Six years after buying a life science lab building on Chicago’s North Side to spin off large tenants for its planned Lincoln Yards project nearby, developer Sterling Bay is looking to sell the property amid challenges for both its $6 billion mixed-use development and biotech real estate.
CBRE brokers are marketing the Lincoln Park Bioscience Center at 2430 N. Halsted St. for sale, according to sales materials.
It is hitting the market as Sterling Bay tries to bring in new investors to revive its stalled, 55-acre mixed-use project about a mile west of the five-story, 125,621-square-foot building on Halsted, and as Sterling Bay looks to sell other properties along Lincoln Yards.
The offering also comes during a slowdown in life science leasing throughout the country, following a boom after the arrival of COVID-19 in early 2020.
It comes as biotech landlords have said they face less demand for new lab space, with large, newly constructed buildings now sitting empty in regions such as San Diego and San Francisco. And some owners are no longer aspiring for deals totaling $100 per square foot for new lab space, in some cases settling for $70 per square foot for offices in the same properties, the Wall Street Journal has reported.
In Chicago, the Lincoln Park Bioscience Center is 41% leased to two tenants, Cyclopure and Evozyne, with a weighted average lease term of 5.6 years, according to CBRE. Brokers are framing the deal as an opportunity to buy a facility for far less than it would take to build today and sign more tenants.
Owners of the building have invested more than $19 million on renovations to the facility and build-out costs for tenants, according to CBRE.
Sterling Bay bought the property from the Ann & Robert H. Lurie Children’s Hospital for $24 million in October 2018, according to Cook County property records and CoStar data.
The high-profile developer later formed a joint venture with Chicago’s Harrison Street to redevelop the building. In 2021, they sold adjacent land that was part of the initial purchase for $3.7 million. That buyer built a 36-unit apartment building on the site.
Sterling Bay and Harrison Street refinanced the life science building with a $64.25 million loan from Capital One in September 2022, property records show. That replaced a loan of about half that amount from a different lender.
It’s not clear how much they’re expecting in a sale. Sterling Bay and Harrison Street did not immediately respond to requests for comment from CoStar News on Thursday.
Chicago is among several major markets that in recent years have been vying to join the likes of Boston and San Francisco as top clusters for biotech research.
Efforts in Chicago have been mixed.
Trammell Crow has notched several victories in its Fulton Labs campus in the Fulton Market district, with tenants including a biohub backed by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan. Trammell Crow also is developing labs in Hyde Park on the South Side along the University of Chicago and just north of the city in Evanston, Illinois, near Northwestern University.
But competition for highly specialized life sciences tenants has been fierce. One veteran developer that had planned a Fulton Market life science project late last year switched to a multifamily focus on the site, with Mark Goodman & Associates saying the city hasn’t made as much progress as he had hoped toward becoming a top life science market.
Harrison Street invests with Sterling Bay on life science-focused developments around the country, including the only building completed thus far at Lincoln Yards along the Chicago River. That structure at 1229 W. Concord Place, completed last year, has yet to land a tenant.
For the record
The sellers are represented by CBRE brokers Chris Bodnar, Brannan Knott, Cole Reethof, Corra John, Zack Holderman, Jesse Greshin and Dan Lyne.