Bank OZK Takes The Only Completed Lincoln Yards Office From Sterling Bay
Bank OZK has taken over Sterling Bay’s Lincoln Yards office building, dealing perhaps the final blow to the developer’s plan to build a life sciences corridor in its home city on the north bank of the Chicago River.
The Arkansas-based bank took ownership of the complete but vacant 284K SF office building in a deed-in-lieu-of-foreclosure transaction, records obtained by banking intelligence platform AtriumData.ai show.
Sterling Bay had partnered with J.P. Morgan and Harrison Street Real Estate Capital to develop the property in 2021 with a $125M construction loan from Bank OZK. The office building is the only project that got out of the ground as part of the developer’s plan to create a life sciences district in an industrial zone wedged between two of Chicago’s wealthiest areas, Lincoln Park and Wicker Park.
Bank OZK had already taken a combined $14.1M charge-off on the loan across the last two quarters of 2025, bringing the total outstanding balance to $50M. The property, at 1229 W. Concord Place, is now held by the bank’s BOTO Strategic Properties IV LLC fund.
CEO George Gleason said on the bank’s fourth-quarter earnings call that Sterling Bay was looking to sell the project for a loss, but that Bank OZK was prepared to take over the property if the deal fell through.
“If they accomplish that [sale], then we could be paid off quickly over the next couple of quarters, however long it takes to close that,” Gleason said on Jan. 21. “If they don't accomplish that sale at a price that's satisfactory to us, then we'll take that property and sell it.”
Sterling Bay put the property up for sale in August, a month after JDL Development and Kayne Anderson Real Estate reached a deal to buy the northern section of the Lincoln Yards site that Bank OZK had seized last March.
Chicago-based JDL agreed to pay about $84M for the northern portion of the undeveloped site and has made an offer to Sterling Bay on the southern half of the property, Bloomberg reported in October.
In a deed-in-lieu deal, a borrower hands over a property to the lender in exchange for guarantees against legal action or further payments of the delinquent debt.
“Sterling Bay is an innovator in the development of urban workspace, and we take great pride in delivering 1229 W. Concord as a premier, technically advanced life sciences facility,” a spokesperson for the developer said in an emailed statement. “The firm remains focused on its broader vision for high-quality, transformative development in Chicago and across the country.”
A spokesperson for Bank OZK pointed to the bank’s fourth-quarter financial disclosures and declined to comment further, saying it would provide an update when first-quarter earnings are reported in April.
Fourth-quarter management commentary indicated that the $50M balance on the loan represented 68% of the property's as-is value after a recent appraisal.
Bank OZK was established in 1903 but captured wider attention during the pandemic as it aggressively loaned on new commercial real estate construction while most other lenders pulled back. The bank originated more than $3B in construction loans in 2023, at least $1B more than its competition.
In recent quarters, it has prioritized growth across other business lines while still being an active commercial construction lender. It has also taken a more proactive approach to working through nonperforming loans on its books.
In January, the bank sold a $265M loan backing a mostly vacant life sciences campus in San Diego for par value to Strategic Value Partners. The loan was one of the largest on Bank OZK’s books.
"Most banks have moved past the peak of the CRE credit cycle. OZK is still in the thick of it,” Atrium Data founder Ryan Alfred said in an email. “The 1229 W. Concord story is what happens when leasing never arrives, and it's far from the last completely empty building in OZK's construction book."
