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Tuesday, December 17, 2019

Ryan Cos. plans big office project in Chicago's Fulton Market neighborhood - Crain's Chicago Business

A Minneapolis developer is jumping into the Fulton Market construction frenzy, filing plans with the city for a major office and retail project three blocks west of Google’s Midwest headquarters.

A venture led by Ryan Cos. wants to build more than 600,000 square feet of office space in two buildings, one rising 300 feet, on the 1200 block of West Fulton Street, according to a statement from the company. Called Axis West at Fulton Market, the project would also include about 100,000 square feet of retail space and more than 300 parking spaces.

Developers have been piling into the Fulton Market district, with multiple office projects under construction or on the drawing board. They’re betting that the cavalcade of companies marching into the West Loop neighborhood will continue, following Google, McDonald’s and other big businesses that have moved there.

The Ryan site is just south of a parcel where Chicago developer Sterling Bay plans a 14-story office building. Though market’s getting crowded, Ryan executive Toby Veit doesn’t expect the music to stop anytime soon.

“It’s got a lot of momentum,” said Veit, vice president of development in Ryan’s Naperville office. “While there’s a good amount of supply, the demand is being met.”

The construction boom has transformed Fulton Market, once the domain of food processors, industrial firms and trendy restaurants, into an extension of downtown, bringing office workers, residents and tourists west of the Kennedy Expressway. More recently, developers have pushed even further west in search of land, to Ogden Avenue and beyond.

Ryan would build its project on a block where another development group, IBT Group and local hedge-fund investor Andrew Bluhm, planned an even bigger proposal more than two years ago. In November 2017, IBT and Bluhm unveiled designs for 1.2 million-square-foot office, retail and hotel development on the block, which is bounded by Fulton Market, Racine and Carroll avenues and Elizabeth Street.

But Bluhm and Chicago-based have IBT parted ways, and IBT now is teaming up with Ryan as co-developers of Axis West. Their project is smaller mainly because they control a smaller site: about two acres, versus 3.3 acres for the IBT-Bluhm project, Veit said. He declined to say how much the development would cost.

Designed by CallisonRTKL, Axis West would include a large plaza on Fulton bordered on both sides by retail space.  Ryan and IBT plan to lease a big chunk of the upper-floor retail space to a “flagship fitness” club, Veit said.

The developers plan to break ground next fall, beginning construction on speculation, or “spec,” without securing leases with office tenants in advance. A spec office project is riskier than one with some pre-leased space, but demand for office space in Fulton Market has been so strong that developers and lenders have grown comfortable with the idea.

Ryan today filed a zoning application with the Chicago City Council asking that it approve a zoning change to allow for its proposal. Ryan and IBT also will need secure construction financing before breaking ground.

“As we work through this process with the community and (Chicago Department of Planning and Development), we anticipate the project will evolve,” IBT Founder and President Gary Pachucki said in a statement. “We are excited to continue our work with the city as we refine the design concept and work to seek their approval.”

Axis West is Ryan’s first project in the neighborhood, but the firm has developed other buildings in Chicago, including the Aurelian, a 368-unit apartment tower at 833 N. Clark St. Ryan is also building a 400,000-square-foot warehouse in the Pullman neighborhood on the South Side.

IBT, meanwhile, is known as a retail developer with projects including Pulaski Promenade on the Southwest Side and the Evergreen Promenade in Evergreen Park.

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Ryan Cos. plans big office project in Chicago's Fulton Market neighborhood - Crain's Chicago Business
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