‘Up-and-comer’ developer makes headway without relying on banks
With emphasis on sustainability and building wealth in minority areas, CEO plans projects on South and West sides
A.J. Patton believes real estate can be developed for profit and purpose. He’s got a small operation now, but anybody who roots for better conditions on the South and West sides will want to know his name and his company.
Patton is CEO of 548 Development, which works out of shared office space in Woodlawn. He said it has about $6 million in assets, but with grand plans for about $200 million in business over the next two to three years. His company is hiring, too.
He’s optimistic because of what happened last week. City officials agreed to work with 548 Development on the development of two sites put out for competitive proposals. After reviewing such factors as financial viability, design quality and community enhancements, the Department of Planning and Development agreed to involve the firm in improving commercial stretches of North Lawndale and South Chicago.
In North Lawndale, 548 Development is in a partnership with GRF Ventures and Imagine Group for a mixed-use project on Ogden Avenue between Homan and Trumbull avenues. The South Chicago project is 548 Development’s alone and would improve parcels at 8840-54 S. Commercial Ave., providing 45 mixed-income apartments and commercial space.
Planning Commissioner Maurice Cox called Patton’s company “an up-and-comer” in neighborhood development.
After several years working in real estate finance, Patton went out on his own in 2016 in pursuit of sustainable development — here meaning homes with efficient heating and cooling to hold down costs for tenants. He memorialized that purpose in the company name, 548 Development. What sounds like something from a Metra timetable is, for him, a reminder of personal experience.
In the 1990s, he was living with his mom in unit 548 of public housing in Terre Haute, Indiana. His mom got a $400 gas bill she couldn’t pay and service was cut off. “We had to heat water on an electric stove to take a bath,” Patton said.
After graduating from Indiana State University, Patton worked for Duke Realty, HSBC and Equities First Holdings. The memory of high utility bills stayed with him as he started renovating small apartment buildings in Auburn Gresham and North Lawndale and, more recently, with a rehabbed 33-unit building opening soon at 79th Street and Loomis Boulevard. The units use solar power and technology that promises lower utility costs while improving tenant control over heating and cooling.
“What I found is that a lot of people were talking about sustainability and cool technology but no one was focused on making it accessible to everyone. A bridge to sustainability means a higher quality of life,” Patton said. In going about this, he discovered a greater calling.
A developer hires contractors, and when that work goes to Black and Brown people, each project pushes back against the disparity in wages and opportunity. As a Black entrepreneur, Patton prefers to hire minorities and minority-owned firms. “So I started out trying to save people money on utilities, but it turns out our main impact is as a developer who cares about the community,” he said.
Patton said financing remains a hurdle for minority-owned firms. Especially in real estate, banks still give Blacks the cold shoulder, he said. “The city is still being redlined,” he said. When he brought projects to banks, he said, “They made it clear it was forward-thinking and innovative, but it was a neighborhood they had not invested in, especially without tax credits or incentives.”
His financing comes from Chicago-based Aurelian Capital Partners, which Patton called a godsend, and private individuals. He’s got more projects planned, including one in Humboldt Park.
And he has one more potential deal with the city. Patton has partnered with one of the city’s largest developers, Related Midwest, to submit an industrial project with community space on the 21-acre former dump at Roosevelt Road and Kostner Avenue, the city-owned site associated with the Silver Shovel bribe scandal. Patton has his fingers crossed. The proposal has made the cut as a finalist.
He said he allied with Related because “they have a spectacular team. They’ve got a track record on equity.” As part of his deal, Patton would get to pick any contractors or equity partners that join the project. “I think it could be a unifying project for the community,” Patton said, noting that two nonprofits have agreed to use the team’s proposed Lawndale Innovation Center on Roosevelt.
Related is known for its skyscrapers. Does Patton want to build those? He phrased his answer carefully. “Eventually, someone will have to build those things with a much more inclusive eye. For a host of reasons, that hasn’t gotten the attention it deserves.”
But now that’s he’s expanding and associating with big-time players, are the banks knocking on his door? “Here’s my long-winded answer,” Patton said. “No.”