Another construction crane is about to rise in the Fulton Market District after a local developer secured financing for a 263-unit apartment project on the neighborhood's west end.
Marquette plans to break ground Jan. 8 on the 14-story building at the southwest corner of Lake and Ada streets, said Marquette President Darren Sloniger. It's one of several residential projects in the works in the Fulton Market area, one of the hottest neighborhoods in Chicago, punctuated by the arrival of McDonald's headquarters there next year.
Though the bulk of development in the area so far has occurred several blocks east of Marquette's site, Sloniger is betting his location will only become more attractive to renters as the neighborhood continues to fill in. It's about two blocks south of Fulton West, a new office building leased to tenants including Glassdoor and Dyson.
"The pendulum is swinging," he said. "The Fulton Market is definitely moving west."
Chicago architecture firm Brininstool & Lynch designed the building, which is expected to cost more than $85 million and open in spring 2019. Power Construction is the general contractor.
Marquette on Dec. 18 acquired the development site, formerly the home of Takis Royal Foods, from Chicago-based Sterling Bay, the most active developer in Fulton Market.
Sloniger declined to identify the project's lender but said one group was providing both the debt and the equity to finance construction. Sloniger wouldn't disclose how much Marquette and its partner were borrowing, saying only that the loan represented 62 percent of total project costs. That would work out to roughly $53 million.
RUSH OF PROJECTS
Spurred by changes in the zoning code and the arrival of companies like Google and McDonald's, developers have been snapping up properties and proposing new residential, office, hotel and retail projects in the Fulton Market District. In November, a development group unveiled plans for a 1.2 million-square-foot office, retail and hotel project on the 1200 block of West Fulton Street.
Apartment developers like Naperville-based Marquette are counting on job growth—McDonald's is moving about 2,000 employees there next year—to drive demand for housing. Unlike other parts of downtown Chicago, which are overbuilt, Sloniger said Fulton Market doesn't have enough apartments to satisfy the strong demand there, one reason he's confident Marquette will be able to fill up its new apartment building.
"It's more supply constrained," he said of the neighborhood.
But several other developers have the same idea, meaning that supply could catch up with demand in the next few years. Developers have rolled out plans for more than 2,000 apartments in the broader Fulton Market neighborhood, including a 300-unit tower at Peoria and Randolph streets. Of course, there's no guarantee that all the developers will obtain construction financing, a task that has grown more difficult as construction costs have risen and the downtown market has swelled with thousands of new apartments.
"It's tough to get deals done," Sloniger said.
Marquette has been doing a lot of deals the past several years, especially in the suburbs. The firm acquired River Run at Naperville and Cityview at the Highlands in Lombard last year. Downtown, Marquette sold a 22-story apartment tower in the South Loop last year and built Catalyst, a 233-unit building in the West Loop in 2014.
The Fulton Market project "will have a loft-warehouse feel to it," Sloniger said. Averaging 850 square feet, its apartments will be "competitively priced," not as expensive as some of the other new luxury downtown buildings on the market, he said. Ten percent, or 26, of the units will be considered affordable to meet the city's affordable housing regulations.