Sterling Bay Bails on Fulton Market Office in Favor of Multifamily

Office is out, even in Chicago’s hottest neighborhood for commercial development, Fulton Market, and multifamily is in, Sterling Bay has declared.

The Chicago-based development firm plans to expand its holdings in the Fulton Market District by building one of the largest residential developments in the area, bailing on an earlier vision to construct an office building on the site.

The developer, led by CEO Andy Gloor, has applied for city approval to construct a 39-story, 570-unit apartment tower at 350 North Morgan Street, Crain’s reported. The new proposal replaces a previously approved 18-story office project at the site, originally planned as 1000 West Carroll Avenue.

Fulton Market’s transition from an industrial hub to a thriving mixed-use district has fueled significant interest in residential development. More than 2,000 apartment units are currently under construction or recently completed in the area, according to Integra Realty Resources.

The 350 North Morgan site, purchased from Pioneer Wholesale Meat in 2020, was initially intended for a Google office building before the pandemic disrupted those plans. Google has since focused its expansion on redeveloping the Thompson Center in Chicago’s Loop, leaving the Morgan Street property vacant.

It’s far from the only Fulton Market development site to go through a changeup of proposed uses before construction kicked off, since the pandemic diminished demand for offices.

Earlier this year, Chicago-based Fulton Street Companies pitched a two-tower complex with over 1,000 dwellings at 1200 West Fulton Street, where it had originally planned a life sciences and office development. And 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 the Chicago City Council approved last year.

Sterling Bay’s proposed 434-foot apartments tower will feature a five-story base and include 115 affordable units, aligning with the city’s housing ordinance. The affordable units will be available to households earning an average of 60 percent of the area median income.

Sterling Bay’s earlier efforts in Fulton Market have laid the groundwork for its Morgan Street proposal. The developer recently completed a 30-story, 282-unit residential tower at 160 North Morgan Street and secured development approval for a 390-unit project at 370 North Carpenter Street and a 559-unit building at 345 North Aberdeen Street.

However, both of those latter two properties are now on the market for sale as Sterling Bay looks to offload the vacant land rather than develop itself. The firm is divesting certain land holdings as it works to alleviate financial pressures on its stalled Lincoln Yards project, including last year’s rejection from the Chicago Teachers’ Pension Fund to provide additional financing.

— Andrew Terrell