Sterling Bay has proposed a 320-unit tower around the corner from McDonald's headquarters, while Marquette plans a 210-unit project next to the Ashland Avenue CTA station.
Plans for another 530 apartments west of downtown are moving forward as the multifamily market begins to pull out of a severe COVID-induced slump.
In the Fulton Market District, Chicago developer Sterling Bay wants to build a 320-unit tower at 160 N. Morgan St., just around the corner from the McDonald’s headquarters. It would be the first apartment project in the neighborhood for Sterling Bay, one of the busiest developers in the area, with a focus on office buildings and hotels.
Farther west, Naperville developer Marquette has proposed 210 units at 140 N. Ashland Ave., on the west side of Union Park. It would be Marquette’s fifth multifamily building in the area, part of a concentrated investment by the developer around the 14-acre park.
“That’s like the final piece of the puzzle for me,” said Marquette President and Chief Investment Officer Darren Sloniger. “I think it will be really transformative.”
Sterling Bay and Marquette are seeking the city’s approval for the projects after one of the worst years for downtown apartment landlords in recent memory. Occupancies and rents in and around the central business district plunged in 2020 as many downtown businesses required their employees to work remotely. Living close to the office lost its value, especially with so many downtown restaurants and bars shut down, and demand for apartments fell.
But recent data suggest that the market is bottoming out and poised for a recovery in 2021. Last year, as tenants moved out of the Mason, a 263-unit building Marquette developed on the west end of the Fulton Market neighborhood, the property’s occupancy dropped below 90 percent, Sloniger said. It’s back above 90 percent now.
The building “is starting to lease up like crazy,” he said. “The last week to two weeks, it has really picked up.”
A recovery could usher in another wave of apartment construction in the greater downtown after a retrenchment in 2020. With fewer projects getting underway over the past year, developers will add just 1,300 apartments to the downtown market in 2022, down from 2,800 this year and the lowest total since 2012, according to Integra Realty Resources, an appraisal and consulting firm. But that number is likely to jump in 2023 and beyond if the economy and market bounce back, as many expect.
At 160 N. Morgan, Sterling Bay plans a 320-unit apartment tower designed by Chicago-based bKL Architecture that would rise 380 feet, according to a zoning application filed with the Chicago City Council. To comply with the city’s affordable-housing ordinance, Sterling Bay would set aside 32 apartments as affordable to residents at income levels below the Chicago-area median income. It would also invest in another 32 affordable units off-site.
Sterling Bay aims to “raise the bar for neighborhood residential and bring our ‘live-work-play’ vision for the submarket full circle,” according to a statement from the company.
Farther west, Marquette plans its 210-unit project on a property it has agreed to buy from the Women’s Treatment Center, a substance-abuse clinic. The developer would keep a five-story building on the site and convert it into apartments, tear down a three-story structure there and construct a 12-story building in its place, according to another zoning application. Marquette would set aside 21 of the apartments as affordable and provide another 21 affordable units off-site.
Designed by Brininstool & Lynch, the project is west of Ogden Avenue, the western boundary of the Fulton Market District, and a good 15-to-20-minute walk from the trendy neighborhood’s core. But residential development is expected to creep west toward the United Center as land becomes scarce and rents rise in Fulton Market.
Marquette is investing heavily in the area, with 1,042 apartments completed, under construction or in planning there. It started with the Mason, at 180 N. Ada St., which opened in 2019. Last year, it broke ground on two projects, a 278-unit building at 1400 W. Randolph St. and a 243-unit development at 1454 W. Randolph. Marquette also is converting an office building at 1436 W. Randolph into 48 apartments.
Union Park offers a major amenity for residents, and Marquette’s projects will energize and bring a sense of security to a neighborhood “that just doesn’t feel safe,” Sloniger says. Marquette would build its Ashland building right next to a CTA station, a plus for residents.
It should also be a bonus for tenants at the Mason, but many of them now walk the longer distance east to the Morgan Street CTA stop, more confident about their safety by taking that route, Sloniger said.
Both Marquette and Sterling Bay need the Chicago Plan Commission and City Council to approve zoning changes for their projects. They also need construction financing.
Marquette’s development, which Sloniger estimated would cost about $75 million, sits in an opportunity zone, where investors can receive federal tax breaks for backing real estate projects. But Marquette hasn’t decided if it will seek financing from an opportunity-zone investor, Sloniger said. He aims to break ground as soon as July.