L3, LaSalle cash out of Fulton Market hangout for $35M

Fulton Market’s retail rush brought in a foreign buyer for one of its busiest hangouts.

An unknown European investor has agreed to pay $35 million for the 49,000-square-foot building at 914-926 West Fulton Market, owned by Chicago-based partners L3 Capital and LaSalle Investment Management, and fully leased by Time Out Market, CoStar reported. The sale price amounts to an annual rate of return of about 4.5 percent, according to people familiar with the arrangement cited by the outlet.

No deal has been officially inked, but if the sale goes through, it would conclude an investment between L3 and LaSalle, a subsidiary of JLL that acquired the property for $14.6 million in 2016. The developers demolished its two-story building after it was deemed structurally unsound, and took out a $17 million loan from Byline Bank to build a three-story asset at the site.

Construction was completed in 2019, and the loan from Byline was set to mature in December 2020. However, the pandemic allowed for an extension of the debt’s due date through December 2023, with the possibility of an additional one-year extension into late next year, the outlet reported citing public records.

Time Out Group, whose CEO is Chris Ohlund, agreed to lease the property in 2017, functioning as a cafeteria-style dining experience curated by editorial staff members and modeled after the company’s initial food hall concepts that debuted in Portugal in 2014. Time Out Group also has locations in New York, Boston, Montreal, Dubai and Miami.

With the deal, the Fulton Market District’s retail scene has lured more investment into the neighborhood that has become an office and apartment development hot spot over the last decade. Last year, Alex Najem’s firm Fulton Street Cos. scored a 25,000-square-foot lease with Dom’s Kitchen & Market at 919 West Fulton Street to give the neighborhood its first grocery-style shopping business.

Fulton Market was the fastest-growing urban office market in the nation over a recent five-year stretch, with an average 100 percent annual increase in supply, the outlet reported.

Developers such as Related Midwest are in the midst of planning or building thousands of apartments in the neighborhood, including Related’s 495-foot-tall tower at 164 North Peoria Street, set to be completed in the near future. Thor Equities also has made a deal to buy a 2.7-acre site from Nealey Foods for over $100 million, with potential plans of building multiple towers that could include a mix of residential and office space.

— Quinn Donoghue