While retail’s national economic health picture remains mixed with the commercial real estate recovery applied unevenly across the land, recovery stories are appearing that demonstrate what could yet be for the national retail property market as a whole.
In Yorkville, IL fifty miles west of Chicago stands a 600,000 sq. ft. shopping center named Kendall Marketplace. Kendall is a shadow of the original development plan of 800K sq. ft., a plan that ran into the historic buzzsaw of the 2007-2008 financial crisis. The development opened amid that chaos, trimming expectations for the intervening years.
The project lies at the extreme edge of suburban metro area, a gamble, ultimately, on sprawl. The trends of recent years leading back toward downtown living interest and development haven’t done Kendall any favors.
But seller representative Jones Lang Lasalle has the immediate surrounding area pegged for 13% growth during the next five years. Which in turn has Kendall’s owners, Greenwood Global Inc, doubling down on suburban lifestyle by buying residential zoned land surrounding Kendall. Brian J. Rogal writes for Globe St.:
“This is the area that was supposed to be the next to develop,” Alex Berman, founder of the Northbrook, IL-based [Greenwood], tells GlobeSt.com. The center’s developers originally planned to have about 800,000 square feet, but “the sales, while decent, were lower than expected and it wasn’t entirely built. Growth is returning and we will be happy to complete the project, although it may take time.”
Kendall Marketplace currently has about 590,000 square feet, which includes space occupied by shadow anchors Super Target, Home Depot and Kohl’s. Berman’s group bought 192,000 square feet of existing retail space anchored by Dick’s Sporting Goods, Marshalls and PetSmart, in addition to several vacant outparcels and adjacent residential land zoned for 192 single-family homes and townhomes. The price was not disclosed.
“We’re not a residential developer,” Berman adds, “but on the other hand, we think that as the property matures, the retail component will benefit the residential portion and the residential will benefit the retail.” Greenwood may eventually build the homes, or bring in a joint venture partner to help, but regardless of the route it takes, as demand for new housing in the area begins to swell again, Berman believes it’s important for the company to control this land.