Tree Street Group and development partners Magellan Development Group and Mark Goodman & Associates announced the sponsorship has closed on construction financing with Bank OZK, which provided a senior loan, and junior capital from Beach Point Capital and Circle Property Partners on 410 N. Elizabeth, a 33-story high-rise in Chicago’s Fulton Market neighborhood.
It will be Chicago’s first all-electric, geothermal multifamily high-rise and represents the first phase of a two-tower, mixed-use development.
410 N. Elizabeth will include 383 units, with 77 designated as affordable. Residences are comprised of 38 studios, 87 one-bed, 256 two-bed and two three-bed apartments. Upon completion of both phases, the development will bring more than 724 total units, with 146 earmarked as affordable, to the thriving Fulton Market neighborhood.
“Closing on financing for 410 N. Elizabeth is a significant milestone for our team, one that dares to achieve what no one else has attempted – Chicago’s first geothermal multifamily high-rise,” said Ted Weldon, principal of Tree Street Group (TSG). “Our ability to move forward on this project underscores the faith of the many parties involved that Chicago is a national leader in sustainable development and a premier market for institutional investment.”
According to the Chicago Apartment Association, Chicago is coming off a 10-year low of new apartment deliveries, and 410 N. Elizabeth will be one of the few tower cranes to rise this year for construction in any sector. TSG Principal Rodrigo d’Escoto noted that in addition to a tight capital markets landscape, other variables make multifamily development difficult to pencil out.
“Labor and material costs, elevated interest rates – it all contributes to lean profit margins for developers, and without being very creative, these projects just don’t make sense financially,” said d’Escoto. “Our firm’s approach benefits from the integration of design, construction and project management – all of it – under one roof. We call it construction-informed design, and that approach is saving us as much as 15% in costs compared with the traditional design-bid-build projects. That is a significant reason why we were able to secure the necessary capital in an otherwise challenging market.”
The geothermal design and associated energy savings of 410 N. Elizabeth unlocked additional capital for the building, which was provided by Infinite Energy Partners, who will own and operate the pioneering system. This system, along with other key design features, will reduce energy usage by an estimated 60%, enabling the building to be Chicago’s first fully electric multifamily high-rise. As a result of lower energy use, the building is projected to reduce emissions by 30% and energy cost-savings by more than 25%. Contributing significantly to the project’s unprecedented energy efficiencies is a triple-glazed window wall system by Reflection Window + Wall that will also help reduce noise pollution and enhance resident comfort.
“Bank OZK is pleased to be the senior lender for this exceptional development, and this financing demonstrates our confidence in the sponsors’ ability to execute on their unique vision,” said Ako Dickson, managing director of originations at Bank OZK.
J.R. Berger, president of Magellan Development added, “Our firm has a long-standing commitment to Chicago, and we’re very excited to be partnering with TSG on this project. 410 N. Elizabeth will not only set a new standard for green building but also signal our continued belief in the positive long-term outlook for Chicago.”
TSG Principal Ed Kruschka expressed his gratitude to city officials, particularly 27th Ward Alderman Walter “Red” Burnett. “410 would not be possible without the support of the city and Alderman Burnett, who is a fantastic steward of Fulton Market and a driving force in its ongoing growth and prosperity,” he said.
Archeo Design Studio is serving as the architect of record for the development. Each tower will feature a gridded facade made up of metal paneling and glazing with ground-floor retail spaces located adjacent to a privately maintained but publicly accessible park, which features green space and a 30-foot-wide pedestrian street running across the southern end of the site. The pedestrian way will connect Elizabeth Street with Ogden Avenue, providing a gateway to the planned Fulton Market Metra Station, which will serve commuters, residents and visitors to the dynamic neighborhood.
Clark Construction Group is serving as the project’s general contractor, bringing 35 years of experience in Chicago delivering complex urban projects, in partnership with Integra-X-Builders, who will be providing construction management and unparalleled geothermal expertise.
