Will 2026 be the year for this stalled downtown Arlington Heights apartment project?

Facing rising interest rates, difficulty in raising equity capital and higher construction costs, a developer’s plan for a six-story, 135-unit apartment building with a ground-floor restaurant in Arlington Heights remains in limbo two years after receiving zoning approvals.

But Joe Taylor of Barrington-based Compasspoint Development expressed confidence that 2026 will be the year to get shovels in the ground and transform the long-vacant office building site on the edge of the village’s downtown.

Arlington Heights trustees this week agreed to grant the developer a 12-month extension of zoning permissions — otherwise due to expire this month — for the proposed transit-oriented development at 116-120 W. Eastman St.

Called Mylo Arlington Heights, the project would be marketed to a mix of renters, from young professionals to downsizers already in the Northwest suburbs.

At one time priced at $66 million, the redevelopment would replace two old three-story office buildings. The basement of the 116 building holds a place in local history as the first of two primary locations for the famed 1960s-era teen music club The Cellar.

Taylor was pressed by Trustee Tom Schwingbeck about whether he could meet the new Dec. 18, 2026 deadline to secure a building permit and begin construction.

“I don’t envision us coming back for a second time for a second extension,” Taylor replied. “I think we’re going to get everything done.”

Underscoring his confidence, Taylor told trustees he has partnered with Richard Wolper, principal of Mark 25 Homes, a Utah luxury homebuilder. Wolper has established long-term financial partnerships with investment firms D.A. Davidson and SDP REIT who can provide access to construction and long-term financing, Taylor said.

“My new partners are well-capitalized,” Taylor said. “I have a personal relationship with the founder of the company now, and he’s committed to financing this project.”

What has slowed progress since the project first came before the board in 2023 is three-fold, according to Taylor:

• Rising interest rates have limited the availability of construction loans from banks and debt funds;

• Raising more equity capital has remained a challenge, as investors have been able to acquire existing apartment buildings in the Northwest suburbs at or below construction cost;

• The price of construction has continued to increase, amid rising material costs, a shortage of skilled labor, and economic uncertainty around tariffs and inflation.

“The challenges I’m facing are no different than a lot of other developers,” Taylor said.

But he believes the zoning extension granted by the village board will allow him enough time to finalize architectural design, engineering and construction pricing in the second quarter of 2026. He hopes construction and lease up of the development could be done by 2028.