Despite the general overbuilding of retail centers in the Chicago area, developers may be able to sell investors on the idea of funding scaled-down projects in fast-growing residential areas this year, real estate experts say. ”Neighborhood shopping centers will become the most important factor in retail real estate as the 1990s progress,” said Mark Tanguay, president of Tanguay-Burke-Stratton Comprehensive Real Estate Services.
”When times are tough, people tend to stay home. Consumers want a neighborhood shopping center where they can grocery shop, stop at the dry cleaners and pick up a videotape on the way home,” Tanguay said.
Institutional investors have not given up on potentially promising retail projects, said Jeffrey A. Davis, president of Cambridge Realty Capital Ltd. in Chicago.
New deals are difficult but not impossible to do, he said, citing a $17 million permanent mortgage loan recently closed by Cambridge for a 212,800-square-foot neighborhood shopping center in Lake Zurich.
”It`s a misconception that suburban areas are over-retailed and the only opportunities are in the city,” said Dick Totaro, a retail leasing specialist with Coldwell Banker Commercial Real Estate Services. ”Developers are looking at the more densely populated areas that have been neglected due to the difficulties of obtaining land.
”There are opportunities in the suburbs and in the city, even in areas of the downtown. But there are also areas both in the suburbs and downtown where there is no need for any retail for the next four years,” he said.
The return to favor of the small neighborhood center among investors and developers may come at the expense of the larger power centers, so called because of their overall size-250,000 square feet and more-and the size of their anchor tenants-40,000 square feet and up-which can account for 80 percent of the space.
”Investors are particularly wary of power centers. They are vulnerable because they are not doing well in many markets,” said Richard Kateley, president of Chicago-based Real Estate Research Corp.
A good example of the smaller centers being built is Woodland Commons, a 170,000-square-foot project of the Zale Group at Illinois Highway 22 and Buffalo Grove Road in northwest suburban Buffalo Grove.
The center, scheduled to open in June, is anchored by a Dominick`s Finer Foods and an Ace Hardware store. The $20 million center is financed by Harris Trust and Savings Bank of Barrington, which will have a branch office on the site.
Gregg Zale, president of the Zale Group, said one of the reasons the project was able to find financing and is already 65 percent leased is that the shopping center is expected to serve the growing number of residents at Zale`s Woodlands of Fiore planned development.
– Rocheux International Inc., a distributor of plastic products, will purchase a new 124,800-square-foot distribution center to be designed and built for the firm by Opus North Corp. on a five-acre site in the Batavia Industrial Park at Kingsland and Douglas Roads in the west suburb.
The facility, which is expected to break ground in late March, will replace Rocheux`s 30,000-square-foot facility in St. Charles. Rocheux will distribute products for Nan Ya Plastics Corp. U.S.A. from the new site when construction in completed in October.
Frank Young, Midwest region vice president for Rocheux, said the firm anticipates its sales will quadruple over the next five years and decided to relocate now to prepare for the growth.
The project will contain 11,400 square feet of regional office space. Young said the remaining space will be flexibly designed to accommodate the possible installation of manufacturing operations in the future.
Craig Conety, vice president of construction for Opus North, said Rocheux chose the Batavia location because of its proximity to Interstate Highway 88 and because of the availability of a rail line running through the
development.
– Bully & Andrews, a Chicago-based general contractor, has started construction on a $25 million addition and renovation project for Central Du Page Hospital in Winfield.
Allan E. Bully Jr., president of the contracting firm, said the project includes construction of a four-story, 110,000-square-foot additional wing for the hospital as well as renovation of 13,500 square feet of existing space. The project is scheduled for completion in May, 1992.
Three new hospital units-intensive care, cardiac care and emergency care- will be housed in the new wing, along with a clinical laboratory. The renovated space will include new information, admitting and lobby areas, as well as a coffee and gift shop.
– McLennan and Thebault Inc. has started construction on a 34,000-square- foot office and warehouse facility for Faucet Queens Inc., a distributor of home tools and hardware, at 401 Chaddick Dr. in the 64-acre Palwaukee Business Center in northwest suburban Wheeling.
Faucet Queens will move from 550 Palwaukee Dr. in Wheeling when the new building is completed in August, according to McLennan and Thebault, the design/build contractor for the project.
– There is still plenty of muscle in the warehouse/distribution market, especially in the western suburbs and the city`s Southwest Side, if the leases announced last week are any indication.
Bennett & Kahnweiler Inc.`s industrial group reported three leases totaling more than 350,000 square feet of space taken by tenants in three western suburbs.
Walt Zegers, a principal with Bennett & Kahnweiler, said the largest of the leases was for Liquid Container, a manufacturer of plastic molded bottles, which will occupy a 212,000-square-foot distribution building at 1445 Northwest Ave. in West Chicago. B&K represented the tenant.
In Broadview, B&K represented parcel company ASAP Mailing Services in its lease of an 82,500-square-foot building at 2100 W. 16th St. And the firm represented the RREEF Fund`s building at 1001 Bryn Mawr Ave. in Bensenville in the lease of 59,800 square feet to food distributor Goya Foods.
The city got into the act as well. Grubb & Ellis said that Borden Inc. agreed to sublease 117,000 square feet previously occupied by Usco
Distribution at the Gateway Center, 1700 W. 117th St. in Chicago. Borden, a division of Jays Foods, will use its space to store and distribute food products.
Knocking down big leases on both sides of the city border was Corporate Realty Advisors Inc. Lynn Kunde, a principal with the firm, said Berkshire Furniture will expand its manufacturing and warehousing operations by taking 91,800 square feet at 4850 S. Kilbourn Ave. The space includes 11,000 square feet of offices.
Across the border in Bedford Park, CRA represented ownership of the Bedford Industrial Center, 5401 W. 65th St., in the lease of 75,000 square feet to Glass Tempering, a manufacturer of tempered glass for the home furnishing markets that will relocate from the city in order to expand its lines.
– Other leases and sales:
Hitchcock Publishing has sold its 38,000-square-foot headquarters at 25W550 Geneva Rd. in Wheaton to American Slide Chart, which was leasing the property as its corporate headquarters. Grubb & Ellis, which negotiated the sale, said the purchase includes five acres of land for possible expansion. . . . Systems Unlimited Inc. has leased a 35,800-square-foot building at 701 District Dr. in Itasca and will use the facility for assembly and distribution of furniture, according to Darwin Realty & Development Corp., which represented building owner RREEF Funds in the deal. . . . American
International Adjustment Corp. expanded its lease to 23,600 square feet at 1230 E. Diehl Rd. in Bellemead Development Corp.`s Naperville Corporate Center. . . . Deloitte & Touche, the accounting and consulting firm, has leased 16,800 square feet at Prudential Property Co.`s 425 Building in the Woodfield Corporate Center in Schaumburg and will open a northwest suburban office there with 80 people in February. . . . Father & Son Pizza has leased 10,000 square feet for a 300-seat restaurant to anchor the recently opened F and S Plaza at North and Larrabee Avenues in Chicago according to Lebovic Realty Group, which is leasing the remainder of the 38,000-square-foot strip center.
