R2 Scoops up Half-Empty Fulton Lofts for $3M

Chicago-based real estate firm R2 picked up a high-vacancy loft property just west of Fulton Market, eyeing a conversion of the building into flexible, small-bay industrial space.

Last month, R2 paid just over $3 million for the three-story, roughly 49,000-square-foot building at 2130 to 2140 West Fulton Street, according to Cook County property records. CoStar reported that the firm rebranded the building as Fulton Lofts and plans to lease it to a mix of creative and light industrial tenants, from furniture studios and art galleries to coffee roasters and podcast operations.

The acquisition fits squarely within R2’s growing push into what it calls “urban flex” properties — older industrial buildings retooled to support a wide range of uses at rents below those commanded by Class A office space. R2 partner Zack Cupkovic told the outlet that the firm wants “to provide urban flex properties with the level of management and service that you’d expect in an office building.”

The seller was Sagard Real Estate, formerly known as EverWest Real Estate Investors, which paid $5.1 million for the property in 2017, according to CoStar data and county records. Sagard was represented by a Marcus & Millichap team led by John Abuja and Kyle Hynes, along with Philip Kates, Adam Sklaver and Steven Weinstock. Sagard did not respond to a request for comment from CoStar.

R2 bought the property out of an auction, financing the deal with a nearly $2.3 million loan from T2 Capital Management. The building is about half vacant and sits near breweries, galleries and other creative users clustered along the western edge of the Kinzie Industrial Corridor.

R2 recently bet on the Salt Shed concert venue and a flex conversion on Goose Island that provide examples of what R2 wants to bring to the building, according to the publication.

The site’s location — just north of the United Center — adds longer-term upside as well. The owners of the Bulls and Blackhawks have floated plans for a $7 billion mixed-use development around the arena, which could further boost demand for nearby workspace.

— Eric Weilbacher