The office vacancy rate in Fulton Market recently soared as new trophy towers opened during the coronavirus pandemic, but Vista Property Group is confident about the neighborhood’s future. The New York-based investment firm paid $32M for 400 and 401 North Morgan St., a pair of Fulton Market sites with a total of 83K SF of leasable space and 75K SF of land.

It’s a hefty payday for MAB Capital Management, which bought 401 North Morgan St. for $1.2M in 2012, and the property across the street for $1.9M in 2013, according to Cook County property records. That was just before Google transformed an old cold storage building one block south into its gleaming regional headquarters. Chicago-based MAB Capital Management then transformed 401 North Morgan St. from light manufacturing space to loft offices, along with a 32K SF special event venue and restaurant.

The event space, Morgan Manufacturing, now shares the building with the corporate offices of The Alinea Group, Tock, Listen Ventures and Nansen. The 7K SF building at 400 North Morgan St. is vacant and sits on 17K SF of land. The new owner plans to sit tight and wait for the right redevelopment opportunity.

“There are very limited, if any, opportunities in Fulton Market to have this kind of cash flow in place, while sitting on a whole city block,” Greenstone Partners CEO Danny Spitz said. “They believe the land around the property will eventually get filled. They have no immediate plans.”

Greenstone represented Vista in the transaction.

The total inventory in the neighborhood increased from 3.6M SF in Q4 2019 to 5.5M SF by Q4 2020, according to Colliers International, and builders have another 1.5M SF under construction. The vacancy rate increased from 7.5% in Q4 2019 to 28.3% in Q4 2020 after the pandemic shut down new leasing.

But Spitz said he is optimistic about the neighborhood’s prospects.

“There is still a lot of tenant demand for space in Fulton Market,” he said. “Obviously, no one is pulling the trigger yet, but there have been a lot of companies shopping around for space in Fulton Market.”