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Residential Boom Set To Accelerate In Illinois Medical District As Council Members Clear Away Obstacles

Not even the coronavirus pandemic could stop new development from spreading into the neighborhoods west of Chicago’s downtown, and the Illinois Medical District falls right in its path.

Yet unlike nearby neighborhoods such as Fulton Market, which has seen millions of SF of new multifamily and offices rise in the past several years, Chicago’s 80-year-old IMD has been hamstrung by regulations that made developers of potential projects jump through additional hoops before securing approval — until now.

Illinois Medical District

The Chicago City Council cleared away many of those regulatory burdens at its Oct. 14 meeting. District officials say the move will help the IMD adopt a modern strategy for development, one that emphasizes a variety of mixed uses, including residential and retail, and will allow it to become a real neighborhood rather an area reserved exclusively for medical care and research.

Officials hope streamlining the approval process will clear away confusion about developing properties in the district, a special planning district established in 1941 that includes hospitals, medical schools and other healthcare facilities, such as the Jesse Brown VA Medical Center, Rush University Medical Center, the John H. Stroger Jr. Hospital of Cook County and The University of Illinois Hospital & Health Sciences System.

“It was very unclear to the real estate marketplace what was and what was not permitted,” IMD Director of Real Estate Operations Chris Fahey said.

The reforms aren’t just about getting deals done, according to IMD interim Executive Director Kate Schellinger. She envisions a hub for life sciences flowering within the district, which spreads out across 560 acres 2 miles west of the Loop, just south of Interstate 290. That hub could provide jobs, cut poverty in the surrounding West Side neighborhoods and close the gap in life expectancy between the city’s wealthy and low-income areas.

There are about 85,000 life sciences jobs in the state, according to the Illinois Biotechnology Innovation Organization, and around 40% of those jobs, many of them well-paying, only require a high school diploma or GED. That makes the industry tailor-made for neighborhoods that historically have suffered from joblessness, Schellinger said.

Chicago has the country’s largest average life expectancy gap across its neighborhoods, with Englewood residents on the South Side living only to 60 while those in the affluent Gold Coast neighborhood of Streeterville typically see 90, according to the New York University School of Medicine. 

It is the need to bring in life sciences firms that helped drive IMD and the city council to clear away regulatory hurdles, Schellinger said. The IMD looked around the country, studying other major life sciences hubs, such as Kendall Square in Cambridge, Massachusetts, and the mammoth Texas Medical Center in Houston, and saw each is set within vibrant communities where people can live and walk to work if they are in the life sciences or medical fields.

What they had heard for years from IMD stakeholders, including the schools and medical clinics, was that students and workers need places to live. Filling in the district’s empty spaces with residences will also mean bringing in restaurants, coffee shops and shopping, establishing community gathering spaces, and building hotels for those visiting the hospitals, schools or labs established by life sciences companies, Fahey said.

Illinois Medical District

Due to the council’s October vote, developers in the district can skip what had been a city review process and deal directly with IMD staff, who can now certify that new projects fulfill Chicago’s rules to include affordable housing, ensure minority participation and build in a sustainable way.

Other changes include loosening what had been the district’s drastic restrictions on the amount of space buildings could occupy, Fahey said.

“What that led to was a lot of surface parking lots being built,” he said. “That just wasn’t conducive to urban-style development and gave the district a more suburban feel.”

Instead of the 30-foot setbacks now common throughout the IMD, multifamily and other developers can include street-level storefronts, Fahey said. In total, the changes could bring up to an additional 20M SF of new development.

New development hasn't been absent from the IMD. Developers have been eager to take advantage of the district’s many train and bus connections to the Central Business District, already starting to take part in the downtown residential boom.

Gateway Development Partners, a venture led by Chicago-based East Lake Management, began construction this year on the 161-unit Gateway Apartments at 2050 West Ogden Ave., which will form the heart of a 10-acre mixed-use project with a hotel and life sciences and medical office space. The developer has so far completed a single-story retail portion occupied by Starbucks, Chipotle, Five Guys and others.   

“The paucity of housing within the IMD has been a missed opportunity for years,” Lee Oller, executive vice president of Merchants Capital Chicago, said in a statement. Her bank secured a construction loan for the project.

In addition, Marquette Cos. finished rehabbing the Medical Center Apartments, a 1960s-era, 18-story building at 1922 West Ogden Ave., now called Atrio. The Naperville, Illinois-based developer has also announced plans for hundreds of additional apartments at the site.

But Fahey said he expects developers’ interest will ramp up further now that bureaucratic obstacles have been swept away, especially for the 30 acres of available vacant land. Schellinger added the IMD is going to start looking more and more like a regular residential neighborhood.

“People have a place where they can get lunch,” she said. “A few years ago, that didn’t exist.”