Najem scraps West Loop condos in favor of Bathhouse lease
Cited increased construction costs and murky outlook of condo market
Alex Najem is scratching plans for a new West Loop condo project in order to build a commercial building set to be leased to a different development, signaling a murky future for Chicago’s condo market.
Najem’s Fulton Street Companies, in partnership with architecture firm Gensler, aims to build a two-story, 40,000-square-foot “modern social bathhouse” at 1010 West Madison Street, Crain’s reported.
The shift in plans comes more than three years after Fulton Street purchased the 17,000-square-foot parking lot site, with a vision of building a 10-story structure with 25 luxury condos, ranging in price from $2 million to $6 million. It would have been the first condo project for the firm, which has been one of the most active developers in the booming West Loop neighborhood, in both commercial and residential realms.
A New York-based company called Bathhouse has agreed to a long-term lease at the site and is having the building developed for its use. The company aims to modernize the traditional bathhouse with focus on a social element, offering saunas, steam rooms, pools, hammams and more. The development will also feature a rooftop restaurant and pool.
Najem cited increased construction costs and an unfavorable outlook on Chicago’s condo market as reasons for the change of plans. And the idea of the bathhouse lease “just seemed like a much better deal,” he told the outlet.
It’s been a busy few weeks of dealmaking for Fulton Street Cos. The development firm’s venture with Shanna Khan, the daughter of the billionaire owner of the NFL’s Jacksonville Jaguars, scored a more than $200 million construction loan package late last month from Arkansas-based Bank OZK and Toronto-based Manulife. The debt will fund the development of a planned 400,000-square-foot office building at 919 West Fulton Street set to be anchored by a 150,000-square-foot lease to Harrison Street Real Estate Capital.
— Quinn Donoghue