Chicago Developer Forced to Give Bank Part of $6 Billion Project

(Bloomberg) — Sterling Bay is being forced to hand over a portion of its $6 billion Lincoln Yards development in Chicago to its lender after years of delays and challenges obtaining long-term financing.

The developer will turn the northern portion of the 53-acre project to Bank OZK, Sterling Bay wrote in a letter to investors. Sterling Bay Chief Executive Andy Gloor told the project’s investors the move was an “unfortunate pause in the development” but said all parties remain committed to the project. 

“Like cities across the country, the Chicago commercial real estate market is facing unprecedented pressures that are preventing the financing of projects at every scale and inhibiting the economic opportunities these projects bring,” he wrote in the letter, which was first reported by Crain’s Chicago Business. 

The initial $126 million mortgage had been written down twice by the lender and was considered at high risk of default, said a Bank OZK spokesperson.

“We will commence efforts to patiently market this property to a new sponsor with sufficient capital and development expertise to achieve its significant potential,” the bank said.

Lincoln Yards sits in an industrial zone on the north bank of the Chicago river — between two of the city’s wealthiest neighborhoods: Lincoln Park and Wicker Park. The project initially broke ground in 2021 with construction meant to last a decade. Instead, it has faced stops and starts with Gloor saying in 2023 that former Chicago Mayor Lori Lightfoot delayed the project by three years. 

The development was set to include 14 million square feet of development, with office, life sciences and laboratory space, as well as 6,000 residential units. 

More stories like this are available on bloomberg.com