Chicagoland development site owners ditch plans, seek to sell as rates rise

A trio of tracts recently listed in Chicagoland present opportunities for developers looking to skip some of the hassle of securing zoning approvals or even drawing up new plans.

When interest rates climbed, some developers walked away from potential projects due to financing challenges — lenders consider construction loans riskier than traditional mortgages. But in a few cases, landowners already did the dirty work of zoning and planning, providing a chance to re-sell development sites at a premium.

The most desirable vacant properties come with zoning favorable to redevelopment and specific project proposals that have been given the green light by municipalities.

“One of the hardest parts of getting land developed is getting it entitled,” said Colliers’ Tyler Hague, adding that sometimes residents and local leaders “bring out the torches and pitchforks” to stop a development.

Hague is marketing a shovel-ready site in Waukegan that includes entitlements for 364 apartments. Owners DRE Group, Stone Beam Development and Cardinal Capital got detailed plans approved by Waukegan City Council for a four-story apartment complex with 166 one-bedroom units, 163 two-bedrooms and 35 three-bedrooms. 

It is unclear why the owners are selling. They took out a $3 million mortgage loan on the property in January 2023, Lake County records show. Representatives of the firms did not respond to requests for comment.

In Chicago, two entitled development sites also recently hit the market.

A half-acre property along the Chicago River, at 2221 West Oakdale Avenue in Roscoe Village, that’s approved for over 30 townhomes and four single-family homes is for sale. 

The land can likely accommodate more density, however, said the seller’s broker, Adam Thomas with SVN Chicago Commercial. In that case, a buyer would need to restart the zoning process. A buyer could also propose a project under the land’s previous light industrial zoning without much difficulty, he said.

“It’s not quite a shovel-ready site, but it’s nice that there has been some legwork done,” Thomas said.

The townhome development was proposed and ultimately abandoned by previous owner CA Ventures. The Chicago-based developer has been in hot water recently as it wards off legal challenges and bank foreclosures on other projects. The firm sold the Roscoe Village property in 2017 for a little less than $4.8 million to the current owner, private investor Eugenio De Aguero, who no longer plans to redevelop the site, according to public records.

De Aguero could not be reached for comment.

In the South Loop, a redevelopment that failed to take shape due to rising interest rates is being marketed as an opportunity for a buyer.

Megachurch Willow Creek Church hit financial hurdles at the outset of the pandemic and planned to redevelop its South Loop location at 1319-1347 South State Street, along with a developer, but couldn’t make the project pencil out as interest rates rose.

After closing its church, it’s looking for a developer who will bring a new vision to the property, which could accommodate up to 200 units under current zoning, and up to 503 units if the buyer pays into a city fund that gives developers bonus floor area allowances for their projects and distributes the funds to commercial corridors in need of investment on the South and West sides, according to CBRE marketing materials.

“As the economy shifted and interest rates increased, the time frame for this project to come to fruition continued to extend farther and farther out. Even with the strong growth and health we’ve seen at Willow Chicago in the past few years, we were faced with the difficult, but necessary, decision to close,” a statement from the church said. (The church maintains other Chicago-area locations.)

CBRE was hired to market the South Loop site as a redevelopment opportunity, with broker Tom Svoboda handling the listing. It’s also possible a new buyer uses the property’s existing facilities.

The 56,000 square foot property includes office space, a day care, classrooms and a 730-seat auditorium. It’s also located near the forthcoming megaproject The 78, which developer Related Midwest and the Chicago White Sox are also pushing to get financing for a new Major League Baseball stadium.

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