The effort to sell the property adds to the saga of a company notorious for environmental violations, strategic political contributions and a slew of lawsuits that have fractured family ownership. While General Iron struck a deal with the city last year to clear the site of its equipment by the end of March 2021 as it prepares to open a new plant under construction on Chicago’s Southeast Side, owning the real estate gives it a big say in a prominent stretch of the North Branch. And a stalemate over the site could impede part of a riverfront revival the cash-strapped city has prioritized to create new jobs and grow its tax base.
General Iron hired brokerage Jones Lang LaSalle in early 2019 to market its North Side property, which includes two parcels totaling about 16 acres along the river’s east bank north of North Avenue and a vacant lot on the west bank between Le Moyne and Blackhawk streets. Real estate developers like R2 and Sterling Bay were tripping over themselves to buy nearby sites like it in recent years as the city opened the North Branch Industrial Corridor from downtown to Lincoln Park to new commercial uses.
But many developers and real estate brokers say the price expectations for the General Iron property have been unrealistic. The owners don’t have a specific asking price, and spokesmen for JLL and the Labkon family, which sold General Iron to Twinsburg, Ohio-based Reserve Management Group last year, both decline to comment. But investors familiar with the offering say they are seeking a deal in the range of $130 million, or roughly $140 per square foot. By comparison, Sterling Bay in 2016 purchased the nearby 28-acre former Finkl Steel riverfront site—poised to be the centerpiece of its 55-acre Lincoln Yards campus—for about $115 per square foot.
Making it harder to justify: The General Iron purchase price wouldn’t include the unknown cost of environmental remediation to prepare the land for development after generations of metal shredding. Plus, some local residents and 2nd Ward Ald. Brian Hopkins want a portion or all of the land to become open space or a riverfront park to offset the density of future Lincoln Yards skyscrapers. That likely means less space for a developer to build.
“It would have to be exciting and inspiring . . . something that local residents would look at and have an initial first impression of support,” Hopkins says of any redevelopment of the site. He’s also not writing off a push by some aldermen for the city to purchase the land and turn it into a park, though it’s unclear whether the city would be able to line up financing for such a deal.
Hopkins says he’s not aware of any offers for the property but is optimistic it will eventually find a new use. “It’s a narrow target, but it’s there and I think it’s attainable.”
One possible reason for the high price is that Sterling Bay was willing to pay it before. As it sought community approval for Lincoln Yards in late 2018, the developer signed a term sheet to buy the northern parcels for nearly $140 per square foot, or $98 million, according to sources familiar with the deal. But that agreement fell apart over complications involving Reserve Management Group’s acquisition of the General Iron business, sources say.
Now it’s unclear whether Sterling Bay, which won City Council approval last year for Lincoln Yards and has its hands full trying to find an anchor tenant for the campus, will make another offer or simply coexist with what remains of the junkyard.
“Sterling Bay supports the vision of a park on the current General Iron site, but we do not own that land and it is outside the planned development boundaries for Lincoln Yards,” a Sterling Bay spokeswoman says in a statement.
Though it doesn’t own the land, Sterling Bay still has a vested interest in its future because of abandoned freight rail tracks that run along and through it. Under the developer’s plan for Lincoln Yards, those rails will eventually be converted into a “transit way” line to shuttle people between the campus and Union Station, creating a vital line of access for commuters.