CHICAGO—A once-gritty stretch along the Chicago River across from an industrial sprawl of concrete and train tracks is headed for transformation as a $1.5 billion development of high-rises, townhomes and a public river walk breaks ground Monday.

The project, known as Riverline, is part of a monumental facelift as developers drawn to the Chicago River build up empty banks along the waterway’s southern stretch. It will eventually bring more than 3,600 new residences to a rare undeveloped plot just south of the downtown Loop.

“The open space was the major initial driver of the development,” said Tom Weeks, general manager of development at Lendlease in Chicago, a co-developer on the project. “We wanted a place where people would play or just sit and contemplate or walk.”

Eight high-rises, a complex of townhouses and several acres of public green, including kayak rental and a continuous river walk longer than five football fields, will replace overgrown brush when it is complete in about a decade, the developers say.

Despite rising violence on the city’s south and west sides, Chicago is among a number of U.S. cities seeing an influx of young, educated workers to their downtown cores.