September 20, 2005

Loyola University Begins $400M Tax Incremented Project

CHICAGO–Loyola University–Chicago’s $400 million undertaking to revitalize its Lake Shore campus in Rogers Park began this week with a sealed–bid marketing process. Phase one of the mixed–use development includes building 400,000 square feet of space built around the university’s eponymous elevated train station there.

The university has acquired properties surrounding its Rogers Park–located campus for decades, but the plans for a transportation–oriented development, including 40,000 square feet of retail space and about 400 residential units, has only been incubating for a couple years, Newcastle Ltd. president Mike Haney told CPN. Newcastle, a local real estate advisory and development firm, acts as a market consultant for the university’s real estate ventures.

Using 50 to 100–year leases, Loyola allows developers to build residential and retail properties while retaining ownership. The plan’s economic viability depends on the use of tax increments, including one $20.4 million chunk approved by the city this week for the renovation of the 14–story Mundelein Center. Haney noted that over the next 22 years (the tax increment period lasts 23 years and was established last year), the residential and retail developments will fill Loyola’s pockets with about $46 million.

Leasing represents a strategic benefit to the university, Haney said. The university’s near–lakeside location restricts further physical expansion, but Haney added that leasing allows the university to capitalize on real estate markets without losing its chance for future growth. “Loyola has been around for more than 100 years, and (it will) be around for another 100,” he said.

Newcastle advised Loyola to rebalance its holdings and identify core assets, in an effort to benefit the university economically and enhance student experience in Rogers Park, a neighborhood that has missed out on downtown Chicago’s profitable real estate market.