One of biggest and best-known development sites in the United States could soon change hands, with a Chicago real estate firm in advanced talks to buy all 55 acres of the Lincoln Yards site on the city’s North Side and reshape Sterling Bay’s stalled $6 billion project.
JDL Development is in talks to buy the southern half of the property along the Chicago River from developer Sterling Bay and one of its longtime partners on the ambitious project, J.P. Morgan Asset Management, according to people familiar with the situation.
Last week, JDL’s interest in buying the northern 27 acres of the site from Bank OZK became public. Bank OZK recently took back that property from Sterling Bay and its partner on that portion of the development, Lone Star Funds.
JDL’s talks to also buy the southern part of the megadevelopment land with investor Kayne Anderson Real Estate, earlier reported by The Real Deal Chicago, add a new twist.
JDL’s deals have not been completed and still could fall apart as Sterling Bay attempts a last-ditch effort to maintain control of at least some of the land.
If JDL does take control of the full site, it could simplify talks with the city to make changes to the pre-pandemic master plan for the site that Sterling Bay struck, with JDL expected to shift to more of a residential focus.
Sterling Bay in 2019 gained zoning approval for 14.5 million square feet of buildings on the site, with towers as high as 595 feet on land along the river between North Avenue to the south and Webster Avenue to the north. The project was envisioned as a mix of residential, office, life science research, restaurant, retail and entertainment uses.
The only Lincoln Yards structure that Sterling Bay has completed is a vacant, eight-story life science research building at the southern end of the site at 1229 W. Concord Place. That building is not believed to be part of what JDL is negotiating to buy.
Little Rock, Arkansas-based Bank OZK also is the lender on that project.
Infrastructure agreement
Sterling Bay’s development agreement with the city included a pledge by the developer to build infrastructure such as roads and bridges, with tax increment financing dollars generated by the development to later reimburse the developer for hundreds of millions of dollars’ worth of those costs. Those infrastructure projects and most of the planned buildings never happened in the aftermath of COVID-19 and more recent capital markets challenges.
Despite challenges Sterling Bay has faced, the site remains coveted because of its location along the river and high-income neighborhoods such as Lincoln Park and Bucktown.
JDL’s leader, Jim Letchinger, declined to comment to CoStar News. Sterling Bay, J.P. Morgan Asset Management and Kayne Anderson did not respond to requests for comment.
Bank OZK has confirmed in filings that it has a deal to sell the northern end of the site for an amount close to the $84 million value that it has on the bank’s books, but Bank OZK has not commented on the expected buyer.
The overall price JDL is paying for the parcels is expected to be far below the amounts Sterling Bay paid to assemble the formerly industrial properties that for decades were occupied by the likes of a now-demolished A. Finkl & Sons steel plant.
JDL’s interest in the norther portion of the site, which includes the former Finkl land, previously was reported by Crain’s Chicago Business, with 32nd Ward Alderman Scott Waguespack telling the publication that Letchinger realizes “the market won’t bear what Sterling Bay was trying to do.”
Sterling Bay previously was in talks with Kayne Anderson to recapitalize and jump-start the project.
Letchinger has experience with big, multibuilding residential developments in Chicago.
That includes the completed, two-tower One Chicago development in River North, with the taller tower rising 77 stories, and the in-progress, 12-building North Union project on the Near North Side.