A Chicago real estate firm has bought a high-vacancy loft property west of the city’s Fulton Market district as part of its strategy to assemble properties with uses that range from furniture studios to coffee roasteries.
Last month, R2 paid just over $3 million for the three-story, approximately 49,000-square-foot property at 2130 to 2140 W. Fulton St., according to Cook County property records.
The property branded by R2 as Fulton Lofts is part of a broader move by the firm to expand its portfolio of historic buildings that can be used as loft offices, art galleries, event spaces, podcast studios, fitness studios and a range of other functions.
“In a world of AI and changing work dynamics, small-bay industrial space is at its core people making things,” said Zack Cupkovic, an R2 partner. “We want to provide urban flex properties with the level of management and service that you’d expect in an office building.”
The seller was Sagard Real Estate. Then known as EverWest Real Estate Investors, the firm paid $5.1 million for the property in 2017, according to CoStar data and Cook County property records.
Denver-based Sagard did not respond to a request for comment from CoStar News.
R2’s purchase out of an auction was backed by a $2.25 million loan from T2 Capital Management, according to property records.
The new owner is looking to boost the property’s value by finding tenants for the half-vacant property that is near tenants that include breweries, coffee roasteries and art galleries.
The property is west of the high-demand Fulton Market mixed-use neighborhood, formerly the city’s meatpacking district.
The property is just north of the United Center, the home arena of the NBA’s Chicago Bulls and the NHL’s Chicago Blackhawks. The owners of those professional sports teams are planning a $7 billion mixed-use development around the Near West Side arena in the years to come.
R2 has been involved in an eclectic mix of real estate projects in Chicago, including the purchase of the 41-story office tower at 150 N. Michigan Ave. and the redevelopment of a former Morton Salt warehouse along the Chicago River on the city’s North Side into the Salt Shed concert venue. The firm often seeks out contrarian investments.
R2 said its new property in Kinzie Industrial Corridor will provide space for tenants priced out of expanding neighborhoods.
The real estate developer recently has bought a few loft office buildings in River North and a large flex-space campus in St. Paul, Minnesota, called Prior Works.
R2 decided to expand its flex holdings after successful conversion of a long-vacant warehouse at 1001 N. North Branch St. on Goose Island, Cupkovic said. Uses there now include a test kitchen for the Hogsalt restaurant group, an architecture firm, coffee roasting, baking, gyms, furniture displays, event space, podcasting and an architecture firm’s office.
“We’ve done a version of this strategy, and with our success on Goose Island, we decided to formalize it with an urban flex portfolio,” Cupkovic said. “If Class A office is like filet mignon with a nice glass of wine, we’re like pizza and beer. We’re trying to do an elevated version of pizza and beer, buying older industrial buildings in areas where we can deliver small-bay industrial space that has a lot of flexibility at a price point that is extremely competitive.”
For the record
The seller was represented by Marcus & Millichap brokers John Abuja, Adam Sklaver, Kyle Hynes, Philip Kates and Steven Weinstock.