500 apartments planned along Fulton Market's west end

Danny Ecker, Originally published in Crain's Chicago - June 13, 2019

As it debuts a 14-story apartment building in the western portion of the Fulton Market District, a Naperville developer is planning to nearly triple its bet on rental units in the trendy corridor—including a plan to build one of the neighborhood's tallest buildings.

Looking to reshape a big piece of Fulton Market's burgeoning western edge, developer Marquette is proposing three new buildings with a total of more than 500 apartments along the 1400 block of Randolph Street on either side of Ogden Avenue, according to zoning applications filed yesterday with the city of Chicago.

The highest-profile of the properties would be a 21-story, 252-unit building at 1400 W. Randolph St., where Marquette plans to raze a one-story building that previously housed restaurants BellyQ and Urbanbelly and erect a high-rise that would tower over a neighborhood of mostly low-slung industrial buildings.

Such building heights have become commonplace along the eastern edge of Fulton Market, which is later in its evolution from meatpacking district to hotbed of corporate offices and upscale restaurants and hotels. But the scale of buildings near Marquette's site is far more modest, at least for now. Marquette's 14-story, 263-unit luxury apartment building recently built at 180 N. Ada St.—just steps from the newly proposed building—is a giant relative to its surroundings.

A block west of the 21-story proposal, Marquette wants to demolish a two-story building at 1436-50 W. Randolph St. across the street from Union Park and build two apartment properties in its place, one eight stories and one six stories. Those two buildings would include 260 residential units, according to Marquette's zoning application. The 21-story and six-story proposals each would include a small amount of retail space on their lower floors.

Marquette President Darren Sloniger said the developer has a deal with craft beer maker 25 West Brewing to open a restaurant in 10,000 square feet on the ground floor of the 21-story tower.

 He's also taking an unusual approach to meeting the city's affordable-housing requirements for the three transit-oriented developments together: Instead of putting affordable units in all three buildings, Sloniger said he is proposing to make all 85 units in the six-story building affordable, with none in the other two. The properties are both within the boundaries of a pilot program area the city launched in 2017 in certain gentrifying neighborhoods that requires 20 percent of the units in a planned residential development to be priced to accommodate low- and moderate-income residents, up from the citywide 10 percent requirement.

The ambitious plan is among the boldest Fulton Market development bets yet along Ogden Avenue, which was designated as the western zoning boundary of the Fulton Market Innovation District that the city created in 2014 as a guideline for development in the corridor.

Marquette, better known for its residential projects in the suburbs, is among the developers wagering that there is unmet demand for apartments near Fulton Market and the West Loop, even amid a surge of apartment development downtown. The explosive transformation of the Fulton Market District into a destination for companies like Google, McDonald's and a growing list of other big names has brought thousands of jobs to the neighborhood, and Marquette wants to give them new, nearby places to live. Residential uses have been prohibited in Fulton Market north of Lake Street, under rules enforced by 27th Ward Ald. Walter Burnett.

Sloniger said he's bullish on apartment demand continuing to grow in the western portion of Fulton Market. He points to the early performance of the Ada Street building, which opened last week at 40 percent leased, as a sign that the market can handle more supply.

"We're having an incredible draw from not only Fulton Market but also from the (Illinois) Medical District," he said. "The demand for departments in this niche is great."

Working in its favor is that development momentum near Ogden has recently picked up speed. Dallas-based developer Trammell Crow is under construction on a 14-story office building at 1375 W. Fulton Market that it is building on speculation, or without any tenants signed. Just north of that site, Chicago developer and Fulton Market driving force Sterling Bay is seeking a $200 million sale for an office building it developed at 1330 W. Fulton Market.

Meanwhile, the city's Department of Planning and Development is moving to rezone the area just west of Fulton Market between Ogden and Ashland avenues to allow new uses, likely setting off even more new development in the years ahead.

Marquette's vision also adds another batch of planned residential units to a downtown market that is quickly being populated by new apartment buildings.

Developers have opened 47 downtown apartment buildings with more than 15,000 units since the beginning of 2015, according to Integra Realty Resources, a Chicago appraisal and consulting firm. Integra forecasts 4,100 new apartments will open this year and another 6,600 over the next two years. But the firm also projected recently that that still may not be enough to meet the rampant demand for rental units in the city.