With a New Roster of Developers, What’s Next for Lincoln Yards?

Lincoln Yards finally has a full slate of new players, and that alone marks the end of what Sterling Bay once promised would be Chicago’s next great mega-development, nestled between wealthy Lincoln Park and gentrifying Bucktown.

With JDL and Kayne Anderson now controlling the land north of the Chicago River and The Real Deal breaking the news this week that John Novak is buying the similarly stalled southern portion, the project has been rebooted. Sterling Bay’s $6 billion, 14.5 million-square-foot vision isn’t just being revised — it’s being replaced.

The shift didn’t happen overnight. Sterling spent years pushing an audacious plan to turn former industrial land along the North Branch into a dense hub of offices, apartments, labs and entertainment. The firm deserves real credit for taking on a wildly ambitious assignment and getting as far as it did. It secured the zoning, convinced City Hall to create a tax increment finance plan and lined up heavyweight financial partners.

But Sterling made some crucial errors as well. Its bet got too big, and the commercial real estate market dropped too much, for the firm to cash in. Infrastructure demands of the project multiplied, as the requirements the city thrust onto the development team proved too heavy to lift. Public support for footing a large share of those costs never fully materialized. At a certain point, the capital stack couldn’t carry the vision anymore.

Now the baton has been passed. On the north side of the Chicago River, Jim Letchinger’s JDL and Kayne Anderson stepped in this fall to buy former Lincoln Yards land after Bank OZK seized the parcels from Sterling and Dallas-based Lone Star funds, setting the table for a more residential-driven plan than previously contemplated. On the south, Novak is taking control of the parcel JP Morgan Asset Management had been reluctant to take away from Sterling for over a year. Between the new owners, Lincoln Yards is no longer one coordinated megaproject but two distinct sides of the river run by unrelated teams.

Fragmentation was part of Sterling Bay’s original challenge. It controlled both sides only through separate partnerships — Lone Star Funds and Bank OZK to the north, JP Morgan to the south — each with its own priorities and tolerance for risk.

JDL and Kayne’s failed effort to also buy the southern block showed the issue hasn’t gone away. Chicago real estate insiders have said JP Morgan’s refusal to indemnify the JDL-led team from loss tied to litigation that Sterling had flirted with bringing in the event the southern parcels were sold killed that transaction, though the firm hasn’t commented on the matter.

So Novak’s arrival solves ownership on the south but introduces yet another independent operator. Whether this constellation works better the second time will depend on how closely the city corrals the groups.

Which brings the whole effort back to City Hall. The agreement Sterling Bay struck with the Department of Planning and Development will almost certainly be rewritten. The previous infrastructure obligations were massive and, in hindsight, financially unrealistic without deeper public participation. Because the new developers are planning far less density, the need — and cost — for bridges, roads, utilities and transit upgrades should shrink. But the city will still have to define how much each developer pays and how much, if any, taxpayers should cover.

That makes the next phase simpler in some ways and more complicated in others. Easier because the ambitions are scaled back, more complex because the coordination burden shifts to the city, which must referee three owners with different business plans.

The Planning and Development Department declined to comment for now, other than to say that any proposed changes to past approvals and agreements would get reviewed as they’re shared with city officials.

For Chicago residents, the hope is that any renegotiated deal improves transparency, right-sizes public exposure and finally unlocks development on one of the most valuable stretches of the river.

Lincoln Yards isn’t dead but instead reincarnated. The question now is whether this new cast can do what Sterling Bay couldn’t: turn land into progress rather than promise.