Gang-related violence poses a significant challenge in numerous countries across the world. While previous research have explored modeling formation of gang territories, none of them incorporated a city layout such as roads, water bodies and parks while doing so. Hence, this research explores the effects of city layout in the formation of gang territories. First the effects of a single vertical boundary of varying permeability is observed. Following this, the model is applied to real world where a part of Chicago's city layout is incorporated to the model. The results are then compared to gang territory maps shared by Chicago Police Department. The experiments show that city layout significantly affects the shape and size of the territories. By fine tuning the permeability for different terrain features, we can observe that the territories produced by the model show resemblance to their real world counterparts.