Sterling Bay Faces Default on Empty Lincoln Yards Building

Sterling Bay is running out of time to salvage what’s left of its long-troubled Lincoln Yards megaproject.

The Chicago developer failed to pay off a $59 million loan tied to the only completed building on the 53-acre site — an empty eight-story life sciences structure at 1229 West Concord Place — and its lender is preparing to take over, Crain’s reported.

The loan matured Sept. 23 and “is unlikely to be extended,” Bank OZK said in a recent regulatory filing, adding that it expects to acquire title to the property if Sterling Bay and its partners can’t sell or lease it soon.

The developer, working with J.P. Morgan Asset Management and Harrison Street Real Estate Capital, has been marketing the 320,000-square-foot building along the North Branch as a turnkey opportunity for a major tenant. But so far, no takers.

The potential seizure would mark another blow to Sterling Bay’s $6 billion Lincoln Yards vision, which won City Council approval in 2019 but has since stalled amid shifting market conditions.

Earlier this year, Sterling Bay surrendered the northern portion of the project site to Bank OZK to settle another outstanding loan. The bank has since sold that 28-acre tract to JDL Development and Kayne Anderson Real Estate, which plan to redevelop it as Foundry Park, with nearly 3,300 residential units.

Sterling Bay declined to comment.

The Concord building was conceived as a biotech hub meant to anchor the southern half of Lincoln Yards. Instead, it sat vacant for more than a year as Chicago’s fledgling life sciences scene has clustered in more established neighborhoods like Fulton Market and the Illinois Medical District.

Marketing materials from Eastdil Secured and Savills tout the property as a “blank slate” for an anchor tenant seeking modern lab or office space.

Bank OZK executives have hinted they’re open to repositioning the property.

“Getting a user in the space to pay rent is what it’s all about,” president Brannon Hamblen told analysts, noting that the bank could repurpose funds earmarked for lab buildouts toward traditional office tenants instead.

The lender wrote down about $5.1 million on the debt, which now carries a $59 million balance after applying reserves, according to the filing.

— Eric Weilbacher