in the area,” Schack said.
Owner-occupiers still use many of the properties that would be perfect for new creative office space, but most seem comfortable. It is possible an eventual increase in property values could entice new sales, especially after the new train station opens, but that is not certain, he said.
The lack of available space is why when a broker brought the opportunity to buy 1827 West Hubbard to Dayton Street, the company jumped at the chance. Built in 1948 and situated on 1.75 acres, the property features a bow truss roof, two loading docks, one drive-in door and parking for 33 cars, making it suitable for industrial or creative office. Tablescapes, an event rental company, occupies the entire building, but has outgrown the space.
“They are bursting at the seams,” Schack said.
Other recent acquisitions by Dayton in the West Fulton Market area include 2501 West Fulton, 2101 West Carroll and 2137 West Walnut.