A Chicago developer concentrating on the Fulton Market neighbourhood has secured $233 million in construction finance for a new office building, a rare success nationally and the first of its sort to start ground in Chicago in more than a year.
Fulton St. Cos., located in Chicago, closed on the construction debt on Wednesday, with plans to begin construction on a 400,000-square-foot office complex at 919 W. Fulton within days, according to founder and CEO Alex Najem. The 11-story structure will house the offices of Chicago-based real estate investor Harrison Street Real Estate Capital.
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According to Keith Largay, one of the JLL brokers who negotiated the developer’s financing, the debt totals $233 million from Bank OZK and Manulife Investment Management.
Launching an anticipated $300 million office complex during a period of historically low demand nationwide might be viewed as hazardous by certain lenders, as evidenced by the limited cash available for this sort of construction. It has been more than a year since the last more than $50 million downtown Chicago office transaction.
“Most people think it’s an insane deal to do, but I’d rather do it now than having started it three years ago and coming into a market where you can’t sell or refinance anything,” Najem stated. “We’ll probably be the only office block under construction in Chicago over the next two years.”
Changes to the Chicago office plans at Fulton Street
According to Najem, the business has leased 112,000 square feet at 919 W. Fulton, down from an early expectation of 150,000. The company has also negotiated a 15,500-square-foot lease on the ground level with Gibsons Restaurant Group, he added.
Fulton St.’s plans for the project have changed in the last year, with 100,000 square feet of intended office space reduced to a new total of 400,000, according to Najem.
