October 14, 2024
Why Chicago developers are seeking deals outside the city It’s become common to see them setting up shop in sunnier, faster-growing markets By Rachel Herzog
It’s become a common phenomenon: Stymied by the challenges of building in Chicago over the last few years, local developers have branched out of their hometown and set up shop in sunnier locales like Phoenix and Nashville, Tenn. “What we’ve seen is, Chicago has a lot of really strong, well put-together and sophisticated development groups that used to make a living in Chicago. They can’t make a living in Chicago,” said Craig Pryde, a principal in the Chicago office of national architecture firm KTGY. More robust population growth and a political environment that they see as friendlier to development makes branching out South and West a better bet, some developers say. On the flip side, those who can build in Chicago stand to benefit from meeting the
demand for housing in a supplyconstrained market. Belgravia Group, a residential developer with decades of experience in Chicago, entered the Arizona market in 2022. It’s a move Chairman Alan Lev said was necessary for the company to thrive as construction costs rose at a much faster rate than rents did in Chicago, on top of elevated interest rates making deals even harder to pencil out. “About three to four years ago, I came to the realization that — or came to the sad conclusion that — we weren’t going to be able to sustain the same level of business in Chicago that we had been doing for the previous 35plus years,” Lev said. “I wanted us to stay in business, and I was afraid that I wasn’t going to be able to do enough in Chicago.” Lev said there wasn’t a See DEVELOPERS on Page 43
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A rendering of the Portico, a project of Chicago-based Belgravia Group in Scottsdale, Ariz.
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