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NorthPoint, City of Chicago Embark on 2.2 Million-SF Development as Part of Cleanup of the City's Southeast Side

Tax-Financing Deal Includes $25.3 Million on 196-Acre Site with ‘Historic Environmental Challenges’
July 10, 2018

Courtesy: NorthPoint Development.

NorthPoint Development reached a tax-increment financing deal with the city of Chicago to build a 2.2-million-square-foot complex on a site on the Southeast side that for years has been plagued with environmental issues, part of an effort to clean up a legacy of the city's past as a steel mill stronghold.

NorthPoint, a Riverside, MO-based industrial and multifamily property developer, and Mayor Rahm Emanuel said the $169 million development will sit on a 196-acre site at 116th Street and Avenue O. The sprawling redevelopment, Emanuel boasts in a post on Twitter, is further "strengthening our position as an epicenter of transportation & logistics for the entire Midwest," and is expected to bring more than 2,000 jobs to the area.

The site has struggled with pollution for more than 15 years since the city drew up the Calumet Area Land Use Plan, which was intended to turn a century’s worth of steelmaking into other industrial and job-generating uses, according to the city.

"The site behind us is a tough, challenging site," said NorthPoint chief executive officer Nathaniel Hagedorn. "It has a lack of infrastructure. It has historic environmental challenges. It has soil condition issues. And it was going to take a true public-private partnership to put this [site] back into use."

That effort is coming through $25.3 million in tax-increment financing that will help cover the costs of roads and what the city calls "related site improvement costs," though specifics were not revealed. Those funds need city approvals before construction can begin, so no starting dates were offered.

Building Example.
Photo Credit: NorthPoint Development

As proposed, the project calls for six state-of-the art industrial buildings ranging in size from 215,000 square feet to 600,000 square feet, according to Emanuel's office. Each new building could house multiple firms; the first is slated as a 361,000-square-foot-structure to be built on speculation -- meaning there are no signed tenants -- on the 12200 block of South Burley.

The complex will be part of an expansive industrial corridor along the Calumet River, long referred to as Chicago’s "other river." The site has also been linked to environmental and public health issues tied to its history as a home for steel mills, grain mills, shipyards and similar businesses for almost 150 years. Northpoint is already working on another industrial site in the area.

From the 1850s, when the railroads first staked their territories, to the 1870s when the Calumet River was widened, deepened and straightened with a channel that would create a port of entry on the river to Lake Michigan, until the steel mills disappeared in the mid-1990s, the area was subject to a host of toxic waste, according to "Chicago’s Southeast Side," written by native Chicagoan Rod Sellers and published by Chicago State University.

"At one point, the region was one of the largest steel-producing regions in the world," he wrote. The mills’ activities included coke production, pig iron production, steel making, casting and primary rolling, and blooming and manufacturing millwork, among others, according to Sellers. It was also the site of flour mills and cereal plants that from about 1929 until 1995 produced such household favorites as Gold Medal Cake Flour, Wheaties, Cheerios, Kix, Trix, and Betty Crocker Cake Mixes.

Already the largest U.S. industrial market, the greater Chicago area holds about 1.2 billion square feet with another 10.5 million square feet under construction, not including this project, according to CoStar research.

Jennifer Waters, Chicago Reporter  CoStar Group   
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