Flexport, a fast-growing freight services startup, is expanding again in Chicago, signing a lease for enough office space in the Fulton Market District to double its current local workforce of 140 people.
San Francisco-based Flexport is leasing an entire floor, about 40,000 square feet, in an office project Sterling Bay is developing at 333 N. Green St., about a block west of the Kennedy Expressway. Including Flexport, Chicago-based Sterling Bay has leased about 86 percent of the 19-story building, which will open next year.
Flexport has grown rapidly since it was founded about six years ago, receiving a $1 billion investment from SoftBank earlier this year that valued the company at $3.2 billion. The freight-forwarder runs a technology platform that helps companies ship goods around the globe, so it made sense to expand in Chicago, a tech-driven shipping center, said Scott Holloway, a senior director and Midwest general manager for Flexport.
“This is one of the great logistics hubs in all of North America,” Holloway said. “This is really becoming a best-in-class engineering product culture.”
Companies including Echo Global Logistics, Coyote Logistics and Hub Group employ thousands of people in the area, and top Midwest universities are churning out plenty of graduates to fill software engineering and sales and operations jobs to fuel their growth. In September, Uber Technologies said it plans to hire 2,000 people over the next three years in the Old Post Office in Chicago, primarily for Uber Freight, its logistics unit.
Flexport, which had about 30 Chicago employees a year ago, now employs 140. After outgrowing its current offices at 370 N. Carpenter St., it placed about 50 employees in a nearby WeWork location.
The company will move its entire Chicago workforce to the 12th floor of 333 N. Green by mid-2020, Holloway said. It has enough room there to accommodate twice its current headcount, though he wouldn’t make any specific hiring predictions.
“I do expect to fill that space at some point,” Holloway said.
Chicago is Flexport’s second “maker’s hub,” where the firm employs software engineers and other technical pros to design and build out its technology, he said.
For Sterling Bay, the biggest developer in the Fulton Market neighborhood, the Flexport lease continues the leasing momentum at 333 N. Green, which was designed by Gensler. Advertising agency WPP, co-working and event space provider Convene and Ernst & Young all have signed leases in the building. Sterling Bay itself plans to move its headquarters there as well.
“I’m very confident by the time we open it, we’ll be well north of 90 percent” occupied, said Michael Lirtzman, director of leasing at Sterling Bay.
Fulton Market, once a frontier of the downtown office market, has become its hottest submarket since Google moved its Midwest headquarters there in 2015. Companies like McDonald’s, Glassdoor and Mondelez have followed, and developers like Shapack Partners of Chicago and New York-based Thor Equities are stamping out new office projects to meet the demand.
Mid-sized tenants seeking 30,000 to 50,000 square feet “just don’t have a lot of good options right now,” Lirtzman said.
With 333 N. Green nearly leased, Lirtzman is courting tenants for Sterling Bay’s next office development, an 18-story, 670,000-square-foot building at 330 N. Green St., just across the street from Flexport’s new home. The developer “is in active negotiations” with some anchor tenants for the project and aims to break ground early next year, he said.