The final framework for the rezoning of North Branch Industrial Corridor was approved by the Chicago Plan Commission on Thursday—a move that has been long-awaited by developers. So far Sterling Bay has bought up land on the north end and Riverside Investment and Development has taken a few acres on the south end.
The North Branch area is the largest PMD in Chicago with 760 acres of land along the river between Kinzie Street and Fullerton Avenue, according to the mayor's office. The project is part of a larger initiative to modernize all 26 industrial corridors within the city that have not been assessed in three decades. The large parcels of vacant land, obsolete product and outdated land regulations will turn into office buildings, mixed-use projects and public green spaces.
The plan calls for 50 percent of the corridor to be used for employment purposes, but also mixed-use projects, a build-up of transportation, additional bridges and 32 acres of park space along a seven-mile river trail. Over the next 20 years the area could triple the local employment base, create thousands of construction jobs, add several thousand residents and generate millions of dollars in economic impact, according to the mayor's office.
J. Michael Drew, founding principal of Structured Development, has spent a lot of time redeveloping the Clybourn Corridor right next door. He sees the initiative by the city as a "courageous" move and is eager for the change.
The unique situation of Clybourn Corridor is similar to North Branch in that both areas are surrounded by dense, popular neighborhoods like Lincoln Park, Lake View, Wicker Park and River North. The key is balance in development and recognizing the enormous economic potential of the area, he said.
"There are lots of strong established residential neighborhoods but there weren't large available land parcels, except for near the Clybourn Corridor," Drew said recalling the redevelopment of Clybourn. The retail chains that have overtaken the area—like Whole Foods, Home Depot, Crate and Barrel—all have large stores that do extremely well because they provide a State Street quality retail center nearby, he said.
Rezoning the North Branch corridor will transform the area, much like Milwaukee Avenue after the city incentivized transit-orientated developments, Drew said. "It was a smart move by the city and probably long overdue," he said.
Structured Development has had a major influence on the Clybourn Corridor, which like the North Branch corridor, also used to be an industrial area. Noteworthy projects from the company include New City, offices at 1333 N. Kingsbury and Blackhawk on Halsted.
Drew has had luck on his side, even early on when he bid on public works projects as general contractor. He recalls when he narrowly missed winning the Kinzie Street Bridge job that caused the Chicago flood in 1992, a disaster where 250 million gallons of Chicago River water flooded the basements of retail of office buildings throughout the Loop. Sometimes there is a reason things don't work out and Drew was grateful he escaped that job.
In 2002, Drew formed co-founded Structured Development with a friend and corporate real estate attorney Dan Lukas. One of the most significant projects to come from the firm was the New City development in Lincoln Park with shopping, dining, entertainment and luxury apartments. When the company began work on the project in 2007, everything fell apart a year later when the real estate industry took a hit. The company's partner dropped out and they even lost the land. Five years later with determination and maybe a little bit of luck, the company secured one of the largest loans at the time, and completed the 1-million-square-foot project in 2015.
The project taught Drew a valuable lesson, "It's a great case study for pitfalls," he said. "You can have the best project in the world but you can't always control outside problems or circumstances you get tangled up in."
As big adjustments for North Branch are lining up, developers might want to keep this lesson in mind. One of the challenges Drew foresees is resistance from residents. Increased traffic will be a huge obstacle especially when office workers begin to flood the area.
"Nobody likes change. You get used to something even if it's a vacant piece of property that you see across the street," he said. "Higher density is often a bad word to the people who live in that area. It's a 'not in my backyard' kind of mentality."
The other big hurdle will come with the increased property values when the land gets rezoned and how the city determines the impact fee for developers. It's a "double-edged sword" because the fee could hurt potential businesses but it also provides funds for the city to build infrastructure and other public projects, Drew said.
Those details will get hashed out by the city this summer, but for now Drew is a huge supporter of the final framework.
"It's a great initiative for the city and since we know the area pretty well, we will certainly be looking at projects in the North Branch Industrial Corridor down the road," he said.