Leon Walker And DL3 Realty Are On A Mission To Rebuild Whole Neighborhoods, Not Just Individual Buildings
Leon Walker’s career as a real estate developer started before his 13th birthday. In 1979, his parents, both former schoolteachers, borrowed about $1M at an 18% interest rate to build and start a school of their own.
“I got my first hard hat on that job, and I knew I wanted to be in the real estate business,” he said Thursday during Bisnow’s Chicago Repositioning and Adaptive Reuse Digital Summit. “I got a chance to sit around the kitchen table and learn the business from the ground up.”
Walker now leads DL3 Realty, a Chicago-based firm best known for its adaptive reuse of properties on the city’s South and West sides, including Whole Foods’ grocery in the Englewood neighborhood and the revival of several abandoned Target stores, including one in Morgan Park that is now a customer care center for Blue Cross Blue Shield.
The company is now on a mission to revive neighborhoods. It does that partly by focusing on what Walker calls high-impact properties, ones that can become anchor institutions for disadvantaged neighborhoods and create ripple effects by providing affordable housing, jobs, or quality healthcare and food.
“All of these things are what makes neighborhoods livable and attractive to working families,” he said. And creating such projects can help reverse long-term trends. “In Chicago, like many cities across the country, we have seen corporate disinvestment in our neighborhoods for the past 50 years. That leads to other deleterious activities, including violence. We think that through economic development, impact investing, we can actually reverse these trends and turn that vicious cycle we see in many neighborhoods into a virtuous cycle where we provide jobs and opportunities and new development that creates additional interest for investment in those neighborhoods.”
But DL3 Realty doesn’t intend do all this on its own, Walker added. He sees the company as one that can inspire other developers, showing them that investing in these long-ignored areas is not only possible but profitable.
“We see opportunity where others have not,” he said.
Walker pointed to the Target adaptive reuse projects as perfect examples of what’s possible. The shuttering of these outlets a few years ago was originally considered a blow to the South Side, removing a valued retailer and leaving behind two empty shells.
“We stepped into the breach and said, ‘We’ll buy both of these vacant, closed stores and reposition them,'” Walker said.
The coronavirus pandemic didn’t stop the firm from delivering the BCBS customer care center last year or halt the recent launch of its adaptive reuse of a former Target store in the South Side neighborhood of Chatham into a call center for Discover Financial Services, which will eventually bring in about 1,000 jobs.
“These are all head-of-household jobs,” Walker added. “Both corporations made commitments to pay not just living wages but head-of-household salaries with benefits, so it’s a game-changer for these neighborhoods.”
Walker wants other corporations to learn a few important lessons from these adaptive reuse projects. First, rent is much cheaper in these areas than central business districts, and that drastically cuts the cost of back-office operations such as call centers. In addition, abandoned big-box retail outlets within malls have built-in amenities for employees. Finally, locating in the neighborhoods where workers actually live cuts down on their commuting times, boosting their quality of life and reducing turnover.
DL3 Realty has another long-term goal. Instead of merely attracting established developers from outside the community, Walker said he would like to see groups of local neighborhood developers rise up, learn the development game and start tackling their own projects on the South and West sides.
Currently, the roughly $14B in annual Chicago development is handled by a small cadre of developers, he added. And it’s understandable that most tend to stick to neighborhoods they know, including in places where they grew up and have contacts and local knowledge.
“But if we’re going to move the needle and change the dynamics and trajectory of these other communities, we also need to raise up developers of color and provide a pathway for them to learn the business,” he said.