Sterling Bay has begun work on its first new building at Lincoln Yards after landing a $125 million construction loan, kicking off a long-awaited $1 billion first phase of the sprawling North Side megaproject.
The Chicago developer today announced it has secured the financing for an eight-story life sciences building at 1229 W. Concord Place from Bank OZK, the Little Rock, Ark.-based firm that has been one of the most aggressive construction lenders in the city for several years. The 320,000-square-foot building, dubbed Ally, is expected to be completed by spring 2023 along the south side of Concord on the west bank of the Chicago River.
The loan and groundbreaking are key steps for Sterling Bay as it looks to jump-start a 55-acre, mixed-use campus along the North Branch of the river between Lincoln Park and Bucktown. The developer, which has partnered with Chicago-based real estate private-equity firm Harrison Street and the investment arm of JPMorgan Asset Management on the new project, won City Council approval for the 14.5 million-square-foot Lincoln Yards project in early 2019.
Sterling Bay has started early work on the new building without any tenants signed, its largest wager to date on a local life sciences sector that has lots of momentum. Demand from biotech and pharmaceutical companies for lab space in Chicago more than tripled between early 2019 and late 2020, according to brokerage CBRE, while venture capital flowing into those fields surged. That has prompted new life sciences-focused projects from developers such as Sterling Bay and Dallas-based Trammell Crow, which are betting local biotech startups that are born at local universities will grow in Chicago if they have the high-quality lab space to do it.
The glassy Ally building will include 128 feet of frontage along the river, 42,000-square-foot floor plates and a tenant amenity space and fitness center on the building’s first and second floors, according to a website detailing the project.
Sterling Bay has already had leasing success at a smaller life sciences building in Lincoln Park at 2430 N. Halsted St., where tenants include molecular engineering technology company Evozyne, neurological disorder research firm Vanqua Bio and gene therapy-focused Northwestern spinout Exicure.
The existing inventory of life sciences lab space in Chicago “prevents the industry from reaching its highest potential here,” Sterling Bay CEO Andy Gloor said in a statement. The new building and those that follow at Lincoln Yards “will meet the needs of today’s most exciting and rapidly expanding life sciences companies, create a new home for scientific research in Chicago and help the city continue to build its reputation as a major player in this critically important sector,” the statement said.
Gloor said earlier this year at an Executives’ Club of Chicago event that life sciences buildings could account for several million square feet of development at Lincoln Yards, making “the majority of our use up there.”
A Sterling Bay spokeswoman declined to share the total estimated cost of the Ally project.
Harrison Street has also been a leading investor in life sciences properties and late last year announced it had raised $720 million for a fund that will target properties in the sector. The firm has partnered with Sterling Bay on three other life sciences projects totaling about 1.9 million square feet in San Diego and Denver.
With its backing of the Lincoln Yards building, Bank OZK over the past 14 months has led construction loans totaling roughly $400 million for Sterling Bay projects in Chicago, including a large piece of a $100 million mortgage for Sterling Bay’s new office project at 345 N. Morgan St. in the Fulton Market District. Bank OZK is the primary lender on Sterling Bay’s 47-story hotel and residential tower under construction at 300 N. Michigan Ave. and put up a $31 million construction loan for a 15-story office building that New York-based Vista Property Group is developing at 601-609 W. Randolph St.