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Chicago developer Sterling Bay tweaks Fulton Market office plan – Crain’s Chicago Business

Sterling Bay has redrawn plans for a new office building on the eastern edge of the Fulton Market District with a taller, thinner structure it thinks tenants will prefer in the wake of the COVID-19 pandemic.

The developer is seeking city approval to build a 26-story office building at 360 N. Green St., according to a zoning application submitted this week to the City Council. The proposal would reshape the 458,000-square-foot property city officials green-lit for Sterling Bay in 2018, on the block bounded by Green, Kinzie and Peoria streets along the northern edge of the Metra tracks running through the former meatpacking district. The redesigned project would be nine stories taller, but include substantially smaller floor plates and be set back farther from the tracks, plans show.

A Sterling Bay spokeswoman said the move is meant to cater to companies’ changing tastes amid a public health crisis that’s given rise to remote work and pushed many tenants to consider shrinking their office footprints. It’s unclear how much smaller each floor would be under the new Gensler-designed plan, but the total square footage would remain the same as what was approved before, despite being about 60% taller.

The pivot runs counter to the pre-pandemic popularity of office buildings with larger floor plates that allow companies to occupy large amounts of space without having to split it up among multiple floors. That trend helped draw tenants in recent years to sprawling properties like the redeveloped Old Post Office and the Merchandise Mart. But Sterling Bay is betting on a post-COVID revival of bite-sized floor plates that were mostly out of style before the crisis, and that there will be a deeper pool of takers moving forward for smaller-sized offices with fewer columns and more window lines.

Sterling Bay’s new pitch comes as it develops another Fulton Market office building with relatively small floor plates at 345 N. Morgan St. That 11-story, 200,000-square-foot project is under construction as the developer is in advanced talks with supply chain management company Havi Group to lease roughly half of its floors.

The 360 N. Green building was originally proposed as part of a three-building plan Sterling Bay laid out in 2018 for office buildings at 330, 333 and 360 N. Green St. The developer completed the 19-story building at 333 N. Green St. in early 2020 and has leased it up with tenants including ad agency WPP and professional services giant Ernst & Young.

Office demand has been strong in Fulton Market this year while activity has been sluggish elsewhere downtown. Companies that have signed on for new offices in the neighborhood this year include consumer products giant Kimberly-Clark, money manager Calamos Investments, restaurant reservation platform Tock, agriculture technology firm Hazel Technologies and online agricultural supply marketplace company Farmers Business Network.

That momentum has been key to keep pace with the new supply slated to come to the trendy corridor in the years ahead. Sterling Bay’s Morgan Street project and a new 150,000-square-foot building under construction at 1045 W. Fulton St. are adding to the available space at properties developers have already built.

Almost 2.3 million of the roughly 6.5 million square feet of completed offices in Fulton Market as of the end of the third quarter have yet to be occupied, according to data from CBRE.

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