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Chicago: Fulton Street Companies’ long-term location bet pays off

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Alex Najem (iStock) by Fulton St. Companies

Every Chicago developer, big or small, wants a part of the Fulton Market. Fulton Market defied a pandemic that has hit commercial real estate with Class A office buildings, boutique hotels and new apartment projects.

Fulton Street Companies (the neighborhood’s largest small-scale developer, as CEO Alex Nagem calls it) has nine projects completed, under construction, or proposed in Fulton Market. This falls short of the scale of the large developers that Najem is competing against. Among them are Sterling Bay, which has dozens of Fulton Market projects totaling over 4.4 million square feet, and his Shapack, developer of 10 of his projects planned and his two hotels totaling more than 2.5 million. Includes Partners. square feet of the district.

It’s important for Najem to focus on the most popular locations, not just Fulton Market. After all, it’s in his company’s name.

“Are you really in Fulton Market when you’re not in Fulton Market (street)?” asked Matt Pistorio, founder of Chicago commercial real estate agency Madison Rose, which manages FSC’s leases at 1045 West Fulton Market. . “It’s a common joke, but if you’re on Fulton Market (street), it’s a great address like Wacker Drive.”

Unlike other Chicago developers who spread their bets across the city, Najem narrowed his focus. Sterling He’s Bay and Shapak He’s Partners a few years later, he’s Fulton He’s Market in 2017. His strategy has paid off so far, even though he entered the race.

About 12 years ago, Najem was a broker for developer Cedar Street, representing tenants looking for restaurants and retail space. He first experienced his Fulton market in 2014 when he headed up Cedar and purchased and then sold his four lofts in his building. Eight years later, Najem’s company bought the same building for $33 million. On his company website, he has nine planned sites and completed projects, seven of which have a Fulton Market address.

“I had to build a reputation for myself. For me the only way to really win was to have the best location, best architecture and best flexibility,” Najem said in an interview. is talking. “Even if I could make the same product as someone else, if there was a better place, I would always get tenants.”

Stay ahead of trends

Born in Texas, Nagem grew up primarily in Indianapolis and frequently visited Chicago. He began his career as a trader at the Chicago Board of Trade in 2006 and pivoted into his real estate four years later.

Najem’s love of restaurants and his experience helping his uncle in the hospitality business has put him in the position to understand what his tenants want and build a network.

In December 2017, he partnered with longtime friend Ross Babel. Ross Babel is a residential developer focused on developing from the ground up throughout Chicago. FSC’s business began by purchasing a three-story fire station at 114 North Aberdeen and leasing it to two tenants, but FSC needed Babel’s expertise in obtaining project permits and funding. was planning a larger ground-up project based on Nagem’s ability to procure and purchase real estate. .

The redevelopment of a dilapidated 15,000-square-foot meat processing facility at 1100 West Fulton Market puts FSC in the spotlight. Creates 45,000 square feet of three and five story showroom, retail and office space with large loft-style windows, metal awnings and single tenant furniture brand Harman on the ground floor It has a roof terrace for mirrors. .

1100 West Fulton (FultonSt.com)

While companies tried to find buildings with floor plates large enough to fit employees on one floor before the pandemic, Najem said, “People were very interested in everything in the building, the aesthetics, the roof deck, and the people.” The expectation of controlling the way in and out came to mind, says Jim Plunkard, partner and co-founder of Chicago-based architecture firm Hartshorne Plunkard Architecture, who worked with FSC on the 1100 West Fulton Market project.

Plancard recalls when FSC signed a 15-year lease with Herman Miller. “Nagem was ahead of the trend.”

As commercial real estate sales plummet and businesses adapt to remote work, Nagem’s strategy has paid off. According to Cody Hundertmark of his Cushman & Wakefield, who represented FSC in his $41.75 million sale to The Game Ltd. sold for a record $925 per square foot of him.

“best of both worlds”

In the last two years, he has purchased approximately 4 acres of land in Fulton Market and completed a 160,000 sq ft Class A building at 1045 West Fulton Market, ready for tenant occupancy.

“When the pandemic hit, they [Fulton Street Companies] We decided to start the project at 1045 West Fulton Market,” said Pistorio of Madison Rose, who is in charge of leasing the building. “In some ways, Alex was kind of a gamble even when the pandemic started because he knew it would work.”

Now, “we have enough interest to lease the entire building,” says Najem of the 1045 West Fulton Market property. “The level of interest last month was unlike anything Fulton had ever experienced in the market.”

1045 West Fulton (FultonSt.com)

While FSC’s successful redevelopment has helped set the tone for the neighborhood, Sterling Bay and Shapack Partners are catching up.

According to local commercial development firm SVN Chicago, Sterling Bay has at least eight residential and commercial projects under construction, approved, or proposed in the district totaling about 3 million square feet. Sterling Bay also has plans to purchase his 2.7-acre vacant lot, which runs along the west side of Peoria Street and the Metra Track, for a price of more than $105 million, making it the largest remaining development site in the Fulton Market district. .

Shapack Partners aims to construct a 28-story residential building at 1353 West Fulton Street and a commercial building at 170 North Green Street with 275 apartments, office space and 150 hotel rooms. It is also seeking City Council approval to demolish Bridgford Food’s long-standing processing plant across from 167 North Green Street to develop a 40-story mixed-use project.

Aggressive expansion of businesses will help keep the neighborhood densely populated, Nagem said. He sees the opening of Fulton-His-Market housing developments in 2020 as another chance to make the neighborhood a more popular one.

HPA’s Purnakhard said Fulton Market Street is “a true walkable street for retailers and restaurants post-pandemic.” Adding new housing projects to the scene, Plunkard said the area will become self-sufficient as more retailers want to enter. This is he better news for FSC.

“The ban on residential areas north of Lake Street has forced a lot of commercial development, so this is the best of both worlds,” said Najem. FSC wants to build a 1.1 million square foot residential and office building around his 1200 block on West Fulton Street and a 430 unit apartment at 1325 Randolph Street.

Projects that may break ground in May include a 39,000-square-foot, 433-unit project at 1201 West Fulton Market and a 530,000-square-foot Class A office and retail building at 917 West Fulton Market. Najem’s first luxury condominium development, which will be occupied upon completion, is his 10-story, 25-unit condominium at 1010 West Madison, which is expected to break ground this year.

1201 West Fulton (FultonSt.com)

Najem still sees opportunities to purchase properties and expand its portfolio. His most recent purchases are his four loft buildings at 1144 West Fulton, 112 Northmay, 1101 West Fulton and 220 North Aberdeen for more than $30 million.

“I walk there every day and see all the projects,” says Najem. “I’m not focused on other parts of the city or anywhere else in the country. I’m just focused on Fulton and his market.

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Written by Natalia Chi

Chicago Popular; Chicago breaking news, weather and live video. Covering local politics, health, traffic and sports for Chicago, the suburbs and northwest Indiana.

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