A Chicago firm known for big residential developments has struck a preliminary deal to buy about half of the Lincoln Yards land on the city’s North Side, adding a new player to the stalled megadevelopment that's one of the most ambitious real estate projects ever undertaken in the city.
JDL Development, led by Jim Letchinger, is under contract to buy the approximately 27-acre northern portion of the site along the Chicago River and the Lincoln Park and Bucktown neighborhoods from lender Bank OZK, according to people familiar with the situation.
The bank recently took back that portion of the 55-acre megadevelopment from Chicago developer Sterling Bay, which has been working for years to create a $6 billion mix of residential, office, life science research, retail, entertainment and other space on the formerly industrial land.
In a Securities and Exchange Commission filing on Tuesday, the bank said it entered into a contract on May 2 to sell the land that it has valued on its books at $84 million, without identifying the buyer.
“If this contract closes, closing should occur on or before September 30, 2025, and should result in substantially no gain or loss on sale,” the filing said.
The lender, formerly known as Bank of the Ozarks, declined to comment to CoStar News beyond what is in the filing.
Bank OZK has given JDL 60 days to explore the purchase before funds paid to put the property under contract become nonrefundable, according to Crain’s Chicago Business, which first reported JDL’s negotiations for the site, citing sources.
The local alderman, Scott Waguespack of the 32nd Ward, told Crain’s that he has held preliminary conversations with Letchinger, saying that JDL realizes “the market won’t bear what Sterling Bay was trying to do.”
Letchinger declined to comment to CoStar News.
Industrial makeover
The deal is preliminary and still could fall apart, but JDL’s potential involvement in Lincoln Yards adds a new twist to a yearslong project to replace industrial properties such as the demolished A. Finkl & Sons steel plant with rows of high-rises and amenities along some of the city’s wealthiest neighborhoods.
Sterling Bay in 2019 won zoning approval under then-Mayor Rahm Emanuel for 14.5 million square feet of construction, 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 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 part of the land that was seized by Little Rock, Arkansas-based Bank OZK, although the bank also is a lender on that building.
Sterling Bay confirmed in late March that about 27 acres of land on the north end of Lincoln Yards was being handed over to the lender via a deed in lieu of foreclosure, a form of voluntary surrender. The bank said it was writing down the value of the debt from the original $128 million mortgage.
That left the broader project with an uncertain future after Sterling Bay was unsuccessful in lining up new investors to replace original partners Lone Star Funds and J.P. Morgan Asset Management and revive the project.
At the time it agreed to hand back the land to Bank OZK, Sterling Bay vowed to continue seeking new investors to see through the full project.
Development obstacles
Along with COVID-19, Sterling Bay has faced obstacles such as capital markets challenges and changes in city leadership.
One of its biggest hurdles has been a master plan for the site that includes commitments for Sterling Bay to pay for hundreds of millions of infrastructure projects in the area, including new roads and bridges.
As part of the agreement with the city, Sterling Bay would later be reimbursed for infrastructure costs by tax increment financing dollars generated by Lincoln Yards' structures. But the huge upfront costs of the public projects have proved difficult to overcome amid high borrowing and construction costs.
It’s unclear how JDL might overcome those challenges, but it’s possible the firm could seek changes to the development agreement with the city to clear the way for a series of residential high-rises on the prime land.
JDL is a major developer of apartment and condominium towers in Chicago.
Its projects have included the two-tower One Chicago project in River North, the taller of which rises 77 stories; the No. 9 Walton luxury condo building in the Gold Coast; and the ongoing, 12-building North Union on the Near North Side.
JDL recently has purchased two existing apartment properties in partnership with former Blackstone real estate executive John Schreiber: the 227-unit Parker Fulton Market and the 292-unit Cobbler Square Lofts in Old Town. The latter property was sold by the estate of late real estate billionaire Sam Zell.
Those properties sold for about $180 million combined.