Chicago real estate power players Curt Bailey, Bob Clark and Marc Zahr completed a $58 million real estate trade that could be the start of a consequential chapter for the South Side’s economy.
The Zahr-led real estate division of Blue Owl Capital bought the entirety of the South Side’s sprawling former U.S. Steel site for about $75 million and subsequently sold it through a ground lease deal for about $58 million to Related Midwest (led by Bailey) and CRG, the development arm of Clark’s construction conglomerate Clayco, according to public records. Blue Owl appears to have issued a 99-year ground lease to the development firms to constitute the $58 million transaction, with the deal finalized earlier this month, public records show.
Related also directly purchased a little more than $3 million worth of land on the site from U.S. Steel, records show. The exact details of the ground lease between Blue Owl and the development team, and how the release of funds for the transaction was structured, is unclear.
With control of the real estate, the developers are tasked with building a multi-billion dollar quantum computing and microelectronics facility in coordination with the massive parcel’s ultimate tenants PsiQuantum and the University of Illinois. So far, it’s unclear whether the developers have acquired the entire site, or if the $58 million represents only the initial batch of acreage set for redevelopment.
Leaders of Related Midwest, CRG and Blue Owl and their representatives didn’t return requests for comment.
The transaction comes on the heels of Silicon Valley-based PsiQuantum — which aims to create the world’s first “useful” quantum computer — raising $1 billion earlier this month to help launch its plans for facilities in Australia and Chicago. The funding round, led by funds and accounts managed by affiliates of BlackRock, valued PsiQuantum at $7 billion.
PsiQuantum will be the anchor of the Chicago facility, to which it has committed $1 billion. Construction is slated to start this year, and the facility is expected to be operational by 2028.
At least 128 acres of the 440-acre former South Works steel site are slated to be transformed, with the first phase of the quantum project set to erect a 458,000-square-foot facility as part of the larger research campus, into which the state is also pouring funds. Federal funding of $140 million from the U.S. Department of Defense’s Defense Advanced Research Projects Agency will also support the establishment of a quantum-testing facility on the campus.
Previous redevelopment efforts for the former industrial site have included similarly grand ambitions, with a project in the late 2010s envisioning up to 20,000 homes. But they fizzled out in part due to the fundamental challenges tied to the site’s scale, soil contamination and broader economics.
Related Midwest and CRG secured rezoning approvals for the entire 440-acre site late last year. While the so-called Illinois Quantum & Microelectronics Park will take up about a quarter of the area, the developers are allowed to build up to 59.3 million square feet of buildings across the campus, far exceeding the combined size of other planned downtown megadevelopments such as the new Lincoln Yards plan dubbed Foundry Park, Bronzeville Lakefront and The 78, the latter being another project that Related Midwest is pursuing.
Larry Goldwasser of CBRE brokered the sale from U.S. Steel to Blue Owl.
Editor’s note: This story has been updated with a larger price for Blue Owl’s purchase of the South Works property as further data became available in public records.