How More Black Commercial Developers Could Change Chicago – Next City

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How More Black Commercial Developers Could Change Chicago

Leon Walker at the Englewood Whole Foods (Photo by Steve Becker)

Leon Walker is on a roll. Neighborhood Housing Services Chicago awarded him its 2019 Community Impact Award for addressing food deserts. The new Jewel-Osco location he co-developed in the Woodlawn neighborhood on the South Side opened its doors on March 7. On the heels of that, the Cook County Land Bank Authority selected Walker’s firm, DL3 Realty, to co-develop the site of the old Washington Park National Bank building, just a couple blocks down the street.

His career as a developer, which nearly never happened, could serve as a template for others like him to come back to — or emerge from — systematically disinvested places like the South Side or West Side of Chicago and provide an often elusive link between longtime residents and businesses and capital for revitalization without displacement.

Walker’s parents arrived in Chicago from Birmingham, Alabama, in the late 1960s, amid the waning days of the Great Migration. Both educators, in 1979 the couple took out a $1 million loan from South Shore Bank to build an early childhood education center on a vacant lot in the South Shore neighborhood.

“I was 13 and got my first hard hat on that job,” Walker says. “I knew then that I wanted to be in the real estate business. I saw it as being fun to go around, meeting the architect, going in contractors’ offices, learning the nuts and bolts, huddling around kitchen tables and on the roofs.”

After earning an MBA and law degree from the University of Chicago, Walker moved to New York City and worked in real estate investing. From there, he went on to work in global investment management in Los Angeles. Then, he got the news that his father was ill.

“It was this classic fork in the road,” Walker says. “I had to decide. I was already making good money, more coats than I ever had, driving a convertible around Los Angeles, and maybe I was going to Singapore … . My colleagues couldn’t believe it. They said ‘you’re leaving this to go back to work on the South Side of Chicago in the family business?’”

He returned home and spent the last few months of his father’s life with him. His parents had expanded their real estate holdings, adding new locations to their network of early childhood development centers. All of the properties were held in his father’s or mother’s names. In 1999, he formed DL3 Realty, a family limited partnership, Walker says, “as a way of professionalizing what was effectively a small real estate company.”

Thanks to Walker’s experience, the firm has gone on to break barriers for community development in Chicago. In 2007, DL3 Realty became the first to use federal New Markets Tax Credits for new construction in the city, to build the Roseland Medical Center on the far South Side. It was also the first in Chicago to list a project on FundRise, an online platform for real estate investment. It took DL3 just 48 hours to raise $500,000 from 61 online investors in 21 states.

In October 2018, Walker took me on a drive through Englewood and Woodlawn in his Tesla, pointing to DL3 projects. Starting from the $20 million redevelopment of the Englewood Square shopping center, with Whole Foods as an anchor tenant in an area once classified as a food desert. He explained what he calls his “venture development” thesis using the movie industry as an analogy. Developers are the film producers, bringing together the necessary pieces, including the money, for projects.

Like a good movie, the project should start with a solid story, one rooted in history. Englewood Square, for example, was once the center of the busiest commercial corridor in Chicago outside of the Loop. The area was once home to 100,000 residents, but today after years of systematic disinvestment, there’s about 30,000. Walker hopes some who moved away will return, and wants those who are there to stay.

Asiaha Butler very nearly left in 2008 with her husband and daughter. They’d experienced a robbery attempt and were on the verge of moving to Atlanta, where Butler’s family lives.

“I looked out my window at a vacant lot, and there were all these kids in the lot playing with glass and tires. I thought little kids should not be out doing this. I looked at my husband and said before we leave, I just gotta figure out is there something I could do, could I give any value here and do anything in this community,” Butler says. “I felt like we were a little bit of an exception to the rule, being two working parents, married. I felt like there wasn’t enough of us that were still here. So I went on this journey. I had no clue that it would land me where I am today.”

Butler is president of the Residents Association of Greater Englewood, or R.A.G.E., which she co-founded with about a dozen other neighbors in 2010. Walker sees groups like R.A.G.E. as essential and complementary to his work. For example, 1Woodlawn, another community group, advocates for policies and strategies to prevent displacement of longtime residents and businesses. Members of groups like these provide clarity for developers through what Walker calls “deliberate community leadership.”

“You can’t go into a community where there’s 900 voices and opinions,” Walker says. “You need someone that’s already working to coalesce that so you can have a dialogue. In some communities that’s just not there yet.”

According to Butler, R.A.G.E. has regular communications about community development issues and challenges with Walker and other developers like Craig Huffman, another black developer in the commercial and industrial development space on the South Side. Huffman is working on the second phase of Englewood Square. “There’s not many black developers who do projects of this scale in Chicago,” Butler notes.

Robert Rose, executive director of the Cook County Land Bank Authority, would like to see more commercial and industrial developers on the South and West sides of Chicago who have strong roots in those communities, but says they are rare.

“A lot of times when you’re outside the community and you’re coming in, you’re coming at it from a financial perspective — how much could I purchase it for, how much rehab can I do that allows for the financial return that I want to see,” Rose says. “That sort of approach can leave you with cutting corners or delivering a substandard product.”

Chicago’s neighborhoods were systematically segregated, with black and Hispanic populations concentrated on the South and West sides where most of the land bank’s properties reside. Of the 360 or so developers that have worked with the land bank authority so far, 50 percent are black and 20 percent are Hispanic, according to Rose. But up until now these developers have only been working on small residential properties, mostly Chicago’s famous two-, three- and four-flats. Most aren’t moving up to work on commercial or industrial development. That may be partly because the land bank has only started acquiring commercial and industrial properties in the past two years. He describes the Washington Park National Bank site, which Walker’s DL3 Realty will co-develop, as the land bank’s largest single endeavor to date, and its first commercial property transfer.

But Rose also points to systematic barriers for developing or constructing public works projects as one of the reasons Chicago lacks a consistent pipeline of developers from the South Side or West Side moving up from small residential properties to larger projects.

“Most developers or most construction companies have cut their teeth on public works jobs — schools or libraries. They were primed on some of these things, and then move onto larger scale projects,” Rose says. “There’s been limited opportunity for people of color in Chicago for that kind of construction, so where does your pipeline of people come from that, have the capacity to do it, the money to do it, the opportunity to do it. If these opportunities aren’t made available, then it’s very hard to even get into the game.”

Rose hopes Chicago’s next mayor will prioritize opportunities for people of color to work on public works projects.

In the meantime, Walker has penned a white paper outlining his “venture development” thesis. It’s partly a pitch to court investors, and partly a playbook for others like him connected to the South and West sides who might be interested in doing development at his level.

Asiaha Butler, for example, recently formed Englewood Development Group. She is getting started with a two-flat acquired from the Cook County Land Bank Authority. She’s gained insight into and confidence for the work by meeting with Walker, Huffman and other developers on a regular basis.

“Where we’re at now, our office is at 66th and Union, and there’s around 10 vacant lots near there now and some vacant homes, so we’re looking to transform the homes and build upon the vacant lots some recreational things,” Butler says. “It’s been beneficial learning the language of development, pro-formas, talking to the city, learning how the city works when it comes to development.”

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi Community Development.

Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.

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Tags: chicagoreal estatefood deserts