Sterling Bay’s grip on the periphery of its stalled Lincoln Yards megaproject has slipped away, as the Chicago-based developer surrendered its vacant life sciences building to construction lender Bank OZK.
Little Rock, Arkansas-based Bank OZK seized the 320,000-square-foot building at 1229 West Concord Place Street from the embattled Chicago developer this month, according to public records. The transfer, executed via a deed-in-lieu of foreclosure, satisfies a $65 million construction loan — a surrender that underscores the depth of Sterling Bay’s distress in a riverfront corridor once touted as Chicago’s next great development and innovation hub.
A spokesperson for Bank OZK said in an email that the property’s carrying value has dropped well below the cost of construction, to $50 million as of Dec. 31. That is 68 percent of the property’s May 2025 appraisal, which valued the property at about $74 million.
The lender also said it would only take title to the eight-story property if a short sale that was pending at the end of the year failed to close. Bank OZK didn’t disclose that buyer, why the deal fell apart nor the price offered, but Novak Construction was purportedly interested in buying the life sciences building shortly after The Real Deal first reported Novak would purchase the adjacent vacant land that was part of the failed Lincoln Yards megaproject at a massive discount from a venture of Sterling Bay and JP Morgan Asset Management.
Novak closed on the southern 18.4-acre portion of former Lincoln Yards land bordering the Chicago River for $34 million last year. The firm didn’t immediately return a request for comment on Friday about negotiations for the life sciences building.
In a statement, a Sterling Bay spokesperson called the building a “technically advanced life sciences facility,” and said that the firm remains focused on developing real estate in Chicago and across the U.S.
Both Sterling Bay and JP Morgan’s investment arm, as well as Harrison Street Asset Management were investors in the Concord Place life sciences building.
Bank OZK said it expected to provide an update on the property in April. It previously suggested it could pivot toward seeking traditional office tenants rather than life sciences firms, which typically require pricier buildouts.
The outcome was foreshadowed in October, when Bank OZK disclosed in public statements the property was teetering on the edge of default. Despite Sterling Bay’s attempt to pitch the building as a premier boutique lab, it has sat empty since completion in early 2023.
The lender’s takeover is a symptom of a broader malaise in the life sciences sector, which has swung from a pandemic-era gold rush to a landscape defined by oversupply and evaporating venture capital. For Bank OZK, snagging the keys in Chicago follows a pattern of de-risking its exposure to both biotech buildings as well as Sterling Bay, in particular. In January, the lender offloaded a $265 million loan on a largely vacant Sterling Bay-developed San Diego life sciences project to Strategic Value Partners.
The sector’s pain has spilled into the courtroom. In Chicago, the friction between landlords and lab tenants reached a boiling point recently when Portal Innovations filed and then settled a lawsuit against Beacon Capital Partners and California teachers retirement fund CalSTRS over a lab incubator space, highlighting the mounting financial pressure on even the most high-profile partnerships.
The Concord Place life sciences building is adjacent to the 53-acre Lincoln Yards site, where Sterling Bay’s inability to kickstart development on its complex land assembly resulted in massive losses. The site was recently taken over by new development teams, with Novak taking on the southern portion, while JDL Development partnered with Los Angeles-based Kayne Anderson to pay $84 million for the northern side of the vacant Lincoln Yards site. While Novak’s plans are still unclear, JDL and Kayne are moving forward with a new residential-focused development plan that could add 3,000 housing units to the site.