Spear Street Capital Buying 1201 West Lake in Fulton Market

Spear Street Capital is trading in its big-city blues for a taste of Fulton Market.

After getting bruised by bigger bets on Loop-adjacent office towers, the San Francisco-based firm is pivoting to Chicago’s trendiest commercial real estate enclave. Spear Street is under contract to purchase the 146,000-square-foot office building at 1201 West Lake Street for approximately $40 million, sources familiar with the sale told The Real Deal. That equates to almost $275 per square foot.

Chicago-based McCaffery Interests is selling the building after developing it, completing it in 2019. It’s about 85 percent leased today, according to people familiar with the property.

Spear Street declined to comment and McCaffery didn’t return requests for comment.

For the buyer, the transaction marks a strategic retreat from the larger, more troubled Chicago property. Spear Street is currently facing a potential wipeout at the 46-story 500 West Monroe Street, where it defaulted on a $270 million loan. Chicago-based Glenstar and Minnesota investor Patrick Halloran as of March were under contract to acquire the 46-story, 966,000-square-foot Monroe Street building for just over $100 million.

Meanwhile, Spear Street is also in the process of offloading 225 West Wacker Drive, a 31-story tower it bought in 2020, for what is expected to be a painful fraction of its original purchase price.

By shifting focus to Fulton Market, the former meatpacking district, Spear Street is betting that smaller, modern floor plates in highly desirable neighborhoods for retail can succeed where hulking towers have failed.

While the price per square foot at 1201 West Lake is still below pre-pandemic peaks, it represents a significant premium over recent downtown fire sales. Earlier this year, properties at 161 North Clark Street and 401 North Michigan Avenue traded for less than $200 per square foot. The Lake Street price tag would be the highest per-square-foot rate paid for a downtown office building since a stake in the Bank of America Tower sold in 2022.

The seven-story Fulton Market building, completed by McCaffery on a gutsy spec bet without any tenants prior to construction, is currently 85 percent leased, people familiar with the property said. Tenants include anchor Santa Clara, California-based ServiceNow, which occupies 48,000 square feet, and advertising firm Schafer Condon Carter. Coca-Cola is also on the roster, though the beverage giant is planning a move to 910 West Lake Street within Fulton Market.

Cushman & Wakefield’s Tom Sitz and Cody Hundertmark are brokering the sale for McCaffery.