A pair of developers ditched office plans in Fulton Market and are pursuing big multifamily projects instead, highlighting two asset classes moving in opposite directions.
Chicago-based Fulton Street Companies has proposed a two-tower complex with over 1,000 dwelling units at 1200 West Fulton Street, where it had originally planned a life sciences and office development, Crain’s reported.
Separately, Canada-based Onni Group wants to build a 698-unit residential tower at 357 North Green Street, as opposed to the 29-story office tower that it received City Council approval for in summer 2023.
The developers’ respective decisions to scrap their office plans reflects the struggles of Chicago’s office sector, which is grappling with record-high vacancies and mounting distress amid persistent remote-work trends and rising interest rates.
Onni and Fulton Street aren’t the only developers growing more cautious of Chicago’s office market, even as both currently have big office projects in the works. Centrum Realty & Development is looking to offload a River North site where it once planned a 123,000-square-foot office building. The firm is trying to rezone the site for residential use, hoping that it will have better luck landing a buyer.
Fulton Street’s proposal for 1200 West Fulton includes 43-story and 27-story towers, with 20 percent of units reserved as affordable housing to comply with city ordinances. Plans also call for 124,000 square feet of commercial space that could include retail, a gym or another use.
The project is set to cost $600 million, with completion slated for 2027.
Meanwhile, Onni bailed on its office plans in part because it never received a major leasing commitment from prospective tenants. Plus, the firm is bullish on Chicago multifamily, as evidenced by its pursuit of several massive apartment projects near the site of Bally’s planned casino complex.
Onni recently revealed new renderings for the smaller of the two projects, Halsted Landing. Onni’s $1 billion plan for that project calls for nearly 2,500 apartments across four towers, along with retail, green space, an amphitheater and a water taxi stop.
Chicago’s multifamily market has taken off since the pandemic amid surging demand. Chicago led the nation in rent growth last summer, rising 3.6 percent year-over-year. Rent growth slowed to 2 percent year-over-year in the fourth quarter, in part because of high interest rates, but they’re expected to rise between 3 and 4 percent for the remainder of 2024 as economic conditions improve, Ron DeVries, of appraisal and consulting firm Integra Realty Resources, told the outlet.
—Quinn Donoghue
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