The city of Chicago issued a building permit on October 8 for a four-story residential development at 3040 N. Lincoln Avenue in Lakeview, clearing the way for construction on the site of the former Rita Oriental Rugs storefront. The new building will include nine rental apartments, a ground-floor commercial space, and an eight-car garage accessed from the rear alley.
As first reported by Chicago YIMBY, the permit followed an application process that began June 30 and took 100 days to process. Pro Homes Incorporated, the Summit, Illinois-based developer behind the project, is also serving as general contractor, with the development plans designed by Michael Cox & Associates. The new building carries a reported cost of $1.5 million.
From Rug Shop to Rental Apartments
The site previously held a single-story masonry building that was home to Rita Oriental Rugs, a family-owned rug sales and repair business founded in 1978 by owner Sudershan Goel. The shop operated at the Lincoln Avenue address for over four decades and is now closed. The old building was permitted for demolition on February 17, with the Carlos Group handling the teardown at a reported cost of $35,000, according to the same account.
The building's removal didn't go unnoticed by preservation watchdogs. Preservation Chicago featured the former Rita Rugs building in its February 2026 “Spotlight on Demolition” digest after the city approved its tear-down, placing the site within a broader pattern of older commercial structures disappearing across the city.
Zoning Application
Pro Homes Inc. submitted a zoning application seeking to rezone the parcel from a B1-2 Neighborhood Shopping District to a B2-3 Neighborhood Mixed-Use District. The nine residential units, which will occupy the building's top three floors, are set to feature larger layout configurations: two two-bedroom, five three-bedroom, and two four-bedroom apartments, offering family-oriented housing options not always common in new North Side construction.
Each of the nine units, all designated as rental apartments, will come with private outdoor space. Development drawings depict a brick-clad building with large covered front terraces and smaller inset rear balconies. The rooftop itself won't be an occupiable deck, but the fourth level is set back from Lincoln Avenue, and that setback space will contain a shareable deck for residents.
Avoiding Affordable Housing Requirements
The nine-unit count is notable for what it avoids: Chicago's Affordable Requirements Ordinance, updated in 2021, mandates affordable housing set-asides only for residential projects with 10 or more units that receive zoning changes or city support, according to the City of Chicago. By capping the building at nine units, developers sidestep the inclusionary housing mandate that would otherwise apply.
Ground-floor plans by Michael Cox & Associates call for 1,300 square feet of commercial space fronting Lincoln Avenue, keeping active retail frontage along the corridor even as the building's primary use shifts to housing. The rear garage will provide eight parking spaces along with bicycle storage.
A Changing Lincoln Avenue Corridor
Plans for the Lincoln Avenue corridor have included pedestrian and public-art improvements, as reported by Chicago Agent Magazine. Nearby, the planned demolition of a historic building one block south at 2965 N. Lincoln Avenue was covered previously in Hoodline's report on Dear Margaret.
The Lincoln Avenue site also benefits from transit access, sitting near the Brown, Red, and Purple Line elevated trains at the Wellington, Belmont, and Southport stops, with CTA bus service available within two-block walks along North Ashland Avenue, routes 9 and X9, and West Belmont Avenue, route 77, while route 76 runs along West Diversey Parkway just south of the site.
