Chicago Office: Fulton Market Isn’t in the West Loop
Long before the emergence of Fulton Market, local real estate professionals referred to the West Loop as the office submarket between Wells Street and immediately west of the Chicago River. But today some also refer to the Fulton Market area, an area one mile west and across a natural boundary of the Kennedy Expressway, as the West Loop. So which is it?
The West Loop is the leading — and by far the largest — office submarket in Chicago with over 50 million square feet of office space inventory. Its proximity to public transportation and wide setbacks along Wacker Drive and the Chicago River offer better view corridors and more access to natural light — key competitive advantages in an area that permits more buildable density than the periphery of the central business district (CBD).
On the other hand, Fulton Market has its own distinct “edgy” identity that some area office tenants consider the antithesis of the Loop (recall that the original reference to the Loop meant the area surrounded by the
Elevated CTA tracks, the “El,” that loops around the CBD).
The West Loop proper has witnessed significant change in the last 10 to 15 years. The surface parking lots along Wacker Drive have largely disappeared, making way for a plethora of new office towers while several “micromarkets” have emerged within the submarket.
Examples include the Wacker Drive Corridor, which has overtaken
LaSalle Street as the city’s premier financial and professional services address, and the Riverside Plaza micromarket, which continues to expand with new skyscraper construction to the north (by the river’s bend) and south (by Congress with the redevelopment of the Old Post Office).
In the beginning
Almost 20 years ago, when trendy, pioneering restaurateurs needed a point of reference to attract customers from the nearby Loop proper, many referred to the Randolph and Halsted area as the “Far West Loop.” Shortly after, restaurants like Vivo and Marche in the Far West Loop opened, and residential developments like 1000 W. Washington that attracted young, urban professionals seeking lofts close enough to walk to the Loop began to pop up. Fulton Market was born.
But it wasn’t until Google opened its regional headquarters at 1000 W. Fulton St. in late 2015, giving a boost to surrounding retail, residential and even hotels in the area, that the new office market officially became Fulton Market.
Today, Fulton Market’s limited supply of office space is in great demand, and its rental rates show it. Net office rents of new construction in Fulton Market are on par with new construction on the Wacker Drive Corridor or the Riverside micromarkets, and in some cases are 25 to 50 percent higher than net rents of second-generation space in the West Loop proper. Often, high-tech companies that are less price-sensitive to rents are the ones driving demand. They want to ensure employees are in a cool area, one that will maintain corporate culture and attract talent.
What’s driving design
For now, Fulton Market remains a boutique market, especially when you consider that Willis Tower has more office square footage than all of the office inventory in Fulton Market today. But while Fulton Market prefers to maintain its boutique image, it has a growing inventory that will double from its current 3 million square feet in the next few years.
It’s important to note that the fight for talent is what’s driving design for new skyscrapers or redevelopment of second-generation space. West Loop landlords are in an amenities race in order to maintain a competitive edge. No matter which submarket you prefer, all corporate tenants benefit.
Fulton Market and the West Loop are two distinctly different areas. Purists cringe when they’re lumped together in a common reference. Fulton Market strives to be what the Wacker Drive Corridor is not, a hipster area with chic restaurants, trendy coffee shops, stylish retail boutiques and companies whose employees despise wearing suits and ties.
Fulton Market is to Chicago what SoHo is to New York, or SOMA to San Francisco, an area that wants to maintain its edge. It is on the edge of the West Loop, but it is not the West Loop.
— By David Burden, Principal, Colliers International. This article originally appeared in the February 2019 issue of Heartland Real Estate Business magazine.