In the February edition of Heartland Real Estate Business, HSA Commercial’s Tim Blum discusses what to expect in Chicago retail development and leasing in 2012. Tim is responsible for the development of The Mayfair Collection in Wauwatosa, Wisconsin, a 250,000-square-foot adaptive reuse project in suburban Milwaukee.
As a result of the changes in consumer behavior, traditional full-price retailers have chosen to focus growth on promotional or outlet brands. For example, Sak’s recently opened its third Off 5th store in the Chicagoland market at the Village Square of Northbrook. Bloomingdale’s announced the closure of four home furniture stores, including a location at Oakbrook Center, at the same time that the company released plans to open five of its Bloomingdale Outlet stores in 2012.
Although such brands as Saks Off 5th and Nordstrom Rack are seeking opportunities to expand their footprints in the Chicago market, their business model necessitates deal structures that are unjustifiable in a new construction budget. Therefore, to satisfy the demand for growth among these chain stores while still meeting their relatively stringent qualifications for a dense trade area, developers are pursuing less obvious adaptive reuse opportunities in many of the vastly underserved metro Chicago communities.
Older industrial buildings, for example, may have outlived their original purpose, but are structurally sound and well-suited to be recycled into retail facilities. In many cases, the cost of repurposing these buildings can be much less than new construction, thereby allowing for an economical rental structure. HSA Commercial’s proposed 250,000-square-foot adaptive reuse of the so-called “Burleigh Triangle” industrial park in west suburban Milwaukee is a case in point, given the significant retail tenant interest the project has generated.
To read the full article, see page 16 of the February edition of Heartland Real Estate Business.